Get That Loan
By James Thomsen
Since the 1960s, I’ve started and owned a bunch of businesses and managed others. I worked in retail stores, manufacturing, and sales; and managed a large corporate business as the president of VF International. After taking years off to travel, sail, and hike the John Muir Trail, I went back into the work world for a personal project: I wanted to reintroduce the Wilderness Experience Klettersack that we had made back in the early 1970s. Last year, I launched a successful Kickstarter campaign to get it done. My wife and I just returned from a trip to Patagonia on March 1, just in time for everything to shut down, when the Small Business Development Center (SBDC) for Central California if asked if I could work with some small businesses in the Eastern Sierra.
The SBDC network provides assistance to an estimated 1 million small businesses and aspiring entrepreneurs each year. Stressing client education, the SBDC, a partnership with the U.S. Small Business Administration (SBA), is the federal government’s largest and most successful management and technical assistance program for small businesses. It provides business consulting at no cost to qualified small business owners and key decision makers. The Central California SBDC network has five full-time centers serving 14 counties to provide businesses with expert consulting, workshops, and technical assistance. Consulting help from the SBDC is 100% free to small businesses.
LOANS
For the past month, the big focus for SBDC has been on cash flow and available government loans to help businesses survive. There are a number of loans out there, but the two main ones (and those receiving the most press coverage) are the Payroll Protection Plan Loan and the Economic Injury Disaster Loan.
The Economic Injury Disaster Loan (EIDL) is the best option to help small businesses survive. It’s a direct loan from the SBA. It also includes a grant, up to $10,000 (or $1,000 per employee as of Jan. 31) that does not have to be repaid. This money is being sent to businesses (often as a surprise when the money ends up in their bank account with no prior communication). The loan portion is calculated to give a business operating capital for six months and is a 3.75% 30-year loan. Over the past week or two, I have had a good number of these approved, up to $300,000.
The Payroll Protection Plan Loan (PPPL) is really a program to allow businesses to keep employees on the payroll, both for pay and, if it was part of the company’s program, their health insurance. These loans are funded by banks. The business applies at a bank (the best of their local banks where they may have a relationship.) If the bank approves it, then it gets sent to the SBA. The SBA will guarantee 100% of the loan, and the Federal Reserve will buy that loan so it does not reduce the lending ability of small banks.
The new stimulus bill sets aside $60 billion for rural, minority, and women-owned businesses. These loans are for two years at 1% interest. But if you follow the intent of the bill and use 75% of the money for payroll and 25% for rent and utilities, then the SBA will forgive the loan 100%.
STRATEGIC PLANNING
With these programs, it should be possible for many small businesses to at least survive. But, what next? After every economic problem (and this one is big!), a lot of businesses fail—but there are many who do survive. (My job is to get this number up as high as possible.) There are some that thrive. Major events like this pandemic always open up a lot of potential new areas for business. Finding those opportunities and being ready for them gives businesses a chance to come out on top.
Strategic planning is critical now. First, look at the next six months. At some point, things will open back up. Will your business be ready? Not if you don’t plan for it. We can watch some of the early states that are opening up to see the issues and the opportunities. Follow how others are doing it and learn from their mistakes. When it’s finally time to open back up, be ready with a plan. Don’t wait until then to decide if you need to redo your building layout and how you will do business.
What about in the longer term? First, this is something that businesses should be doing all the time—making long-term plans and goals. But so often, when there is so much work, future planning gets ignored. But now, you have time to think! Use this time to your advantage. Where do you want to be in three years? In five Years? What things can you do now to help reach those goals. This may turn out to be the best time ever to move toward those goals. Much of your current competition will be having problems. What can you do to come up on top?
If you want to take advantage of the free small business services that the SBDC offers, sign up here: ucmsbdc.ecenterdirect.com/signup.
Spin into the Hub: Outdoor Industry Association Has the Updates You Need
In mid-March, after stay-at-home orders were implemented across much of the country, OIA recognized the oncoming business challenges its member companies would face as supply chains and daily operations were affected. In response, the trade association stood up and has been updating its online COVID-19 Resource Hub with industry- and small-business relevant updates, including information about SBA loan programs, requirements for producing PPE, trade and commerce policy updates at the state and federal level, and more. In addition, OIA has hosted twice-weekly webinars on many of those topics and others as the situation evolves. Upcoming webinars and recordings of past webinars can be found on the hub: outdoorindustry.org/covid-19-resources-outdoor-industry
Online Education: Stand Up For Retail Webinars Offer Education and Strategy to Weather the COVID-19 Crisis
Outdoor Retailer is hosting a series of 10 webinars conducted by 10 experts with the intention of bringing you the tools you need to make it through the pandemic and to the other side. These presentations began on April 16 with “Realities Retailers Can Do Now to Help Protect Their Businesses Later,” presented by Nicole Leinbach Reyhle, a global retail thought leader who has worked with companies that include IBM, American Express, and Vend. Reyhle offered a full docket of strategies and information, including the fact that 65% of consumers have tried new brands during this crisis and 45% plan to stick with them. Other webinars have covered topics including the logistics of curbside pickup, and upcoming presentations will delve into rebuilding your retail shop, digital strategies, and supporting new customers. You can watch past webinars, see what’s on the docket, and register for upcoming presentations here: outdoorretailer.com/events-education/webinars.