Indie Labels

Take 1 Minute To Support Your Favorite Indie Artists And Their Teams NOW

In the next 60 seconds, you can support your favorite independent music at no cost. Yes, for FREE.

By following the link below you can contact Congress to help save your favorite independent artists and the teams that support them as well as the entire indie music ecosystem.

The National Independent Touring Organization (NITO) has come together to lobby for independent music industry professionals including artists, agents, managers, event staff and touring crew, by calling on Congress to provide relief to U.S. based small music businesses by including #RESTART Act (details below) on the next pandemic relief bill.

Congress returned to DC this week and will be working on a relief bill. So this is THE CRITICAL TIME to take 60 seconds to lend your support.

Go to the “Take Action” page on the NITO website to contact Congress in support of this act: https://nitolive.org/resources/take-action.

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This proposal, supported by NITO is before Congress now.

The RESTART Act

Senator Michael F. Bennet and Senator Todd Young

Near-Term Fix to the Paycheck Protection Program (PPP) for Hardest-Hit Businesses

Background: PPP has an 8-week “covered period” that begins immediately following the origination of a PPP loan. Payroll during this 8-week period is used to determine what amount of loan forgiveness a business receives. To receive the full forgiveness amount, businesses are required to rehire their full headcount by June 30, 2020, regardless of whether their business is anywhere near full capacity.

As funds were limited and there was much uncertainty, businesses rushed to apply and were unable to adjust the timing of their application to a point when they were actually prepared to relaunch their business. Many have
already laid off employees and are currently facing challenges to quickly rehire. Unfortunately, some businesses may be shuttered for most or even all of the 8-week period and may even be prohibited from operating at
anything near full capacity by June 30, making the decision to rehire employees for a short timeframe increasingly complex.

• Proposal: The RESTART Act proposes to extend the 8-week covered period to a 16-week period to allow the hardest-hit businesses that have seen revenues decline by at least 25% additional time to deploy PPP funds and meet the requirements for loan forgiveness.

Long-Term Strategy: The RESTART Program

Summary: The RESTART Act includes a new loan program to provide funding to cover 6 months of payroll, benefits, and fixed operating expenses for businesses that have taken a substantial revenue hit during the COVID-19 pandemic. A share of the loan will be forgiven based on the revenue losses suffered by the business in 2020 with the remainder to be repaid over 7 years. No interest payments are due in the first year, and no principal payments are due for the first two years. At its core, this program is designed to provide small-and medium-sized businesses with liquidity to get their businesses up and running again, and ensure that they receive loan forgiveness to help fill in the gap caused by revenue declines.

Terms of the RESTART Program

Eligibility: Businesses – including most nonprofits, veterans’ organizations, self-employed individuals, independent contractors, and Tribal business concerns – with fewer than 5,000 full-time equivalent employees are eligible. Businesses with fewer than 500 full-time equivalent employees will receive more generous loan forgiveness, and the structure of the program is designed to reach the smallest businesses. Borrowers will be required to self-certify a revenue loss of no less than 25% for any 8-week period between February 15, 2020 and July 31, 2020, relative to a comparable 8-week period in 2019 or between January 1, 2020 and March 31, 2020.

General Loan Terms:
• Maximum Loan Size: The RESTART loan is designed to finance the equivalent of 6-months’ worth of
fixed operating costs, benefits, and payroll, up to a maximum loan size capped at the lesser of 45% of
2019 gross receipts or $12 million.
• Interest Rates: The RESTART loan has a 7-year term. For the first 2 years, the loan will have a fixed interest rate between 2% and 4%. For years 3 through 7, the rate will be based on the Applicable Federal
Rate (AFR) plus a spread of 250 to 600 basis points based on revenue decline.
• Guarantee: The loan will be 100% guaranteed by the federal government.
• Payment Schedule: No principal payments are required for the first 24 months, and no interest payments are due for the first 12 months. Thus, no payments are due in the first year.
• Origination Fee Structure: Origination fees range from 3.75% to 0.75% depending on the loan size. The fee will not count toward the overall loan size, and the fee structure is designed to provide an incentive for banks and other financial institutions to assist the smallest businesses. For businesses with fewer than 500 full-time equivalent employees, 100% of the origination fee will be covered by the federal government. For larger businesses, 50% of the origination fee will be covered by the federal government for loans up to $10 million. Businesses may roll the non-federally-paid portion of the origination fee into the loan and it will not count toward the $12 million cap or other restrictions on loan size.

Permitted Expenses: A broad array of expenses can be paid for with a RESTART loan, including payroll, employee benefits, fixed operating expenses, personal protective equipment (PPE), accounts payable, and other
ordinary and necessary business expenses.

Forgivable Expenses: Certain permitted expenses are eligible for forgiveness. Based upon a business’s revenue declines from 2019 to 2020, a share of the loan used for the following expenses is eligible for forgiveness:
• Total payroll (up to $100k per employee);
• Employee benefits (for both current and furloughed employees);
• Rent;
• Utilities;
• Interest on mortgage payments existing as of February 15, 2020;
• Interest payments on other scheduled debt existing as of February 15, 2020; and
• Personal Protective Equipment (up to $5,000).
Prohibited Expenses: Borrowers are prohibited from using funds to:
• Purchase real estate;
• Pay interest or principal payments on loans originating after February 15, 2020;
• Invest or re-lend funds; or
• Contribute to, or on behalf of, any political party, party committee, or candidate for elective office.

Forgiveness Terms: The level of forgiveness is based on the losses in revenues and may be applied for within 2 years of loan origination.

For smaller business (< 500 employees), forgiveness will be based on the following formula:

Forgiveness = (1 −2020 Gross Receipts 2019 Gross Reciepts ) ∗ 0. 90 ∗ (Payroll + Benefits + Operating Costs)

Larger businesses (500 < X ≤ 5,000 employees) will do the same but exclude the cost of payroll: Forgiveness = (1 − 2020 Gross Receipts
2019 Gross Reciepts ) ∗ 0. 90 ∗ (Benefits + Operating Costs) In either case, comparisons between 2020 and 2019 gross receipts will either be between the full calendar years or between the RESTART loan’s 6-month covered period and a comparable 6-month period a year earlier. Forgiveness Restrictions: Publicly-traded companies are not eligible for loan forgiveness.

Nonprofits: All eligible nonprofits will have access to a loan with more favorable terms than businesses, including a longer duration of up to 10 years and a lower interest for the first 4 years. Alternatively, nonprofits
with up to 500 employees are provided an option for loan forgiveness, with the remaining loan subject to the same terms as businesses.

Application Process: Once the RESTART Act is passed into law, Treasury and the Small Business Administration (SBA) will have 15 days to stand up the program. Borrowers will apply at their local bank, credit union, or Community Development Financial Institution (CDFI). Small businesses and small banks – including CDFIs and minority depository institutions (MDIs) – will receive set-asides to ensure that the funding reaches the smallest and most underserved businesses.

Lender Protections: Lenders will be held harmless for relying on a borrower’s documentation and attestation.

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