As small businesses and live event venues struggle to recover from a summer of heavily limited operations, U.S. Sen. Kirsten E. Gillibrand, D-N.Y., is calling for legislation to create a new loan program to help them survive.
In a video news conference held Tuesday afternoon, Gillibrand proposed legislation, in the form of the Reviving the Economy Sustainably Towards a Recovery in Twenty-Twenty, dubbed the RESTART Act, that would create a new loan program to fund six months of employer and operating expenses for businesses that have lost substantial revenue and have been unable to access a lifeline through the Paycheck Protection Program.
While the PPP was intended to help small and mid-sized businesses weather the economic crisis brought on by the coronavirus pandemic, many have slipped through the cracks and are struggling to maintain operations and pay their employees.
“When New York made the difficult but necessary decision to go on pause, arts, tourism and hospitality went on pause too and they’ve not come back,” Gillibrand said. “Neither have many jobs in those industries. Art venues, restaurants and tourist attractions across the state are suffering.”
Theaters, live events, restaurants and hospitality make up a significant part of New York’s economy and have faced unprecedented revenue losses since March. Independent venues across the country have been forced to close during their peak seasons and are forecasted to lose almost $9 billion in revenue if the rest of 2020 continues in the same way.
The majority expect to permanently close if shutdowns persist and no federal funding becomes available.
To this end, Gillibrand has co-sponsored the bipartisan RESTART Act to support small and mid-sized businesses, calling for the inclusion of the act in the next COVID-19 relief package.
“PPP required businesses to maintain their pre-pandemic employee headcount for up to 24 weeks,” Gillibrand said. “Restaurants and entertainment venues can’t do that. They are either closed for the foreseeable future, or need fewer employees on site as they serve fewer customers to stay safe. That’s left them ineligible for relief. The RESTART Act would ensure they get the support they need and I’m proud to be joining my colleagues on both sides of the aisle in support of its inclusion in the next relief package.”
Gillibrand is among a group of more than 30 senators to co-sponsor the RESTART Act. Specifically, the RESTART Act would provide access to loans to cover six 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 revenue decline by at least 80%.
The act would also 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 seven years, with generous loan terms. Businesses with fewer than 5,000 employees would receive even more favorable terms on loan forgiveness.
The act would also 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 two 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; and provide a 100% loan guarantee from the federal government
“The reality is that COVID is going to be with us for a long time, and during that time, some businesses will not be able to operate at the scale they used to, if at all,” Gillibrand said. “We need to help them make it through. We all want to be able to go out to eat and to see concerts again when it’s safe. We need the restaurants and venues we love to still be there when that day comes.
“The RESTART Act will help them survive. I will continue fighting for a new relief package to be passed and for this legislation to be included,” she added.