Throughout the COVID-19 crisis, small businesses across the country have been severely impacted by a sharp decline in revenue. Thousands of small business owners have been forced to let go of their employees, leaving millions out of work. Many small business owners are finding it nearly impossible to keep up with rent, utilities and other expenses while bringing in limited or even no income.
As CEO of FASTSIGNS, and as the Chair of the International Franchise Association, I’ve witnessed these challenges firsthand for independent franchise owners. While franchises run under the same larger brand name, they are individually and independently owned, operated, and run as small businesses. While brands provide a certain amount of national support for their franchises, it is ultimately the independent small business owners who deal with the day-to-day operations, manage employees and contribute to their local economies.
Although the Paycheck Protection Program (PPP) was implemented just over two months ago with the intention of helping businesses stay afloat during stay-at-home orders, the PPP structure needed to change to live up to its potential to help small businesses. And thanks to Congress, it did.
The Paycheck Protection Program (PPP) Flexibility Act, which addresses these concerns, was just recently passed by Congress. The PPP Flexibility Act contains many of the changes that franchise owners across the country have been calling for to ensure their businesses survive. The bipartisan bill, sponsored by Reps. Chip Roy (R-Texas) and Dean Phillips (D-Minn.), provides needed flexibility not only for FASTSIGNS franchise owners, but for all the other thousands of small business franchisees across the country.
It’s clear that businesses needed this legislation. At the IFA, more than 5,600 of our franchise members contacted their elected officials in support of this bill, in addition to the scores of telephone town halls with our franchise owners and their members of Congress. Small businesses advocated for these simple, necessary and uncontroversial changes — which is why the bill passed with only one dissenting vote.
One of the newly passed changes allows forgiveness for expenses beyond the current eight-week period. Small businesses that have been required to close down or open at a limited capacity simply cannot be expected to return to normal income levels within the eight-week guideline. This much-needed fix to the current loan program allows businesses the chance to distribute funds throughout the crisis, until they are able to fully reopen.
Because they limit loan usage to 25 percent of non-payroll expenses, the former PPP guidelines did not always allow small businesses to sustain rent, mortgage and utilities. But under the PPP Flexibility Act, the small business owners I work with daily have more control over the loan’s use, instead of limiting non-payroll expenses to 25 percent. This change renders loans much more effective, allowing each individual business owner to properly allocate funding in the manner that best suits their situation.
Next, this bill extends the rehiring deadline, granting businesses more time to rehire workers and to ensure the jobs they return to are stable. The PPP Flexibility Act will defer payroll taxes for businesses that receive PPP loans, because maintaining revenue and a source of cash is crucial to supporting small businesses in surviving this crisis. The tax deferral allows them to stay in business, retain their employees and continue serving their communities.
In order to make it through this pandemic and its resulting challenges, small businesses desperately need further support from our government leaders, as the small business community assists nearly 60 million Americans with employment opportunities. Through the changes outlined in the newly passed PPP Flexibility Act, small businesses will be able to rehire employees, acquire a steady cash-flow, and distribute funds based on their needs, not on arbitrary or unrealistic requirements.
Just because states are slowly beginning to reopen does not mean the fight to keep our businesses alive is anywhere near over, however, thanks to Congress and their bipartisan efforts to provide funding for small businesses, the Paycheck Protection Flexibility Act was passed. This act of solidarity shows their commitment to the thousands of small businesses that are the backbone of the American economy and, in turn, keep our communities up and running. I appreciate Congress for their bipartisan efforts to pass this bill that will provide much-needed help to our small businesses throughout the country.
Catherine Monson is CEO of FASTSIGNS and chair of the International Franchise Association.