A month ago, the Home Furnishings Association wrote to key leaders in Washington, D.C., asking for improvements to the Paycheck Protection Program. It is the primary lending initiative for small businesses, but some of its provisions make it less helpful to furniture retailers than it should be.
Now, help may be on the way.
In her April letter, HFA CEO Sharron Bradley said the PPP needed to allow:
- Greater flexibility as to when money could be spent to earn loan forgiveness.
- Greater flexibility in how to spend the money.
- And a longer term to repay loan funds not forgiven.
This week, U.S. Sens. Todd Young (R-Ind.) and Michael Bennet (D-Colo.) announced a new proposal that addresses those problems. Called the RESTART (Reviving the Economy Sustainably Toward a Recovery in Twenty-twenty) Act, it would extend the opportunity for businesses to access the funds they need to endure the coronavirus crisis.
Proposal extends spending period to 16 weeks
PPP loans can be forgiven if funds are spent within eight weeks after they are received and three-fourths of the amount is used for payroll. That window is too small for stores that are closed for some or all of those eight weeks. The RESTART Act would extend that period to 16 weeks, as long as the business had seen its revenues decline by 25 percent or more.
Kittle’s Furniture, based in Indianapolis, received its PPP loan around April 9, Chairman Jim Kittle said. Because only some of its Indiana stores are open, with others expected to open later this month, it hasn’t yet returned to previous employment levels. More time to recall employees and still earn loan forgiveness would really help, Kittle said.
Kittle’s wouldn’t be alone. Yet, for many HFA members, that still wouldn’t be enough.
“At the same time, we need a long-term strategy to help businesses ramp back up in the second half of the year and provide some assurance they’ll be able to survive the uncertainty they face,” Bennet said in a news release. “Our new RESTART program will provide flexible funding with a longer repayment period to Main Street businesses that took a big financial hit, so they can relaunch and rehire their workers when it’s safe to do so.”
The Young and Bennet plan would “provide funding to cover the next six months of payroll, benefits and fixed operating expenses for businesses that have taken a substantial revenue hit during the COVID-19 pandemic,” the two senators said. “A share of that loan will be forgiven based on the revenue losses suffered by the business in 2020, and the remainder can be repaid over seven years, with no interest payments due in the first year and no principal due for the first two years. This program is designed to provide small- and medium-sized businesses with loans to get their businesses going again, and ensure that they receive loan forgiveness to help fill in a loss in revenues.”
New loan program allows flexibility
This loan, available to businesses with up to 5,000 employees, would be capped at 45 percent of 2019 gross receipts or $10 million. Funds could be used for:
- Total payroll (up to $100,000 per employee).
- Employee benefits (for both current and furloughed employees).
- Mortgage payments on existing mortgages as of Feb. 15, 2020.
- Other scheduled debt service, as of Feb. 15, 2020.
Loan forgiveness would be based on a formula including revenue loss and other factors. There would be no requirement to restore employment levels beyond what business conditions allow.
Bradley has written to Senators Young and Bennet thanking them for their efforts.
“I really appreciate that our Indiana Senator Todd Young is co-sponsoring this bipartisan effort for small business,” Kittle said.
Some details of their proposal could change during the legislative process, but this initiative answers some of the needs of HFA members who have found the PPP inadequate. The HFA encourages members to contact their senators and representatives and ask them to support this important RESTART. Contact information can be found here.
Model letter to your senator/representative
A model letter could say:
Dear Senator (or Representative) ________,
Thank you for your leadership and continued support of small and mid-sized businesses. We are all facing massive uncertainty as our country continues to recover from the COVID-19 pandemic.
I applied for a Paycheck Protection Program loan in hopes that it would help me keep my employees and cover other expenses during this crisis. Unfortunately, it required me to spend the loan funds during an eight-week period when my business was closed and there was little work for my employees to do. This really negates much of the value of this program.
The RESTART Act proposed by Republican Senator Todd Young and Democratic Senator Michael Bennet offers a better solution by adding eight more weeks to the time when PPP funds can be spent by businesses like mine that have seen a decline in revenue of 25 percent or more. The RESTART Act also includes a new lending initiative with longer maturity and realistic terms that can help my business recover over a period of years.
My business has provided good jobs, helped customers furnish their homes with quality products, paid taxes and supported community causes for many years. Now we need help to get through this terrible and unforeseen adversity. Please include the RESTART Act in the next coronavirus recovery bill so that I can restart my business with a fighting chance to succeed. Thank you.
HFA focuses on additional legislative priorities
HFA’s Government Relations Action Team identified three other legislative priorities:
- Liability protection for businesses from coronavirus-related claims.
- Changes to the implementation of the Employee Retention Tax Credit so that employers earn credit for the costs of employee health insurance.
- Forbearance for rent and lease payments.