How the Covid-19 Relief Package Impacts Business Decisions for Outdoor Recreation Outfitters

The CARES Act, frequently referred to as Covid III, is the third bill in three weeks passed by Congress to address the coronavirus crisis in the U.S. These acts have significant ramifications, both beneficial and problematic, for seasonal commercial outfitters:

  • The Families First Coronavirus Response Act, HR 6201, focuses on protecting the American worker by expanding federal benefits, such as paid sick leave and extended family and medical leave.

  • The Coronavirus Aid, Relief, and Economic Security Act, the CARES Act (HR 748) which passed on March 27, 2020, focuses on increasing the scope, size, and accessibility of disaster assistance loans to small businesses, allows partial loan forgiveness for payroll expenses, and increases the unemployment benefit for a four-month period.

The Small Business Administration has 15 days to issue regulations based on the CARES Act. Outfitters may want to hold off on applying for a loan until the SBA has a chance to update its application process to fit the coronavirus response and the more broadly available loans.

Understanding the CARES Act

Borrowed from Bryan Cave Leighton Paisner, LLC

For eligible small businesses, sole proprietors, independent contractors, and other self-employed individuals, the CARES Act provides $349 billion through federally backed loans under a modified and expanded Small Business Administration (SBA) 7(a) loan guaranty program. Borrowers are eligible for loan forgiveness for the first 8 weeks of the loan. The SBA’s existing 7(a) program will see an increase in maximum loan amount to $10 million, a much larger lending pool, and an expansion of allowable uses for loans to include:

  • Payroll support (including paid sick or medical leave);

  • Employee salaries;

  • Mortgage, rent and utility payments;

  • Insurance premiums; and

  • Other debt obligations.

Loan Forgiveness 

Certain borrowers would be eligible for loan forgiveness equal to the amount spent during an eight-week period after the origination date of the loan to offset expenses incurred for:

  • Payroll costs;

  • Interest payment on any mortgage incurred before Feb. 15, 2020;

  • Rent on any lease in force before Feb. 15, 2020; and

  • Utilities for which service began before Feb. 15, 2020.

The amount forgiven will be lowered in proportion to a reduction in employees retained compared to the prior year and to the reduction in pay of any employee beyond 25% of the prior year’s compensation. Borrowers that rehire workers previously laid off will not be penalized for having reduced payroll at the beginning of the period.

An outfitter who was denied an SBA loan last week may be eligible for a new loan this week. Though credit ratings, proof of profitability, and other requirements remain the same, the CARES Act relaxes other requirements:

  • No personal or collateral guarantee will be required.

  • The eligible recipient does not have to certify that it is unable to obtain credit elsewhere.

Loan forgiveness will be limited to the payment of certain types of permitted expenses incurred before the covered period started and paid after the loan was secured. Rental payment under a lease in effect as of January 1, 2020, would be eligible for forgiveness while rental payment under a lease effective as of March 15, 2020, would not. Eligible payroll costs do not include compensation above $100,000.

Any loan amount not forgiven at the end of one year is carried forward as an ongoing loan with a maximum term of 10 years and a maximum interest rate of 4%. Detailed accounting and complete and accurate recordkeeping will be vital to taking advantage of these provisions.

Maximum Loan Amount

The maximum loan amount is the lesser of $10 million or the product obtained by multiplying average total monthly payments for payroll costs during the 1-year period before the loan is made by 2.5.  So, if the loan was made on April 1, 2020, and average monthly payroll costs for the period April 1, 2019, to April 1, 2020, were $1,500,000, the maximum loan amount would be $3,750,000. The loan can also include the outstanding amount of a loan made under the SBA’s Disaster Loan Program between January 31, 2020, and the date on which such loan may be refinanced as part of this new program.

Loan Period

Under the CARES Act, the loan period for this program would begin on February 15, 2020, and end on December 31, 2020, during which time an application must be submitted. The program would cover businesses with fewer than 500 employees.


For those who lost employment because of the pandemic, the measure provides robust unemployment insurance, including for self-employed, independent contractors, and those with limited work history. The assistance will include an additional $600 per week for each recipient and provides an additional 13 weeks of benefits to those who remain unemployed after state unemployment benefits are no longer available.

Source: Breakdown of the COVID-19 Relief Bill Passed in the House

Families First Coronavirus Response Act and the Family Medical Leave Act

Payroll also factored significantly into the second coronavirus relief bill that passed on March 18, 2020. Within it, small businesses with 500 employees or less are directed to offset payroll costs with a tax credit. In addition, federal sick leave and family medical leave programs are significantly expanded.

FMLA is typically unpaid leave, but the Families First Coronavirus Response Act provides 80 hours of paid coronavirus-based leave. The first 14 days of leave may be unpaid, but an employee can choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during the leave. The employer cannot force an employee to use their accrued paid leave.


In Conclusion

As we gain more insight into the nuance of the work for Congress, we will be sharing that information broadly. If you have a resource that you think would benefit your fellow outfitters, send it to America Outdoors and we will add it to our ever-growing collection of community resources.


Website Links:

Department of Labor Wage & Hour Division Pandemic Resources

OSHA Guidance

Outdoor Recreation Roundtable Resource Page

America’s Small Business Development Center Network Coronavirus resource page

SBA Disaster Loans


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Mary Oswald
Durango, CO
3/27/2020 08:01 PM

  Thank you for your timely, well-researched article. Question: as the owner of a business ( an s-corp so i pay into unemployment including for myself) should i apply for unemployment insurance, which i was planning on doing, or will that affect negatively my ability to qualify for loan forgiveness which I'm hoping to get for payroll for my staff as well as rent. In other words, I understand that, in order to qualify for loan forgiveness, emplyees hours and wages cannot be reduced, but are the owners of business counted in that qualification?

America Outdoors
Knoxville, TN
3/30/2020 02:56 PM

  Thanks for asking, Mary, that is a great question. We are researching it and will get back to you.. Joy: We are trying to find the right resource to get them answered well. The C.A.R.E.S. Act has some complexity to it, though there is some consideration for seasonal outfitters, that will apply differently to AO members then it will to other businesses. This is a tentative answer, based on our preliminary reading of how the bill applies to what it describes as a seasonal operator. You can get a loan for up to 2.5X your average total monthly payments for payroll for the 12-week period beginning 2/15/19 and ending 6/30/19. That loan may be used to cover payroll, employee benefits, salaries, mortgage interests, rent, utilities, and interest on existing debts. The portion of the loan that was used to cover payroll costs, mortgage interests, rent, and utilities is eligible for forgiveness. The way the C.A.R.E.S. Act reads, The amount of loan forgiveness will be reduced by the amount of reduction in total salary or wages if it is more that 25% less than the employee’s most recent full quarter. The amount of the loan to be forgiven will be reduced by this year’s average payroll divided by last year’s average payroll for the same 2/15 – 6/30 period, so there is a penalty for not hiring at last year’s level on a sliding scale.

Joy Staveley
flagstaff, AZ
3/27/2020 07:14 PM

  I am unclear about who qualifies for the loan forgiveness and the amount the loan can be for. Are Grand Canyon river outfitters eligible if they do not lay off any employees on their payroll as of March 27, 2020? Will the loan cover payroll, property taxes, insurance, utilities, equipment and supply purchases? Will the entire amount of these expenses be forgiven?