IFA Gets Results During the COVID-19 Crisis
On March 25, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. Consisting of $2.2 trillion in emergency relief programs and liquidity, the CARES Act would be followed by the Consolidated Appropriations Act in December 2020 ($900 billion), and the American Rescue Plan in March 2021 ($1.9 trillion).
All told, federal emergency measures in response to the COVID-19 pandemic have exceeded the entire cost of the American war effort in the Second World War (over $5 trillion to roughly $4.5 trillion respectively). The scale of this mobilization of capital and resources cannot be understated.
Since the beginning of the pandemic, IFA's government relations team has secured critical results for the franchise sector in each round of these relief negotiations, as well as standalone measures. Through the work of IFA's team, members, leadership, and grassroots advocates in the Franchise Action Network (FAN), the franchise sector has received access to liquidity, tax incentives and credits, and other emergency components of COVID-19 relief totaling billions of dollars. These include:
Franchise Inclusion in the Paycheck Protection Program (PPP) (CARES Act)
Through the lobbying and advocacy efforts of IFA and FAN, franchise small businesses of most brands were eligible to receive PPP loans. Without this, franchise locations could have been discriminated against in the creation of the program, leaving over 700,000 franchise businesses to fend for themselves. FRANdata estimates that more than 75% of franchisees received federal pandemic relief funding through the PPP and other programs (EIDL, Main Street Lending, etc.). Inclusion in the PPP alone provided nearly $16 billion to franchise businesses, impacting more than 2.5 million jobs. This advocacy resulted in the average franchise small business receiving $80,000.00 in loans. FRANdata estimates that federal loan program efforts so far have saved more than 20,000 franchised small businesses from permanently closing, helping to preserve almost half-a-million jobs.
PPP Flexibility Act (June 2020)
IFA and FAN also worked with Congress in devising the PPP Flexibility Act, which lowered the revenue loss threshold for PPP applications and increased the limit on non-payroll expenses (rent, utilities, mortgages) from 25% to 40% of the loan amount.
Consolidated Appropriations Act (December 2020)
The $900 billion COVID-19 relief package that passed in December of last year followed months of IFA staff, IFA members, and FAN advocacy on behalf of franchise businesses. The bill contained major pro-franchise provisions, including:
PPP Tax Deductibility
- Allowed for full deductibility of business expenses on forgiven PPP loans for both "first" and "second" draw loans. The provision mirrored a bill IFA worked with Senator John Cornyn (R-TX) on, the Small Business ExpenseProtection Act.
2nd Draw of PPP Loans
- Provided an additional $284 billion in PPP loans. IFA also worked to ensure greater eligibility for second draws. While initial discussions in Congress and the Administration suggested a 50% or greater revenue decline threshold, through the efforts of IFA this was reduced to a 25% or greater revenue threshold, ensuring struggling franchise small businesses were able to access much-needed funds.
Enhanced PPP Forgivable Expenses
- Provided additional forgivable expenses for COVID-related expenditures, to include software, cloud computing, and other human resources and accounting needs; property damage due to public disturbances in 2020 not covered by insurance; covered supplier costs and PPE.
Other Enhancements and Benefits
- These included an extension of troubled debt restructuring, an extension ofSec. 1112 SBA coverage on principal and interest for 7(a) and 504 loans, enhancements to the 7(a) lending program, a repeal of EIDL advanced deductions, expansion and extension of the Employee Retention Tax Credit(ERTC), and an extension of the Work Opportunity Tax Credit (WOTC).
American Rescue Plan (March 2021)
IFA worked with the Biden administration and congressional allies on several provisions beneficial to franchises in the most recent COVID-19 relief package. These include an expansion of the Employee Retention Tax Credit to cover $7000 per employee per quarter, as well as the inclusion of franchise restaurants in the $28.6 billion "restaurant revitalization fund" included in the plan.
PPP Extension Act (March 2021)
IFA led a coalition of influential trade and business groups calling on Congress to extend the PPP application deadline beyond March 31 and is currently working with Congress on passage of the PPP Extension Act, which would extend the program through May.