Today, U.S. Senator Kirsten Gillibrand urged passage of the bipartisan Reviving the Economy Sustainably Towards a Recovery in Twenty-Twenty (RESTART) Act to support live event venues and small- and mid-sized businesses that have been hit hardest by the coronavirus crisis. While the Paycheck Protection Program (PPP) was intended to help small- and mid-sized businesses weather the economic crisis, many have slipped through the cracks and are struggling to maintain operations and pay their employees. Theaters and live event venues, restaurants, and hospitality providers, in particular, have been largely unable to access PPP benefits despite unprecedented revenue losses since March. Across the country, independent venues are forecasted to lose almost $9 billion in revenue if the rest of 2020 remains dark. The majority expect to permanently close if shutdowns persist and no federal funding becomes available.
“Arts venues, restaurants, hospitality, and tourist attractions form the cornerstone of New York State’s regional economies. Upstate, historic live event venues are at risk of closure, and in New York City, nearly 90% of beloved neighborhood bars and restaurants had trouble paying their rent throughout the summer. These small businesses don’t just provide entertainment and culture, they provide countless jobs and sustain families throughout New York,” said Senator Gillibrand. “To help our economy recover, we must ensure these businesses survive. The PPP program did not do enough for those hit hardest by this crisis, but the RESTART Act would help fill the gaps and ensure they have the support and flexibility they need to recover and thrive.”
The PPP failed to account for the current realities of the hospitality and entertainment industries, requiring businesses to maintain their pre-pandemic employee headcount for up to 24 weeks. Senator Gillibrand is urging Congress to include the RESTART Act in the next coronavirus relief package to provide a lifeline for businesses unable to meet the requirements for PPP eligibility. The legislation would create a new loan program to fund 6 months of payroll, benefits, and fixed operating expenses for businesses that have lost substantial revenue due to the pandemic.
Specifically, the RESTART Act would:
- Provide access to loans to cover 6 months of payroll, benefits, and fixed operating expenses for small- and mid-sized businesses and nonprofits that have suffered significant revenue losses and would provide an extended 12-month covered loan period for businesses that have seen revenues decline by at least 80 percent;
- Forgive a share of loans based on revenue declines suffered by the recipient in 2020 (or during the six-month covered loan period) compared to a year earlier, with the remainder to be paid back over 7 years, with generous loan terms. Businesses with fewer than 5,000 employees would receive even more favorable terms on loan forgiveness;
- Offer more favorable loan terms to nonprofits, including a longer duration and a lower interest rate;
- Defer interest payments for the first year of the loan, and defer principal payments for the first 2 years, with additional deferral available to economically distressed firms;
- Build an origination fee structure designed to provide an incentive for banks and other financial institutions to assist the smallest businesses;
- Allow businesses to choose when to rehire their workers and when to deploy the capital;
- Provide a 100% loan guarantee from the federal government.
A one-pager on the RESTART Act can be found here.