As we continue to navigate the challenges presented by the coronavirus pandemic on our economy, I’m encouraged by the initial response from lawmakers who seem to be putting aside partisan differences to provide serious relief for workers and businesses.

The Paycheck Protection Program (PPP) was a great first step. However, it is becoming increasingly clear that we cannot simply stop there. More must be done.

We’ve been reaching out to and having productive conversations with our state and local leaders regarding our recommendations for legislation that will offer relief to employers like Convene and other small to medium-sized businesses that are the driving force behind our nation’s economy. With a staff of 200 people and a customer base that is over 50% small and medium-sized businesses, I have outlined a few of these ideas below in hopes that with an amplified voice, we can create the momentum needed to make these a reality.

Provide Rent Relief

For most businesses, payroll and rent are far and away their biggest expenses. If we want to keep companies afloat (and by extension their employees) during this time, it is essential that we address these issues.

So far, we’ve seen some states institute temporary bans on evictions and foreclosures. While these may keep people in their offices or places of business for now, they do not reduce overall rent or mortgage obligations. This is especially burdensome as some businesses, like Convene, have seen substantial reductions in revenue if not outright closure. Two possible solutions:

  • Establish an Emergency Rental Assistance Fund. This fund should extend to both residential rent and commercial rent and mortgages.
  • Establish a loan program similar to the Paycheck Protection Program. This program will be specifically directed at landlords who keep their tenants, both residential and commercial, who have been substantially affected by the COVID-19 pandemic in their homes and offices. 

Besides offering a much-needed expense relief, this will also allow businesses to return to normal operations (when it is safe) more quickly and put people back to work.

Expand and Revise PPP

The Paycheck Protection Program has been a huge help for businesses, allowing them to keep people on staff, but it has become clear that it must be extended and expanded. The initial funds were depleted in fewer than two weeks, and there have been several high profile stories of companies receiving funds that the program was not intended for. Lawmakers should appropriate $600 billion in additional funding for the PPP and extend the coverage period until December 2020. The growing reality is that many businesses will be nowhere near full operating capacity before the end of June, the current deadline to spend the PPP funds. Allowing loans to be retained until a full reopening takes place will stabilize the business and ensure that employees stay employed for the long term. Additionally, businesses should be able to apply for up to three loans from the PPP, including businesses with multiple locations, as provided under the CARES Act.

It is my belief that these loans should be permitted to cover both payroll and non-payroll costs. In order to achieve forgiveness, the Department of the Treasury mandated that 75% of the PPP loan must be spent on payroll. This makes the PPP impractical for helping businesses stay afloat, especially those businesses in the meetings and events industry that are currently either operating with a skeleton staff or are experiencing complete shutdowns due to social distancing guidelines in the interest of public health. 

Loan forgiveness should be based on a good faith effort to spend the required portion of the PPP funds on payroll, not predicated on strict compliance. For example, Convene intends to make $1.5 million in Section 139 disaster relief payments to its furloughed employees that it will not be able to count towards the PPP forgiveness amount, despite our plans to forgo the tax deduction for such payments. During these difficult times, companies are making quick decisions to remain solvent while supporting their employees, and this should be recognized when companies are applying for loan forgiveness. 

Finally, it’s vital that we allow taxpayers that receive loan forgiveness under the PPP to defer payroll taxes owed this year to the next two years, as provided under Section 2302 of the CARES Act. Without this exemption, many businesses will not have enough cash on hand to pay the federal payroll taxes connected to that compensation.

Support Pandemic Risk Insurance

Currently, business interruption insurance does not cover losses incurred due to a pandemic. Similar to the Terrorism Risk Insurance Act, which was enacted in 2002 after the 9/11 terrorist attacks, Congress should establish a program to serve as a federal backstop for pandemic losses. In exchange, insurers would agree to make available business interruption insurance for insured losses that does not differ materially from the terms, amounts and other coverage limitations applicable to losses arising from events other than public health emergencies. 

Prohibit Predatory Credit Card Processor Policies

Companies that process customer credit card payments on behalf of small businesses have the ability to unilaterally require such businesses to establish a “Reserve Account” in an amount determined by the processor, and withhold or delay the proceeds of credit card payments until the reserve amount is met. Often these reserve accounts are imposed with little to no notice nor explanation to the affected business. For businesses with few or zero clients, this represents an effective seizure of funds that are desperately needed to keep the lights on. Regulators should take swift action to prohibit these predatory practices, or provide alternative sources of support so that small business revenues are not used to backstop credit card processing risk. 

Building for Tomorrow

The time for federal investment in our economy is now. With bold legislation, we can provide the footing businesses need to recover from this downturn, provide well-paying jobs for citizens, and put us on the road to recovery.