This is a crazy time, especially for business owners who are having to face tough realities and make hard decisions in an ever changing landscape. This week we want to provide a quick update on some SBA programs, the recently passed stimulus bill, and some links to what we are reading and watching.
Last Friday the Small Business Administration (“SBA”) declared Oregon an “economic disaster” which allows Oregon businesses access to SBA emergency loans. Through these loans, businesses can borrow up to $10 million at 4% or less for a maximum term of 30 years. They can be used to pay other debt, accounts payable, payroll, or any other expense that cannot be paid otherwise because of the coronavirus. Specific terms are negotiated case by case and your mileage may vary. These loans can serve as an excellent option if needed but can take between 60 to 90 days under the best of circumstances.
As of a few hours ago, the CARES Act (“Coronavirus Aid, Relief, and Economic Security” Act) passed and was signed into law. As a result, banks and credit unions who are partners of the SBA can issue these emergency loans which are then backed by the SBA. These loans can be approved and disbursed significantly faster, sometimes within a few days.
Additionally, if these loans are used to pay payroll, rent, mortgage interest, and utility payments and you maintain the average size of your workforce, the principal on the loan can be forgiven leaving only the accrued interest to pay. The loans can effectively become grants if used for these expenses. Among other benefits are a 50% refundable payroll tax credit, delay in paying 2020 social security taxes until 2021 and 2022, and expanded unemployment benefits. An investment firm called Permanent Equity wrote a fantastic overview of the stimulus’s benefits to small businesses which we highly recommend reading.
More support is on the way for small businesses and we will continue to track the developments and share them with you. In the meantime, we want you to know that we are here to help in any way that we can. Whether that be to bounce ideas off of, discuss what we see on a macro level and how that relates to your business, or just share a cocktail over Zoom while counting our collective blessings.
For the astute investor and business owner, times like these can serve as wonderful opportunities. To reevaluate our business and plans moving forward. To challenge our assumptions. And to recommit ourselves and our teams to the shared vision and your plans for growth.
Pilot Notes
Permanent Equity today published this article explaining how this stimulus package helps small businesses.
Brent Beshore, founder of Permanent Equity, appeared on the podcast Invest Like the Best to discuss what he’s seeing in small businesses.
They also wrote a great article about how to cut expenses.
Wendover Productions made a fascinating video about the coronavirus’s effect on the airline industry.
Andy Ellis from Localize Capital in Pittsburgh, PA wrote about how the world has changed from coronavirus.
Macro-Ops wrote an amazing article analyzing 11 years of operations at a family run business called Mestek.
If you know anyone who might enjoy reading our thoughts around business owners and interesting resources we come across, feel free to forward this along to them so we can keep them in the loop as well.
Additionally, if you come across an interesting article, interview, podcast, or Tweet, please send it over to us. We are always buyers of quality information.