Macy MaxsonCoronavirus has hit American workers and business owners hard and nothing has been hit harder than the travel industry. Travel advisors must make necessary adjustments to keep their business alive and ready to catch travelers after the pandemic ends. One of the key areas is cash flow. We’ll take you through some items to consider when running your travel business.
1. Offer gift cards or credits to your clients
Many of you may have had to repay your commissions or have pending repayments for the trips your clients have canceled. Although this seems like a huge burden on top of everything else you have to do, try to change the way you approach it. Many travel vendors are lenient during this time, as they’re also struggling. To encourage your clients to book again with you, change the narrative of a negative balance with your commission to an air credit your client can use if they book with you.
2. Space out refunds
If you can space out the refunds your clients are asking for this will majorly impact your cash flow. If some travelers are okay with not getting their refund for 90 days, by all means, take them up on it! You want less cash coming out of your accounts as possible.
3. Take advantage of forbearance options
In response to the financial hardships Americans are facing for their businesses and personal finances, the government has announced plans that offer relief to many homeowners who aren’t able to keep up with their mortgage payments. Borrowers who have federally backed mortgages can request temporary loan forbearance for up to 180 days. You can also apply for an extension for up to another 180 days. Check with your lender to see if you qualify.
4. Cut costs
Focus on recurring monthly, quarterly, or annual expenses. Can you cut back on rent, payroll, or utilities? Are you spending money on subscriptions or services you’re not using or insurance you no longer need? Can you renegotiate the terms of outstanding loans or leases? Whatever is considered an unnecessary expense at this time, cut them out.
5. Unemployment
One of the major new benefits with the CARES Act is access to unemployment benefits to self-employed and IC workers. This is a major benefit because most workers on 1099 are not usually eligible for unemployment, but the CARES Act recognizes that this is a global pandemic and created an unprecedented need for relief for all types of workers.
Apply for unemployment through your state.
6. Tax payments
The IRS is offering COVID-19 relief to taxpayers. Deadlines to file and pay federal income taxes have been extended to July 15, 2020. You can talk to our accountant to determine the best approach for you and your business.
7. Take advantage of government loans and grants
The United States government has taken action to help Americans through the CARES Act where you can take advantage of different programs as a business owner. You can read what the CARES Act means for travel agents.
The Paycheck Protection Program
If you haven’t taken advantage of this program already, you should look into it. This program subsidizes employee and related expenses so you don’t have to layoff your employees. The loan can be partly or even entirely forgiven based on a complicated formula that essentially provides that the more employees you keep or bring back during the eight weeks after you receive the loan, the more the loan will be forgiven. Basically, keep yourself and your agents employed–and your loan could be forgiven.
Travel Advisors should find a local Small Business Development Center to better target which institution is best for them here.
SBA Economic Injury Disaster Loans
EIDL loans can be used for payment of fixed debts, payroll, accounts payable, employee sick leave, and other bills that cannot otherwise be paid. The CARES Act also permits applicants for EIDLs to request an advance of up to $10,000 from SBA that need not be repaid even if the applicant is subsequently denied.
Apply for the SBA loan through EIDL program here
8. Share kindness
This is an unprecedented time not only in the travel industry but across the globe. Businesses everywhere are struggling, Americans are struggling. There are tough decisions you have to make as a business owner, but make sure you do it in kindness. We’re all in this together.
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