Implementation of CARES Act
The federal and state governments are working to implement the provisions of the CARES Act, signed by President Trump on 3/27/20. ACRA is following the implementation of the following CARES programs for its members:
- Payroll Protection Program (PPP)
CARES program for small businesses (500 or fewer employees) for SBA loans up to $10 million. Loans can be forgiven completely if the business maintains its workforce and uses the loan proceeds to pay wages (at least 75% of loan amount), rent, utilities and other approved expenses.
- Title IV Loan Facility for Small- and Mid-Sized Businesses
The Department of Treasury and the Federal Reserve Board are charged under CARES with establishing a loan or financing program for small- and medium-sized businesses (1 – 10,000 employees). The Fed on 4/9/20 issued a two “term sheets” for the “Main Street Program” new and expanded loan facility that all ACRA members should review to determine if it could assist your company weather the economic storm of the pandemic.
- Title IV Loan Facility for Large Businesses
For large businesses, CARES established a loan program to offset impacts of the pandemic. Treasury and the Fed provided guidance on this CARES Title IV program on 4/9/20 as well.
Next Steps for Congress and the Administration
- CARES 1.5
Treasury and congressional leaders have already signaled that the $350 billion for the PPP program and the $450 billion for the Title IV programs will be insufficient. Treasury is expected to ask that the PPP program be increased in size by $200 – 250 billion and the Title IV program be doubled in size. Congress is expected to take up a “CARES 1.5” bill the week of 4/20/20.
- CARES 2.0
With CARES 1.5 likely being an expansion of existing programs under the original CARES Act, Congress also is discussing a “CARES 2.0” stimulus bill with new policy initiatives. The timing for the CARES 2.0 is not yet clear.
ACRA Ideas on CARES 2.0
ACRA’s “COVID-19 Special Task Force”, appointed by ACRA’s President, has been discussing ideas for policy initiatives to assist the car rental industry specifically for CARES 2.0. Among the ideas being considered are:
- Tax credits for individuals and corporations to encourage them to start traveling again after the pandemic is over; e.g., 20% tax credit for airline tickets and 15% for hotels and car rentals:
- A vehicle buyback program similar to prior “cash for clunkers” programs;
- Protection for the industry from lawsuits alleging an individual contracted the virus during a rental;
- Federal pandemic business interruption insurance, similar to the terrorism insurance underwritten by the federal government after 9/11;
- Federal funding of relief from Minimum Annual Guarantees under airport concession agreements for all airport concessionaires); and,
- Establishment of a travel industry “rainy day fund” to prepare for future major travel industry disruptions like 9/11 and this pandemic.