As the timeline for reopening the economy remains uncertain, the retail sector is pushing the federal government to do more to bolster the industry.
On Thursday, the American Apparel and Footwear Association (AAFA), the Council of Fashion Designers of America (CFDA) and the Travel Goods Association detailed recommendations for further stimulus measures to aid U.S. businesses suffering amid the coronavirus outbreak.
In a letter to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, House Minority Leader Kevin McCarthy, and Senate Minority Leader Charles Schumer, the trade groups requested revisions to programs developed under the CARES Act, as well as new trade policy programs and tax credits.
The letter writers, including AAFA president and CEO Steve Lamar, CFDA president and CEO Steven Kolb and Travel Goods Association president and CEO Michele Marini Pittenger suggested modifications to the CARES Act’s Paycheck Protection Program (PPP) that would allow businesses to utilize loan funding for more than payroll, rent and utilities.
They asked that the law be amended to include payments to vendors, and also requested that eligibility for PPP loans be opened up to Section 501(c)(6) organizations, the internal revenue code that encompasses most trade associations.
Finally, the groups asked that the Small Business Administration adopt “the most lenient view possible” in administering affiliation rules, a complicated and, in their view, flawed mechanism for determining a company’s headcount.
Current practices stipulate that companies with private equity or venture capital majority ownership could be disqualified due to the strict under-500-employee rule that designates them as small businesses. Lumping in these stakeholders or their affiliated businesses as part of headcount could prevent small brands from having access to the funding they need, the groups argued.
The letter also included a request for an extension of duty payment deferrals, and asked that a wider range of products, like those hit with punitive tariffs under Section 301 last year, be included in the measure, along with some positive trade incentives.
Renewing the Caribbean Basin Trade Partnership Act and the Generalized System of Preferences would also provide trade advantages to countries that meet specific requirements, giving American firms more healthy avenues to do business, they said.
Looking forward to the coming months, Lamar, Kolb and Pittenger asked for an expansion of tax credits, business interruption insurance and liability protection, along with support for childcare funding that would allow parents to get back to work even as schools are out of session.
“The COVID-19 pandemic is a health crisis that is leaving an economic crisis in its wake,” Lamar said. “As companies have closed stores and limited operations in line with public health guidance to protect workers and consumers, they have been unable to bring in the revenue they need to pay their employees and the bills that come with running a business.”
The CARES Act has provided some liquidity and cash flow, he said, but more needs to be done to support factories and supply chains on the front lines of production for personal protective equipment. The letter is intended to provide congressional leadership with an overview of what AAFA’s members need as they move to reintegrate their employees into the workforce, he added.
“As fashion and retail look to reopen in the near future, the ability to rehire workers is critical,” CFDA’s Kolb echoed. “There is more that Washington can do, starting with changes to the CARES Act while considering other steps outlined by our organizations.”
The Travel Goods Association’s Pittenger argued that its members faced the unique challenge of “staying afloat while virtually all travel is banned and retail is shut down.”
Small, mostly family-owned businesses make up the association’s membership, she said, supporting 100,000 American workers through the crafting and marketing of luggage, totes, backpacks, handbags and more. The current crisis has all but halted the sales of those goods, she said.
“This letter includes practical measures that can help our industry to survive now and assist us to get to the other side of this crisis,” she added. “Now is not the time to leave any tools in the toolbox, especially when so many jobs are at stake.”