Furniture stores should get a second chance if the Paycheck Protection Program is extended, the Home Furnishings Association has told Senate leaders.
The HFA joined other business groups in asking for improvements to the proposed Continuing Small Business Recovery and Paycheck Protection Program Act. The bill, introduced by Sen. Marco Rubio (R-Fla.) and Sen. Susan Collins (R-Maine), could be folded until a new relief package. It would allow qualified firms to receive a second Paycheck Protection Program loan. As the measure is currently written, however, borrowers would have to show a decline in revenue of at least 50 percent from 2019.
Update: The bill sponsors have amended the measure to require a revenue decline of 35 percent.
Most furniture stores experienced significant losses in March, April and into May, when state governments forced many retail businesses to close. Sales generally began to pick up later in May, then gained steam in June and July as consumers focused on upgrading their household furnishings. Yet, it’s not clear this trend will continue. If sales slip again, some furniture retailers might need a second chance to borrow on favorable terms.
“Many small businesses operate with slim profit margins in a normal economy,” said a letter signed by the HFA and sent to Senate Majority Leader Mitch McConnell, Minority Leader Chuck Schumer and Senators Rubio and Ben Cardin, leaders of the Senate Small Business Committee. “For them, even a revenue decline of 20 percent or greater could mean the difference between staying in business or closing. For their employees, such a revenue decline could mean the difference between remaining at work and receiving benefits or losing their jobs.
Second chance could provide a lifeline
“For businesses with revenue declines of 20 percent or greater, but less than 50 percent – businesses currently excluded from the proposed CSBRPP Act – broad access to a second round of PPP funding, and the new, long-term, low-interest loan program, may prove the lifeline they need to stay afloat throughout the economic recovery. This second round of funding and access to these long-term loans is akin to a targeted investment from the federal government into the very businesses where it can make the most difference – many of whom benefited from PPP in the first place, but now, through no fault of their own, remain closed or forced to operate at reduced capacity to protect the public safety and that of their employees and customers.
“In summary, we urge you to expand small business access to the proposed PPP second draw by changing the eligibility requirement that businesses must demonstrate a gross revenue reduction of at least 50 percent. America’s small businesses have borne a heavy burden during the COVID-19 pandemic. These businesses have navigated an unprecedented landscape to continue to serve their customers, employees, and communities in a clean, safe, and compliant manner throughout this historic period. On behalf of our small business members, we encourage you to expand access to relief measures to further strengthen our national economic recovery.”
The coalition is spearheaded by the International Franchise Association. It includes the American Home Furnishings Alliance, National Retail Federation, U.S. Chamber of Commerce, Associated General Contractors, National Restaurant Association, American Farm Bureau Federation, Small Business & Entrepreneurship Council and others representing hundreds of thousands of businesses across the country.
HFA still supports the RESTART Act
The HFA supports the creation of a new lending program under the proposed RESTART Act. All businesses up to 5,000 employees could access loans under that program. However, a new PPP potentially could help many smaller HFA members.
The Association also urged Congress to approve liability protection, which would bar unwarranted legal actions against businesses that make good-faith and reasonable efforts to follow all federal, state and local safety guidelines, and to grant easy loan forgiveness under the original PPP.
Furniture stores have provided essential products that their customers need to live and work comfortably at home during this crisis. As businesses reopened, furniture stores showed they could operate safely, implementing social distancing and other protocols to prevent transmission of the virus. Finally, the jobs and tax revenue they support are critical for their communities and local and state governments.
The coronavirus crisis continues, but furniture stores contribute to the solution, not to the problem. And when it comes to borrowing, they should get a second chance.