Tourism industry scrambles for government loans

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Lobbyists for the tourism industry are scrambling to secure a cut of the $500 billion that the federal government will use to greatly help big companies whose business has been paralyzed by the coronavirus pandemic.

The $500 billion “stabilization fund” - the most controversial component of Congress’ $2.2 trillion COVID-19 emergency monetary aid package referred to as the “CARES Act” - will be utilized to backstop up to $4 trillion worth of loans to large employers.

Decisions about how precisely to deploy that money will be largely up to U.S. Treasury Secretary Steven Mnuchin and the Federal Reserve. Congress set relatively few conditions: $25 billion is defined aside for passenger airlines, $4 billion is reserved for cargo airlines, and $17 billion is ticketed for “businesses critical to maintaining national security” - a carve-out widely thought to be mostly for beleaguered airplane-manufacturer Boeing Co.

The remaining money - at least $454 billion - is to subsidize loans to cities, states or any other U.S. businesses that have “otherwise not received sufficient economical relief” through other government programs.

In a letter this week to Mnuchin and Federal Reserve Chairman Jerome Powell, four leading tourism lobbying groups needed a dedicated fund especially for travel-dependent businesses.

They urged loans for theme park owners just like the Walt Disney Co., global hotel brands like Marriott International Inc., and casino operators like MGM Resorts International Inc. - together with hotel-owning real-estate investment trusts, hospitality management companies, transportation companies, restaurants, travel technology companies, retail and shopping centers, and events and convention industry companies.

“Our members’ usage of the program within the CARES Act is essential to their financial survival and capability to lead the economic recovery,” reads the letter, which is signed by the U.S. Travel Association, the American Hotel & Lodging Association, the Asian American Hotel Owners Association and the International Franchise Association.

Lawmakers rushed the mammoth CARES Act - which also contains rebate checks as high as $1,200 per adult for some Americans, a significant expansion of unemployment insurance, $350 billion in forgivable small business loans, and a huge selection of billions running a business tax breaks - through Congress the other day in just a matter of days.

But for businesses which may have been broadsided by the coronavirus, obtaining the bill through a divided Congress was only half the battle. Now industries and their lobbyists are working with officials in places just like the Treasury Department and the Small Business Administration to tailor the rules to the many emergency programs, which the Trump administration has vowed to get right up and running as quickly as possible.

“I think many people are hurting. But we will be pressing on Treasury and SBA and others in the federal government to prioritize those hardest-hit first,” said Tori Emerson Barnes, a lobbyist for the U.S. Travel Association.

Lobbyists for hotels and restaurants have already been working frantically with the SBA to guarantee the rules for a new forgivable loan program for smaller businesses - dubbed the “Paycheck Protection Program” - will make clear that companies that own multiple hotel or restaurant can be eligible for several loan.

The industry lobbied an exception to the SBA’s typical small company definition in to the CARES Act itself. However the wording is ambiguous and there are questions about how precisely administrators will interpret it, especially amid broader concerns that demand for the loans - which is for an amount add up to two-and-a-half times a company’s average monthly payroll - could quickly exceed the $350 billion in available funding.

“Our first priority is to be sure this PPP program really works the way we are looking for it to,” said Sean Kennedy, a lobbyist for the National Restaurant Association.
Source: https://www.baltimoresun.com

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