By John McClelland, Ph.D.
ARA vice president for government affairs and chief economist
Last week at this time, I was hoping to have good news for the many American Rental Association (ARA) members who continue to struggle as the coronavirus (COVID-19) pandemic grips the United States. A week has passed and unfortunately, I do not have much good news to convey. Negotiations on the next coronavirus relief package have stalled and we currently do not expect a speedy resolution of the differences that exist within the Republican Senate Conference, let alone the wide gaps between Congress and the White House. Some of the big issues that need to be resolved before a bill can move through Congress are unemployment insurance, liability protection for businesses and other institutions, and aid to state and local governments.
With respect to small business issues, it seems certain that Congress will allow some small businesses to get a second draw of funds from the Paycheck Protection Program (PPP). However, eligibility requirements for a second draw of PPP loans have not been finalized. Then there is the question of how to make long-term capital available to small businesses that may not see meaningful revenues until sometime in 2021, like many ARA event rental businesses.
A proposal introduced by Sen. Marco Rubio (R-Fla.), Chair of the Senate Small Business Committee, establishes a long-term capital loan using the authority of the Small Business Administration’s 7(a) loan program that would allow small businesses with 500 or fewer employees who have lost 50 percent or more in revenues year-over-year to receive loans of up to $10 million or two times their annual revenues, whichever is less with a 20-year maturity and a 1 percent interest rate. However, to qualify for such a loan, a business must be located in and receive at least 50 percent of their revenues from a low-income census tract. The result of that last eligibility requirement is to eliminate virtually all ARA event rental businesses from the program. ARA intends to press for changes to this eligibility requirement so that all small businesses that have 500 or fewer employees and have lost at least 50 percent of their revenues year-over-year are eligible for the long-term low-interest loans proposed in Chairman Rubio’s legislation.
Going forward, it is our view that negotiations will continue, that an agreement will ultimately be reached, a relief package will be passed, and the president will sign it into law. However, predicting a timetable for this action is all but impossible at this time. If the developments of the past week are any indication, it could take several weeks at a minimum for an agreement to be reached and we may not see final passage of this legislation until sometime in September.
If you have not already been engaging with your members of Congress on the need for action to help your business survive, it is time to do so now. If you have engaged your members of Congress, it is time to redouble your efforts. Just go to ARAvotes.com and click on “Your Elected Officials” tab to find the phone numbers for your Senators and Representatives and call; tell them your story and let them know that your situation is urgent.
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