Surly Thread of Business Owners/Managers, Etc. & Current Business Climate

[VABuckeye 2472]

Fortunately most of my invoices are currently with a company that's a great payer and relies heavily on us.  They're also a multi-billion dollar company so hopefully they are liquid enough.

Yeah, I know it hasn't passed.  The slow paying of the process and the special interest addons have pissed me off.

[Jiggy-Z 3432]

37 minutes ago, landman said:

Is any aspect of the project public works, i.e. water main work, installing a water line for a meter, repairing a public road, etc.?  

The stop work order says if a project has any public work aspect to it, then the entire project is exempt.  That's what we and our contractors are following.  Understanding that getting inspections will likely still be a problem.

Yes there is Right of way work later in the project.  Approaches, ADA, Curb and Gutter, and Sidewalk...and there is also water quality ordinance work related to the detention pond.  Does all of those count?

[Wally Pryor 5261]

16 minutes ago, Cheeseweasel said:

Keep in mind the bill hasn't passed yet, so who knows? Having solid receivables is a double edged sword right now. I love the thought of cash coming in, but I have a feeling "slow pay" is going to become the norm.

It's already started. 

[Spaulding Smails 1552]

2 hours ago, VABuckeye said:

Yesterday there was a portal open to apply for SBA disaster loan assistance online.  Clicking on the link today takes one to a page where the application can be downloaded to be printed, filled out and mailed in.  Yeah, that's going to be an efficient process.  Furk.

My banker just sent me a summary.  I've never really considered an SBA loan, but this one may be pretty enticing.  I'll be curious to see what type of conditions accompany it.  But, on the surface, it seems to be a pretty solid deal that would help a ton. 

[Spaulding Smails 1552]

Below is the SBA summary that my banker sent over.

Paycheck Protection Plan (part of the H.R. 748)
** The Bill has passed the Senate and is set to be voted on in the House on Friday (3/27). The President will need to
sign, then the Bank will need to receive implementation guidance from the SBA before the program is available to our
customers. **
Key Program Details (subject to change prior to final Government approval):
Eligibility –
Small businesses, non-profits, self-employed, and independent contractors.
(Churches and/or religious affiliated businesses MAY qualify – details to come)
Must meet SBA Size Standards (based on NAICS Code of subject business).
Loan Amount –
Lesser of $10MM OR any outstanding balance on SBA Disaster Relief loans obtained between January 31, 2020 through
date debt is eligible to be refinanced (information included within your Disaster Relief loan documents) PLUS:
Existing Business:
2.5x the average monthly payroll cost incurred and paid over the year prior
New Business (less than 1 year):
2.5x the average of 2 months payroll from January 1 st to February 29 th , 2020
Seasonal Business:
2.5x the average of monthly payroll from February 15 th or March 1 st , 2019 through June 30, 2019.
*Payroll costs include salary, wages, and payment of cash tips, employee group health care benefits, including
insurance premiums; retirement contributions; and covered leave. Salaries/Wages over $100,000 per employee
will not be included.
Loan Requirements -
No Personal Guaranty
No Collateral Requirements
$0 Guaranty Fee
Business must certify loan is necessary to continue to operate, retain their employees, and/or make mortgage and utility
payments and that you have not applied or received another 7(a) loan for similar purposes.
Loan Forgiveness –
Calculated based on payroll costs, mortgage interest, rent, utilities for the 8 week period paid after loan origination.
Payroll costs over $100,000 per employee will not be considered in the forgiveness application.
*Amount will be reduced if the # of employees used to determine loan amount is decreased or salary expense is
reduced*
Business must certify funds were utilized to keep business operational and retain/pay employees.

[Cheeseweasel 26438]

4 minutes ago, Spaulding Smails said:

My banker just sent me a summary.  I've never really considered an SBA loan, but this one may be pretty enticing.  I'll be curious to see what type of conditions accompany it.  But, on the surface, it seems to be a pretty solid deal that would help a ton. 

We run a decent size line of credit that is higher than I'd like it to be right now. Worse case, we'll use the SBA to pay of the LOC and if the Fed writes off the SBC loan, we'll be great.

[landman 559]

29 minutes ago, Jiggy-Z said:

Yes there is Right of way work later in the project.  Approaches, ADA, Curb and Gutter, and Sidewalk...and there is also water quality ordinance work related to the detention pond.  Does all of those count?

We believe so, as do our contractors.  Those items would be inspected by the city and inspection fees would have been paid to the City.

[G650 14229]

11 minutes ago, Cheeseweasel said:

We run a decent size line of credit that is higher than I'd like it to be right now. Worse case, we'll use the SBA to pay of the LOC and if the Fed writes off the SBC loan, we'll be great.

My thinking as well, though I had already paid my LOC down (I usually don't run anything on it, prefer fixed loans for CapEx just for planning purposes). But if we can wipe out a bunch of overhead and fund payroll with Fed forgiveness that would be a homerun.

[Jiggy-Z 3432]

2 minutes ago, landman said:

We believe so, as do our contractors.  Those items would be inspected by the city and inspection fees would have been paid to the City.

My GC talked to inspectors this afternoon.  They all said no problem.  Issue was mainly with downtown jobs, interior work, crowded job sites etc.

[VABuckeye 2472]

I'd like to wipe out some overhead as well but the 2.5 months payroll plus health insurance premiums (I pay 100% of the premium for everyone) would be huge for us.

[Cheeseweasel 26438]

2 minutes ago, VABuckeye said:

I'd like to wipe out some overhead as well but the 2.5 months payroll plus health insurance premiums (I pay 100% of the premium for everyone) would be huge for us.

It's huge for everyone. No politics but it's a great move in this bill to cover this as it will assure many companies keep employees employed. 

[G650 14229]

8 minutes ago, Cheeseweasel said:

It's huge for everyone. No politics but it's a great move in this bill to cover this as it will assure many companies keep employees employed. 

Goal #1 to keep economy from depression. Keep consumers spending.

[G650 14229]

14 minutes ago, VABuckeye said:

(I pay 100% of the premium for everyone

Damn. You hiring?

[VABuckeye 2472]

Just something I do to keep good people.  Skilled tradesmen that give a shit are hard to find.  I just pay for the employee.  If there's a family they foot that bill.

 

ETA: It's something we will revisit as we grow.

Edited March 26, 2020 by VABuckeye

[G650 14229]

Just now, VABuckeye said:

Just something I do to keep good people.  Skilled tradesmen that give a shit are hard to find.  I just pay for the employee.  If there's a family they foot that bill.

For sure. We have a graduated scale, probably net more than paying 100% employee only as I split a lot of family coverage. Our basic laborer is 50% employee only, my top super is 100% family.

[Cheeseweasel 26438]

20 minutes ago, G650 said:

Goal #1 to keep economy from depression. Keep consumers spending.

Yup. Happy workers make good consumers.

[Wulaw Horn 19063]

39 minutes ago, Cheeseweasel said:

It's huge for everyone. No politics but it's a great move in this bill to cover this as it will assure many companies keep employees employed. 

I’m white frankly absolutely stunned at how good the economic recovery bill is. Just seems really really well designed to keep people working- if that happens this country will be fine and we will see the hopes for V shaped recovery. Incredibly impressed by the White House and both sides in the Senate to get this done. 

Edited March 26, 2020 by Wulaw Horn

[Cheeseweasel 26438]

11 minutes ago, Wulaw Horn said:

I’m white frankly absolutely stunned at how good the economic recovery bill is. Just seems really really well designed to keep people working- if that happens this country will be fine and we will see the hopes for V shaped recovery. Incredibly impressed by the White House and both sides in the Senate to get this done. 

Same. It's got pork but I'm not naive enough to think it would ever be a clean bill. This is a once in a generation problem that took a once in a generation solution. I hope it works.

[VABuckeye 2472]

Quote

I’m white

Shhh, #MeToo

[VABuckeye 2472]

I hope it works as well.  I also hope they get this thing under control in the next month or two or they'll be doing it again.

[RollLeft 5040]

1 hour ago, Cheeseweasel said:

We run a decent size line of credit that is higher than I'd like it to be right now. Worse case, we'll use the SBA to pay of the LOC and if the Fed writes off the SBC loan, we'll be great.

Yeah, well i'm sure some will use the LOC to pay down all kinds of debt even long term debt (which you can't use the loan for) and get better terms.  Just my balance sheet mind swirling.  

[Cheeseweasel 26438]

1 minute ago, RollLeft said:

Yeah, well i'm sure some will use the LOC to pay down all kinds of debt even long term debt (which you can't use the loan for) and get better terms.  Just my balance sheet mind swirling.  

Should matter on the balance sheet. Just swapping short term debt for short term debt. LOC rates are higher than most LTD so it would be fooling to use LOC to pay LTD.

[Wulaw Horn 19063]

15 minutes ago, VABuckeye said:

Shhh, #MeToo

Fucking auto correct and fat fingers got me there. 

[RollLeft 5040]

19 minutes ago, Cheeseweasel said:

Should matter on the balance sheet. Just swapping short term debt for short term debt. LOC rates are higher than most LTD so it would be fooling to use LOC to pay LTD.

Hence why you would pay off the LOC, as you suggested, using the new sba loan.  Eg. Equipment or paying any long term debt with bad terms put on the LOC also with bad terms but that can be paid due to being short term, with SBA.  Its not for everyone but certainly a play that i'm certain will happen.     

Edited March 26, 2020 by RollLeft

[VABuckeye 2472]

There will be accountability. We do federal jobs with certified payroll that we have to document.  I’m sure the same protocol will be in effects for these loans for them to be forgiven. 

[Dbeasy 15039]

I’m bracing for the fallout from the rest of the economy. My company sells to enterprise companies. When commercial construction stops, and enterprises buckle down, companies put purchase of our software and hardware on hold. I’m readying draconian actions to keep the business funded.

[G650 14229]

16 minutes ago, VABuckeye said:

There will be accountability. We do federal jobs with certified payroll that we have to document.  I’m sure the same protocol will be in effects for these loans for them to be forgiven. 

I actually anticipate this being a little more loose. Not free for all or anything, but not like turning in daily certified payroll.

[staboner 4969]

business owner here. Started my own company in Oct 2019. March was month 6 and our forecasted onboarding of first round of clients.  HAHA. well done, thats my sad story. I am trying to figure out how to keep pipeline warm. 

We sell a highend consultancy to the C-level - CEO, CIO, CMO, etc. Problem is most of them are in free fall and letting people go. Have their own issues. So trying to manage how to gently interact with them through this. Get the timing right and find the right client, in the right place, that is ready to think about the future. 

I am in analytics and the underlying health for our business is super strong. So its all good, but just hard to maintain confidence, company morale (my partners), and a positive healthy image to our customers as they go through their own panic. 

Hard times friends

[Wulaw Horn 19063]

18 minutes ago, Dbeasy said:

I’m bracing for the fallout from the rest of the economy. My company sells to enterprise companies. When commercial construction stops, and enterprises buckle down, companies put purchase of our software and hardware on hold. I’m readying draconian actions to keep the business funded.

Yeah- this is why I’ve been so bearish on what’s coming- but do have some hope as it relates to this recovery with 2 trillion- basically the US GDP is what- 19 or 20 trillion a year- and we are looking at loss of production if this thing opens back up around May 1 of what- 6 weeks?  8 weeks? It’s not

like the economy is shutting down to zero at this time- we are probably only off like 25 or 30% of our normal GDP during that time- so call it what- 700 billion out of the economy during the shut down?  2 trillion ought to help with deflation and the things being geared toward keeping people on the job ought to do the same. 

Americans have shown if you put money in our hands through jobs or rebates or government incentives we will spend 108% of what we get our hands on- so this is a good plan to combat unemployment and deflation.

 

if you can hold off on those things everything else fixes itself. But yeah-‘those kind of fall outs are going to be a bitch and require a lot of help to keep/get out of the ditch. 

 

Good luck man. 

[Zombie 284]

I'm in a weird position in that I'm a commercial landlord in downtown SA. I've deferred the rent for April for a number of small tenants in a warehouse I converted into office/retail suites. I have two tenants that occupy four suites, one a coffee shop cafe with a beer/wine license that is under construction (about 90% complete) and has two combined suites and the other an upscale bar (full liquor license) that has two combined suites, with each business having about 2,800 sq ft. I've deferred their rent for April and would probably do the same for May because I'd like them to be successful and keep paying rent. But I can't keep doing that indefinitely with my note, taxes, and building maintenance I need to pay.

So I'm game planning for the event that either or both decide to throw in the towel and how to handle that. I'm not one to sue for all rent due and that kind of thing. If a business fails,  I let them out of their lease as long as they leave the space as is and don't remove fixtures so the space can be re-leased as the same type of business. I have enough savings to carry my expenses for a year or so. So one option is I can try to find same the type of tenants to take over those suites. As one is fully built out and the other nearly built out, this may be a good option. But I'm wondering if it makes sense to just take over those businesses myself and hire managers etc..to run them on some kind of profit sharing model so I don't have to outlay cash. In good times I think both businesses could be very lucrative and produce revenue way beyond the rents. The area around is/was booming with new apartment and office buildings. I prefer passive income to being directly involved in businesses, but this economic environment may force my hand. Anyways, just thinking out loud about how to handle this mess.    

[Nueces River Rat 5537]

5 hours ago, Cheeseweasel said:

We run a decent size line of credit that is higher than I'd like it to be right now. Worse case, we'll use the SBA to pay of the LOC and if the Fed writes off the SBC loan, we'll be great.

That's what I'm thinking about doing.  I thinking about doing even if I can get the  3.25 fixed rate loan I saw on another  info bulletin.   

[Brew 3049]

This has been a pretty shitty deal which is really an understatement. We let all of our interns and part time people go this week because the workload isn’t their to support them and with the 7/15 deadline it’s not going to be. Clients are freaked out, there is a shit ton of misinformation out about what the government is doing, everyone’s neighbor is an expert now, clients are shutting down/laying off people/etc, and the hole the federal government is about to dig is going to put a crippling debt load on the country.

Commercial rent payments have dropped to nothing with national tenants saying it may be 120 days before they write another check, local owned renters are just as strapped and scrambling, banks have gotten awfully conservative the last few days, and the fun just keeps going and going. 

Not to mention we had a significant amount of commercial deals set to close next month that are all in jeopardy. It’s utterly amazing the difference a few days can make. Two weeks ago yesterday our commercial group met for lunch and were discussing the opportunities that were going to be coming up and it’s a whole different day now. Luckily we have had no cases in our staff or families, as I’ve talked to a number of firms especially in the NYC area that have been crippled by staff out with it.

[troph 24781]

Been away for a while just saw this thread, currently neck deep in deciphering SBA provisions. We had 5-6 clients poised to apply for disaster relief the day the SBA recognizes all counties in Texas. Several notable hospitality brands down to micro businesses. We’ve pivoted to the CARES Act legislation. Banks are slowly getting up to speed. The SBA will be required to get their rear in gear within 15 days. Banks will then be ready to go. Could be sooner.

 

No PG

No Collateral

No fees

4% rate

6-12 month deferral

Forgiveness - complex but could be dollar for dollar if you have no lay-offs

10 year term at the end of the forgiveness period

 

Only down side is it’s 2.5x average monthly payroll and it’s really a tread water loan if you want to take full advantage.

 

But if you lay-off or have laid off folks you have until June 30 to rehire. Applies to reduction in pay too. BUT the language of the bill suggests it’s all or nothing on the rehire raise wages part.

 

Base reduction in what’s forgivable is derived from a fraction the numerator of which is your current number of FTE (more or less) and the denominator of which is your historical average FTE (measured Feb 19-June 19 — OR — measured right before the covid-19 outbreak). Again rehires don’t factor into this fraction negatively (should increase the numerator).

 

There’s more nuance to it but there the basic idea.

 

Even with a 50% reduction in force you could have a sizable loan and you could find yourself with a significant forgivable piece.

 

The upside of the disaster loan is the longer term, it is direct with the SBA and you can possible access more. You can also borrow to the economic impact with a ceiling of $2m. So it could be more for small companies with less payroll. But it’s not forgivable and they want the PG and collateral too. So we are in a full pivot here for most if not all. Clients and several of companies I’ve got a stake in are all going for it. Residential construction, B2B distribution, hospitality, software, several ancillary to real estate businesses, etc. Heck several nonprofits I’m involved with are mulling it over as well.

 

Find experienced lenders. Don’t muck this up.

[Dbeasy 15039]

What is PG? We also are pivoting from SBA to the Care Act

[LaunchPad 10]

PG = Personal Guarantee

 

[Cheeseweasel 26438]

12 hours ago, Wulaw Horn said:

Americans have shown if you put money in our hands through jobs or rebates or government incentives we will spend 108% of what we get our hands on

[Cheeseweasel 26438]

6 hours ago, troph said:

Been away for a while just saw this thread, currently neck deep in deciphering SBA provisions.

Thanks, Troph. Your insight here will be valuable for us wading thru this. Please keep posting!!!

[VABuckeye 2472]

We'll be doing Care Act.  With current receivables we should be good for at least 5 months without any new business coming in.  If that were to happen we'd be fucked anyway.

[Cheeseweasel 26438]

4 minutes ago, VABuckeye said:

If that were to happen we'd be fucked anyway.

The whole business world will be fucked then and I'll be in the woods. Stay away from my TP.

[VABuckeye 2472]

So.  I have a friend I met in Cabo a few years ago.  It turned out that we are in very similar businesses.  He has a pool of guys he can move all over the country and we've used his people to supplement our labor in California.  We've decided to share our larger opportunities and collaborate.   

My family and friends make fun of me because I talk with everyone I meet but if I hadn't had that conversation in Cabo I might have missed out on huge opportunities for my company.

[Cheeseweasel 26438]

22 minutes ago, VABuckeye said:

We've decided to share our larger opportunities and collaborate. 

We are seeing a lot of this in our business with sharing of materials. Helped us move some slow moving inventory.

[closetojumping 62507]

7 hours ago, troph said:

Been away for a while just saw this thread, currently neck deep in deciphering SBA provisions. We had 5-6 clients poised to apply for disaster relief the day the SBA recognizes all counties in Texas. Several notable hospitality brands down to micro businesses. We’ve pivoted to the CARES Act legislation. Banks are slowly getting up to speed. The SBA will be required to get their rear in gear within 15 days. Banks will then be ready to go. Could be sooner.

 

No PG

No Collateral

No fees

4% rate

6-12 month deferral

Forgiveness - complex but could be dollar for dollar if you have no lay-offs

10 year term at the end of the forgiveness period

 

Only down side is it’s 2.5x average monthly payroll and it’s really a tread water loan if you want to take full advantage.

 

But if you lay-off or have laid off folks you have until June 30 to rehire. Applies to reduction in pay too. BUT the language of the bill suggests it’s all or nothing on the rehire raise wages part.

 

Base reduction in what’s forgivable is derived from a fraction the numerator of which is your current number of FTE (more or less) and the denominator of which is your historical average FTE (measured Feb 19-June 19 — OR — measured right before the covid-19 outbreak). Again rehires don’t factor into this fraction negatively (should increase the numerator).

 

There’s more nuance to it but there the basic idea.

 

Even with a 50% reduction in force you could have a sizable loan and you could find yourself with a significant forgivable piece.

 

The upside of the disaster loan is the longer term, it is direct with the SBA and you can possible access more. You can also borrow to the economic impact with a ceiling of $2m. So it could be more for small companies with less payroll. But it’s not forgivable and they want the PG and collateral too. So we are in a full pivot here for most if not all. Clients and several of companies I’ve got a stake in are all going for it. Residential construction, B2B distribution, hospitality, software, several ancillary to real estate businesses, etc. Heck several nonprofits I’m involved with are mulling it over as well.

 

Find experienced lenders. Don’t muck this up.

Great stuff. A few questions:

1) Is it salary plus burden that gets to 2.5x or just the raw salary side? I’m talking about taxes and health benefits as part of the burden. 

2) Are rent payments also forgivable? Seems like rent and utilities, with utilities unexplained. I assume that’s water, electricity and gas, if applicable, but not high speed or janitorial services. 

3) I really don’t think I’ve seen a reference to the healthcare expense aspect as part of this for employers, so curious if you or anyone else has seen something different.

 

 

[G650 14229]

1 hour ago, closetojumping said:

1) Is it salary plus burden that gets to 2.5x or just the raw salary side? I’m talking about taxes and health benefits as part of the burden. 

Troph will certainly answer better than I, but our guidance has been total burden.

[G650 14229]

1 hour ago, VABuckeye said:

My family and friends make fun of me because I talk with everyone I meet but if I hadn't had that conversation in Cabo I might have missed out on huge opportunities for my company.

It's the way of the world.

[VABuckeye 2472]

Yep.  Those that succeed build relationships.

[Dbeasy 15039]

Ctj one problem with the Care act is limited or no help for resources making over $100k. I have too many engineers, etc for it to help that much.

[lonestar3 274]

If you're pro getting construction back underway in Austin, please sign and share the petition.

 

https://www.change.org/p/city-of-austin-mayor-steve-adler-keep-austin-building-safely-during-covid-19-shelter-in-place-order

[UTPhil2006 3801]

1 hour ago, VABuckeye said:

Yep.  Those that succeed build relationships.

Why do you think I keep all you fuckers drunk at Happy Hours and Astros games?

[UTPhil2006 3801]

2 minutes ago, lonestar3 said:

If you're pro getting construction back underway in Austin, please sign and share the petition.

 

https://www.change.org/p/city-of-austin-mayor-steve-adler-keep-austin-building-safely-during-covid-19-shelter-in-place-order

Done

[lonestar3 274]

Just now, UTPhil2006 said:

Done

Saw your name scroll by. Appreciate it, bud.