A federal loan program shoring up some of the nation’s major airlines also helped a Northwest Arkansas travel company survive the pandemic.
The federal Coronavirus Aid, Relief, and Economic Security Act provided the U.S. Treasury Department with $500 billion for loans and other investments “to provide liquidity to eligible businesses, States, and municipalities related to losses incurred as a result of coronavirus.”
The law earmarked up to $25 billion of that money for a passenger airline industry loan program, which ultimately provided nearly $21.2 billion in low-interest loans for airlines, ticket agents and aircraft repair companies, according to a report released this week by the Congressional Oversight Commission.
Of that, more than $21 billion went to nine air carriers, with $7.5 billion of that going to American Airlines and $7.491 billion for United Airlines.
Fayetteville’s Bristin Travel LLC, which received a loan for $549,651, was one of two travel agencies nationwide to participate.
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Ovation Travel Group in New York City, which received a $20 million loan, was the other.
Bristin Travel’s founder, David Temple, says the loan, along with other government covid-19 programs, helped his company survive the roughest business climate he’s ever encountered.
With more than 100 trips to Mexico and the Caribbean under his belt, the 35-year-old businessman has made travel and tourism his mission.
Operating as BlueSun Vacations, his company arranges destination weddings and sunny respites.
Specializing in seaside destinations, its travel agents are referred to as BeachMasters.
After the coronavirus pandemic closed the country, “it was a nightmare,” Temple said.
Transportation Security Administration checkpoint travel numbers, which had been about 2.15 million passengers on March 31, 2019, fell to 136,023 on March 31, 2020.
Borders closed; overseas flights were canceled.
“I was in the industry during the Great Recession [of 2008-2009]. I went through some pretty challenging boom-and-bust cycles. This was completely unprecedented,” he said. “It wasn’t an off-ramp. You just fell off a cliff overnight.”
With customers canceling trips and credit evaporating, “my full-time job became ‘make sure we don’t run out of cash,'” he said.
“I applied to about 98 different loans, grants and government subsidized vehicles,” he said.
The Paycheck Protection Program, combined with the Small Business Administration’s Covid-19 Economic Injury Disaster Loan program, helped him avoid disaster, Temple said.
The Treasury Department-managed loan was fairly complex, Temple noted.
“As you’re picking up on, it was not created for small businesses like me,” he said.
He inquired about the loan in April, and it wasn’t finalized until October, he said.
It was an expensive process; Temple estimates he spent $25,000 on lawyers and accountants overall.
“The closing documents were 498 pages. The compliance documentation since getting the loan has been almost 2,000 pages,” he said.
“I’m sure I spent 100 hours, maybe 150 or 200 hours, on paperwork, correspondence [and] meetings,” he said.
“I didn’t really know or have any degree of confidence that we were going to get it until within days of actually receiving it,” he said.
The interest and fees on the loan will ultimately be about 6.75%, he said.
The loan’s maturity date is Oct. 26, 2025.
The Treasury Department will “get paid back, in whole, with interest,” he said. “It shouldn’t cost the U.S. taxpayer anything, and it saves all the jobs.”
The company now has 16 employees, including six who were hired this week, and the business is bouncing back, he said.
“It’s booming,” he said.
People are looking to travel over the summer and year-end trips are also heating up, he said.
The Transportation Security Administration reported 1,278,113 passengers at its checkpoints Wednesday — up from 136,023 on that same date a year ago.
The Treasury Department has closed the airline industry loan program.
U.S. Rep. French Hill, R-Ark., who serves on the bipartisan congressional oversight commission, said the program did what it was supposed to do, pointing to the revival in passenger travel.
A separate, $4 billion program provided loans and loan guarantees for air cargo companies.
“Congress’ airline and air cargo related program was extremely helpful for the airlines to weather this yearlong storm,” he said.
“In our view, it was accepted and used by airlines, and by air cargo companies pretty successfully,” he said.
Hill, a former Little Rock banker, was one of four people tapped to serve on the congressional oversight commission, a bipartisan body formed to monitor how the Treasury Department and the Federal Reserve utilize CARES Act funds.
The report can be found at: https://coc.senate.gov/sites/default/files/2021-03/March%20Report%2C%20Appendices%20v2.pdf