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On Wednesday, April 1, the Minority Limousine Operators of America (MLOA) held another in their series of weekly calls designed to keep their members up to date on industry news in the wake of the COVID-19 crisis. MLOA President Darrell Anderson of A-National Limousine called the meeting to order with a moment of silence, to honor those in the industry and beyond who have lost love ones to the virus.
Ground transportation “Energizer Bunny” Matt Daus of Windels Marx was the meeting’s special guest. The attorney/transportation regulation specialist has been a constant fixture among webinars and conference calls during the past several weeks, breaking down the complexities of the government bills and regs into easy-to-understand bullet points. On Wednesday’s call, Daus focused on the recently passed CARES Act, and the Paycheck Protection Program (PPP) contained within.
Intended for companies with fewer than 500 employees, the PPP is a loan program through local lenders that provides businesses with payroll for their staff for eight weeks. Daus explained that the loan is essentially a “gift” from the government to help retain valuable employees. According to the SBA: “The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75 percent of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.” Ultimately, the goal of the PPP is to keep your staff, even during this slow period, to encourage a continuous workforce when the quarantines lift and it is safe to travel again. Aside from the low interest rate, the PPP is especially advantageous for small businesses as no personal guarantee is necessary. More details on the PPP can be found here and here.
While the PPP lets operators pay any member of their staff, Daus strongly advised that ICs not be included, as that can open owners up to employee classification suits down the line. However, ICs can apply for their own PPP loan after 4/10.
Since the funds are ultimately finite, Daus suggested that all operators apply as close to the April 3 start date as possible.
MLOA’s next call is scheduled for Wednesday, April 8 at 1 pm ET.
Visit mlooa.org for more information.
[04.02.20]
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The American Bus Association (ABA) applauded Congress for agreeing to a third COVID-19 economic relief package known as the CARES Act, but feels they missed the bus—literally.
In a statement from ABA President & CEO Peter Pantuso: “We appreciate the Congress and the Administration coming together to continue to help small businesses during this time of crisis. Of the 3,000 bus and motorcoach companies in the United States, 90 percent are small, family-owned business who have had to close their businesses during the COVID-19 crisis. ... ABA’s nearly 3,000 travel and tour members are mostly small businesses and many of the 2 million people who work in group travel industry are also are unemployed and the U.S. economy will lose $237 billion in economic value generated by the industry."
He continued: “Congress missed the bus. They completely ignored the motorcoach industry—the movers of America—while every other form of passenger transportation, i.e., airlines, Amtrak, and transit, have received more than $50 billion to save these industries. The bus and motorcoach industry connects cities; connects rural areas to urban centers, serves as the only means of intercity transportation in many parts of America; serves workers in every part of the country including commuters in urban environments and business campuses, mines, oilfield workers, etc.; serves the security and strategic needs of the country by moving troops and takes people out of harm’s way during hurricanes; connects families and friends; and brings travelers to tourist destinations economically when Americans do not have the access or the resources to use other modes of transportation. What will happen when disaster comes and there is no one to call? Congress needs to help the bus and motorcoach industry NOW!”
In a letter to members, Pantuso urged that there is still work to do, especially as Congressional leaders are back home in their districts for a few weeks during recess. As Congress will surely start deliberating a fourth stimulus package upon their return, ABA created a “tool kit” to help fight for the industry.
- Letter template to send to legislator; more information on taking action is available here
- Draft local press release to send to area media
- Use economic data to help you make your case (available to ABA members only); ABA Foundation’s economic data can be sorted by state, county and city
- According to the ABA, the motorcoach industry alone employees nearly 100,000 workers and moves about 600 million passengers annually—which is in line with domestic airlines’ trips
- ABA has also asked members to share videos with the association detailing their shutdown experiences, which should also be tweeted to Congress (find Twitter handles here)
“We are not asking for a $50 billion bailout. We are asking for grants and loans that will save this industry from collapse,” Pantuso said in a letter to members. “Know that we are not giving up the fight. We continue to work with our outside consultants, industry association colleagues, and you, to ring every phone on Capitol Hill.”
ABA’s frequently updated coronavirus resource page can be found here.
[03.31.20]
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Updated on 4/2 with clarification and new details on PPP.
NLA President Robert Alexander of RMA Worldwide hosted a Facebook live Monday afternoon with guests Matt Daus of Windels Marx, Bill Faeth of Limo University, and Louie Perry of Cornerstone Government Affairs, which serves as the association’s direct line to what’s happening in Washington. The full 1.5-hour session, which had nearly 500 participants and had a ton of great information for operators, can be viewed on the NLA’s Facebook page here.
The live session unpacked specific parts of the CARES Act, the unprecedented $2.2 trillion stimulus package (although some estimates have it at $2.6 trillion), with special emphasis on the Paycheck Protection Program (PPP). The loan program, which is facilitated through local lenders and has less strict criteria to qualify (such as no collateral) than traditional SBA loans, was intended for employers with under 500 employees to assist with payroll, mortgage interest or rent, and utilities during an eight-week period after funds are received.
Business owners, including Alexander, are rightfully concerned about being prepared for when the industry starts moving again, especially with so many chauffeurs and office staff furloughed or laid off throughout the industry. And with unemployment benefits that include an additional $600 per week on top of state benefits, he’s concerned that the industry may not be able to attract those employees back to work. Perry clarified that employees cannot collect unemployment or the additional benefits for a job left voluntarily, although it does offer protection to laid off employees to stay out of the workforce and healthy.
Alexander calls PPP “liquidity for your business” while Daus says “it’s a grant in disguise.” Faeth, who is also a small business owner, said that his takeaway from the call was to “rehire everyone at full salary because it’s eight weeks of payroll” after securing the funding to retain rock star employees who could be lost to other companies dafter the economy moves again.
PPP details
- Based on an average monthly payroll and benefits from March 2019-February 2020, a company can borrow up to 2.5 times that amount, capped at $10 million. Individual salaries are capped at $100,000 maximum.
- Loans are intended to keep employees, even if there is little work for the company or the employee is working in a different capacity than normal such as in work-from-home situations
- Loans may be used for payroll (including benefits), mortgage interest or rent, and utilities, and may be forgiven
- Home-based businesses may also apply
- It is based on Employer Identification Number (EIN) not the owner, so owners can apply if operating several different companies
- If workforce is reduced during that eight-week period beginning when the PPP was funded, then the amount of loan forgiveness is decreased accordingly. For example, if you estimated a $50,000 per month payroll when securing loans, but only paid $40,000 during the eight-week period, you would be required to repay the $10,000 difference
- Loan payments (if not forgiven) are deferred for a minimum of six months up to a year, with a 2-year repayment
- Check with your local SBA-preferred lender to apply
- The program currently runs through June 30; small businesses may apply with lenders starting April 3 while indepdendent contractors and self-employed individuals may apply starting April 10
- Additional resources are available on the NLA’s dedicated COVID-19 page here
- See PPP FAQs here
Independent contractors
What happens if you have ICs? Although Daus and Perry disagree slightly on the flexible interpretation of the law, Daus recommends NOT including ICs in the payroll calculation and letting them apply on their own as a small business for one specific reason: worker classification. With the continue spate of employee classification lawsuits, this could potentially be used at a future time to bolster an IC’s claim should classification be challenged.
PPP vs. EIDL
The SBA is also offering Economic Injury Disaster Loans (EIDLs), which are separate from the PPP. A key difference: There is currently no loan forgiveness with EIDLs. However, businesses can apply for both, but funds may not be used for the same thing (e.g., PPP can be used for payroll and rent, while EIDLs can be used for other business expenses such as vehicles and insurance). EIDLs also come with a low interest rate (3.75 percent) and have a repayment period up to 30 years. Loans are up to $2 million and first payment is deferred up to a year. Applicants may qualify for a $10,000 emergency grant even if they don’t qualify for other funds. Cornerstone has provided the highlights of the CARES Act here.
Other topics discussed
- Business interruption insurance has been widely reported to NOT apply to pandemics, although Daus notes that the federal government directed funds to cover acts of terrorism after 9/11. Developing.
- Check grants.gov for additional money (grant=no repayment in most cases) for small businesses. Also check state and county resources as the federal government is injecting money at the local level to ensure that markets come back strong.
- Ideas for keeping work-at-home employees active and engaged: Have them look into new cleaning materials for vehicles and offices and construct a post-coronavirus cleaning SOP as travel managers will likely demand that from our industry; training on every aspect of operations; keep up the marketing and plan for when the bans lift. Daus noted that the travel industry will be “going from green to clean,” referencing the sustainable options that corporations had previously expected from transportation providers.
- Alexander is optimistic about the future, although he is equally pragmatic that the industry will be leaner and more efficient. It’s imperative to keep those essential employees connected to the company, even if there is little business.
- Daus says that he and his team are available to address any issues that operators may have. He can be reached at mdaus@windelsmarx.com or 212.237.1106.
- Cornerstone has provided a thorough breakdown of
The NLA has compiled a tremendous resource page that includes a breakdown of the CARES Act and tons of other COVID-19 updates for keeping your business safe. Visit limo.org/page/COVID-19 frequently for the most up-to-date information.
[03.30.20]