March 31, 2020 Sub Zero Franchisee Call: Financial Recovery Assistance Options
Recording of call: https://meetinglab.zoho.com/public/videoprv?recordingId=108e60fd7f0f8a34c254c748f3ece51edc47ab8538c34562273d09c9e81e2600
Disclaimer: The programs and information presented here are what we have gathered as we have listened to many different sources of information, from the IFA to community partners. Because many of these programs are so new, there is still a lot of development and detail that is set to come out and new changes are very likely. We are working to provide direction for you to weather through this.
This is a very helpful and comprehensive document our attorney offered that can answer a lot of questions:
The Small Business Owner’s Guide to the CARES Act
https://docs.zoho.com/file/1xsqca8b581cbae81466996c8bb7cf494757c
Getting Cash and financial help through Government Programs
EIDL - directly with SBA
Step 1: Online application or by mail. www.sba.gov/funding-programs/disaster-assistance
Step 2: SBA Reviews Credit. Decision within 2-3 weeks. They are a little easier on decisions with your credit scores.
Step 3: Loan closing docs. Initial disbursement within 5 days.
Loans at 3.75%
Funded only through the SBA
**Since yesterday, the SBA website now only has the ability to apply for the grant. I’m assuming that by completing that application, it gets the ball rolling for the larger EIDL SBA loan, but I am unsure and still trying to find out more information.
CARES Act --Coronavirus Aid, Relief, and Economic Security Act
Just ratified as of Friday, March 27, so many details are still being worked out.
Includes funding for 7A SBA loans, including Payroll Protection Program (PPP)
EIDL (Economic Injury Disaster Loan) Advance
$10,000 Advance on an SBA loan
This advance may be taken off the SBA loan if and when approved.
Click on the first menu item: Economic Injury Disaster Loans and Loan Advance
Whether or not you receive a loan, the grant does not have to be paid back, provided it is used to retain employees.
--I realize this is contradictory to the point above. I have heard both from different sources. I believe this is just one of those details that are still in development and being discovered. We are continuing to gather information from every source we can.
When completing the application for the SBA Grant, it will ask if you are a franchise. Mark YES. The IFA specifically pushed for franchises to receive help when this bill was being formed. It is of value to be a franchise with this application.
If you wish to apply for the Advance on your EIDL, please visit www.SBA.gov/Disaster as soon as possible to fill out a new, streamlined application. In order to qualify for the Advance, you need to submit this new application even if you previously submitted an EIDL application. Applying for the Advance will not impact the status or slow your existing application.
Payroll Protection Program/ 7A SBA; this is what we know for now:
The loan program is for small businesses: Less than 500 employees - (there are some exceptions) AND NON-PROFITS which is a big change
The Loan Amount: up to $10 MM.
To calculate what the borrower can apply for is as follows:
2.5 Times the Average Monthly Salary expense of the company over the past year. (Take a year’s worth of salary expense, including benefits divided by 12 and then multiply by 2.5). This can potentially include 1099 payments as well.
You should be prepared to provide some documentation on how you derived that number. EX: Payroll statements etc.
Some have said that you can include 1099 contractors in that amount. I believe that is yet to be confirmed for sure.
Funds are for coverage through June 20, 2020
The loan rate is no more than 4.0% and payments can be deferred for 6-12 months. After that time period, any outstanding, unforgiven piece will amortize over 10 years.
A portion or potentially all of the loan can be forgiven.
It is applied to through a bank. Having a relationship with a bank is the best option.
Guidelines have not been released through the SBA yet. Banks are waiting for instructions to come from SBA.
In order to be forgiven, you need to prove that the loan proceeds are used for one of the following:
Payroll
Must remain open and keep employees on. Can’t cut payroll by more than 25%
Rent payments
Interest on loans made before 2/15/20
Utilities
You can use the proceeds for other things, such as principal payments on mortgages, insurance premiums, payroll support services, it’s just that these items will not be FORGIVABLE.
The forgiven amount will be equal to the amount actually paid for payroll, salaries, benefits, rent, utilities and mortgage interest during the 8 week period following the disbursement of the loan.
The forgiveness amount is subject to reduction if there is a workforce reduction or a reduction in the salary or wages of an employee.
Reductions in workforce, salary and wages that occur from February 15, 2020 to April 26, 2020 will be disregarded for purposes of reducing the forgiveness amount so long as the reductions are eliminated by June 30, 2020.
You have to apply for forgiveness and the amount for the forgivable expenses are for the 8 week period after the date the loan is funded. You will need to save your receipts.
There will be an application which no one has yet.
Banking Partner Options who are familiar with and have experience in franchising and business:
Lendio, Lendio.com
Apple Pie Capital, applepiecapital.com
Boefly Capital, Boefly.com
Franfund.com
Plans of Action:
Prepare Paperwork:
Make sure all books are up to date and all documents are accessible. P&L, Balance Sheets, Taxes, Payroll information, Business and Corporation documents, Debt Schedules, Lease Agreements.
Reach out to your Banking Relationships
Many of these programs will be rolled out through banks, and banks will be working to keep up on all regulations. Bankers at this point need to be our friends.
Reach out to your bank as soon as you can to let them know you need to know the new developments of relief available.
Our banker sent an email with a form to request information once they have it. The form included what amount we would be asking for
Seek Local Help
Turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-to-date information regarding COVID-19. There will soon be a joint platform that consolidates information and resources related to COVID-19 in order to provide consistent, timely information to small businesses.
To find a local resource partner, visit https://www.sba.gov/local-assistance/find/. (or just Google SBDC)
Seek Help from Vendors
Payroll companies may have information as these and other programs are rolled out. For example, we use ADP and they have already asked survey questions on my business to keep track of what programs they can help with. Call your payroll company to see what information they may be receiving and to make sure and keep you in mind.
Contact banks and request deferral of loan payments or reduction of payment.
Check for Local Relief, State and Local
Keeping a Lease:
Franchisees and tenants must conserve cash to survive
Now is the most opportune time to create a win/win scenario
Benefit to Tenant-conserve cash, preserve the lease rights, avoid default penalties and termination risk and take advantage of CARES Act loan forgiveness of rent.
Benefit to Landlord--comply with mortgage terms by having a performing lease, create certainty in relationship, structure the rent relief to provide for some payment when tenant secures CARES act financing.
Success on both ends requires documenting the agreement, not letting it ride until the crisis is over.
Take control and make a plan. The landlord and you benefit by you staying in business.
Personal:
On the topic of preserving cash: Federally backed home mortgages can also be put in Forbearance with no negative impact on your credit score as a result of the virus. You can get accepted to those programs in 3 mins by calling your mortgage lender and completing the automated phone survey.
Liability Insurance:
Check policies if coverage excludes a pandemic. If pandemic is considered “Act of God” or “Force Majeur”
Most insurance companies are saying that viruses are not covered, but it never hurts to ask.
Insurance companies are trying to offer pay deferral options. At this point, you want to hold onto as much cash as possible to continue operating.
Paid Leave:
Companies with <50 employees are exempt from providing paid leave
Look through IRS.gov for more information
Facebook Small Business Grants
Unsure how much or how many businesses will qualify for this, but still apply. We have applied and just received message that application was received and we’ll hear back from them.
Be Creative
If you can, find other local businesses that you can partner with and have either a takeout option that customers can pick up while also getting their pizza or other to-go options.
Create takeout options, even kits to assemble yourselves at home with mix-ins and ice cream separate. Partnering with businesses where people are going.
Continue to engage and post content on your local social media pages. People are still online and engaging. We hope to come out of this with follower relationships intact and able to reach out and start thriving again.
If you have any ideas or needs for graphic design, let Kimber know (kimber.pritchard@subzeroicecream.com). We can submit any graphic you may need, either during this time or for prospective needs in the future, either for social media content or for POP (point of purchase) printed designs in store.
Online Ordering
We need to make it clear that it’s local pickup ONLY. Not shipped or delivery.
How to find what orders have come through online through a report. That’s available now.
Contact support@linkpos.com or call their help line 855-472-3767 to get stores lined up, even if only for selling gift cards.
Working on a specific link per store for selling gift cards to make a “Buy now” button on social media