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Small business owner Leah Sherrill is desperate for an SBA loan.
Her preschool and childcare center in Midland, Texas plunged from over 100 kids to around 45 as a result of the coronavirus slowdown. That’s forced her to make difficult decisions like cutting staff hours and laying off two employees. She says her business needs a lifeline, in the form of the forgivable small business loans that is part of the $2.2 trillion coronavirus stimulus bill. But the program’s rollout has been messy and confusing, and businesses are losing precious days as they try to navigate the process. Fortune spoke to Sherrill and other small business owners currently going through the loan application process to learn about what they’re doing to increase their odds of getting paid sooner rather than later.
Make multiple loan applications
For Sherrill, her biggest a-ha was not to put all her eggs in one basket. She has applications in at five different banks for the loans. She’s not the only one. Several small business owners told Fortune they’ve applied for the loans at multiple banks in hopes of speeding up approval and getting the funds sooner. Once approved, Sherrill says she’d cancel the other applications. “We’re losing money. We don’t know how much longer we can hold on … This PPP loan could be game changer for us,” she says.
When applications for the Paycheck Protection Program loans opened on Friday, many banks were still figuring out the nuances of the loans and weren’t ready for the rush of applications. That delay caused business owners like Sherrill to turn to banks they’ve never patronized before in an attempt to speed up getting their chunk of the $349 billion set aside for the loans, which can forgiven if used for things like payroll and rent.
One banking industry source told Fortune they don’t have a problem with business owners applying at multiple banks for PPP loans, and it isn’t any different than a customer shopping around for a loan in normal times. But not everyone was as supportive.
“It is really unfair for the banks. I would discourage people from doing that,” said Frank Sorrentino, CEO of ConnectOne Bank based in New Jersey. It could end up bogging down the whole application process, he says. “They could impact other people. Just like with the toilet paper [run], don’t take more than you need.”
But some desperate small business owners, who have businesses like hotels and restaurants that have been hit hardest by the coronavirus slowdown, are willing to go to great lengths to speed up getting the funds. Including dumping their long-time trusted banks for credit unions or banks that can get them the money fastest.
“Last week was one of the most turbulent and chaotic weeks in my career. There were so many rumors on how the program was going to be set and what paperwork was needed” said Matthew Roger, a certified public accountant who owns his firm in New Orleans. He has more than 50 small business clients who were scrambling to figure out what documents and information they needed to apply.
Roger, who also applied for the Paycheck Protection Program loan for his own firm, advises that when submitting applications that small business owners make sure they are correctly calculating their average monthly payroll cost. That average payroll cost includes things like salaries and bonuses, but also retirement benefits, parental leave and health care benefits. This average monthly payroll cost is multiplied by 2.5 to determine how much the business can borrow (topping out at $10 million).
But it’s easy for employers to incorrectly calculate their average monthly cost—given the calculation’s nuances. For example, the portion of employee salary in excess of $100,000 is excluded from the payroll calculation. If small businesses incorrectly calculates average payroll, banks could ask them to resubmit their paperwork, thus delaying the funds, says Charlie Epstein, a financial advisor and author of Paychecks for Life. And if businesses leave out costs from their average payroll figures, it means they’d get a smaller loan than would otherwise be possible.
Get your lender’s credit department on the phone
Small business owners and bankers told Fortune it’s helpful to speak with someone from the bank before applying.
If at all possible, “make sure you speak with the credit officer of your bank—that is the person who must approve the PPP loan. Get on the phone with them and walk through your calculations,” Epstein said. He recommends borrowers be kind to the credit officer. This person will help small business owners make sure they didn’t make an application mistake—which would slow down funds—and is the person who submits the loan through the bank portal and gets an approval code.
And after that? Small business owners like Sherrill then just have to cross their fingers and wait—hopefully not too much longer.
More must-read finance coverage from Fortune:
—What small businesses applying to the SBA’s Paycheck Protection Program need to know
—The banks and lenders accepting SBA Paycheck Protection Program loan applications
—JP Morgan’s Jamie Dimon lays out a future worse than 2008 in his annual letter
—Are we headed for a depression? Economists weigh in
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—VIDEO: 401(k) withdrawal penalties waived for anyone hurt by COVID-19
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Quarantines relaxed nationwide on June 1
THE country will be transitioning into more relaxed lockdowns starting June 1, with fewer restrictions on people’s movement and more outdoor activities and physical reporting to work allowed.
Most areas in the Philippines will be placed under a modified general community quarantine (MGCQ) — the least strict lockdown level — the starting Monday, while Metro Manila, Davao City, Region 2 (Cagayan Valley), Region 3 (Central Luzon), Region 4-A (Calabarzon consisting of Cavite, Laguna, Batangas, Rizal, and Quezon), Pangasinan, and Albay will be placed under general community quarantine (GCQ).
The Omnibus Guidelines on the Implementation of Community Quarantine issued by the Inter-Agency Task Force on the Management of Emerging Infectious Diseases (IATF-EID) states that GCQ involves the imposition of temporary measures on movement of transportation, industries, and presence of uniformed personnel. However, this is less strict than the enhanced community quarantine (ECQ) which was originally imposed on Metro Manila and many parts of the Philippines and allowed only sectors delivering basic goods and services to operate and with public transportation prohibited.
MGCQ is also called the “transition to the normal,” with much fewer restrictions than GCQ.
In areas under GCQ, persons under the age of 21 and those 60 and above, and people who suffer from immunodeficiencies, or have comorbidities or other health risks, and pregnant women, are not allowed to leave their homes unless they are obtaining essential goods and services or have to go to work in permitted industries and offices. The same limitation is imposed on the people living with them. But under MGCQ, everyone is allowed to leave their residence.
The GCQ restrictions on leaving the house do not apply though when it comes to outdoor exercise. Everyone is allowed to do outdoor non-contact sports and exercises under GCQ such as walking, jogging, running, biking, golf, swimming, tennis, badminton, equestrian, and skateboarding as long as minimum public health standards are followed such as the wearing of masks, observing social distancing, and no sharing of equipment.
For MGCQ, both outdoor and indoor non-contact sports and exercises will be allowed. The same minimum health standards should be observed.
Unlike GCQ areas where mass public gatherings are banned and leisure establishments and areas are closed, under MGCQ movie screenings, concerts, sporting events, entertainment activities, community assemblies and non-essential work gatherings, among others, are allowed — but attendees will be limited to 50% of the venue’s capacity.
Under MGCQ, employees of public and private offices can resume physically reporting to work at full operating capacity. All public transportation will also be allowed to operate as long as minimum health standards are implemented, especially social distancing.
No face-to-face or in-person classes will be allowed under GCQ, while under MGCQ, tertiary schools can conduct face to face classes as long as minimum health standards are followed, although the mass gathering of students will still be banned. For those in K-12, the Department of Education’s Learning Continuity Plan, which includes remote and distance learning, will be adopted for areas under GCQ and MGCQ. — Gillian M. Cortez
How a hair-care company went from salon supplier to sanitizer powerhouse
When AG Hair moved into its new, 70,000-sq.-foot, state-of-the-art manufacturing facility in Coquitlam, B.C., two years ago, it was part of a plan to supercharge expansion of its hair care product line to salons in international markets. Europe was next on its list. Then COVID-19 hit.
Not only was the European expansion put on hold, but salons in major markets across Canada and the United States were temporarily closed. Very few were purchasing hair products, so manufacturing was halted in mid-March, leaving most of the company’s 82 employees out of work.
AG Hair could have waited out the pandemic but instead decided to lean into its entrepreneurial culture and make a sharp pivot. It began providing hand-sanitizing products for front-line health-care workers, addressing a global shortage.
“We realized there was this massive need for health-care professionals, and we wanted to make a difference and be able to provide them with the products they needed,” says AG Hair CEO Graham Fraser.
AG Hair received Canadian and U.S. approvals a week after applying for the licences needed to make sanitizer, and produced samples to show local authorities within 48 hours.
“That rapid response time, and the fact that we had gone through all of the Health Canada regulatory hurdles, showed [the local health authorities] that we were a partner they could trust and someone they could look to, to deliver the products they needed,” Fraser says.
Within a month, the company started pumping out the products, first for the health-care industry, then for consumers on its own website and on Amazon. About 10 per cent of AG Hair’s hand-sanitizer production also went to people in need, as identified by organizations such as United Way.
Parallel 49 Brewing Company is also using AG Hair’s Coquitlam manufacturing facility to produce its own blend of liquid hand sanitizer for front-line health and emergency workers, in partnership with the B.C. government.
Fraser credits his team for its energy and creativity in making the hand-sanitizer production happen, and helping put AG Hair staff back to work.
“We realized we had an opportunity . . . and then it became this incredible, almost war-room mentality and collaboration with our owners, our executive team and our people to say, ‘How are we going to get through this?’ ” Fraser recalls. “I think our success speaks to the type of people we have and the entrepreneurial spirit of pursuing every avenue we have, understanding how we can produce the products and making it happen.”
AG Hair’s commitment to investing in future growth is a big part of what makes it a Best Managed company, says Nicole Coleman, a partner at Deloitte and co-lead of its Best Managed Program in B.C.
“Capability and innovation come through quite strongly with this company,” says Coleman, who is also AG Hair’s coach at Deloitte. “I don’t think they would be able to pivot as quickly if they weren’t so strategic and had the internal capabilities to do it.”
The manufacturing facility was a big investment, but one Coleman says has already paid dividends.
“They were looking forward with a strategic plan in mind about future growth and how they could expand, rather than just focusing on the day to day,” she says. “Best Managed companies are always pushing the envelope and are conscious about planning for the future.”
AG Hair was founded in Vancouver in 1989 by hairstylist John Davis and graphic artist Lotte Davis. The husband-and-wife team began bottling hair products in their basement and selling them direct to salons from the back of a station wagon.
The company eventually moved its manufacturing off-site, to a third party. One day, John went to watch the operations and was surprised to see salt being poured into the mixture. Although he was told salt is commonly used as a thickener, he didn’t like the potential side effects of dry hair and skin.
It was at that moment John decided the company would oversee its own manufacturing. “Through that experience, John also became an expert in product development,” says Fraser, who came to the company in 2000 as director of sales.
After having worked for more than two decades at PepsiCo and Kraft Foods, Fraser was eager to work at a smaller, more agile company where he felt he could help make a difference.
“It was perfect because I got to bring a lot of structure and process that I learned in those organizations, but I also learned an awful lot about being an entrepreneur from John and Lotte: that sense of urgency, the decision-making process, the need to get things done and drive things forward and pursue opportunities,” he says.
Fraser has helped drive AG Hair’s expansion into the U.S. and internationally, including Australia, Taiwan, and Central and South America. A portion of its sales go to One Girl Can, a charity founded by Lotte that provides schooling, education and mentoring for girls in sub-Saharan Africa.
Fraser also oversees the development of new, trending products, including a new deep-conditioning hair mask made with 98 per cent plant-based and natural ingredients. Hand-sanitizing spray and gel will be the latest addition to the company’s product lineup.
“We don’t see the demand [for hand-sanitizing products] going away,” he says. “As the isolation policies start to get lifted, people are going to need forms of security and protocols as they get back into regular life and work. We see there’s going to be a need for these types of products long-term.”
This article appears in print in the June 2020 issue of Maclean’s magazine with the headline, “Working out the kinks.” Subscribe to the monthly print magazine here.
Stocks, Futures Drop Ahead of Trump’s China Talk: Markets Wrap
(Bloomberg) — Stocks fell with U.S. futures on Friday as President Donald Trump’s planned press conference on China threatened to further stoke tensions between the world’s two largest economies. Treasuries gained alongside most European bonds.The Stoxx 600 Index declined for the first time in five days, dragged lower by travel shares and automakers, as deteriorating Sino-American ties cast a cloud over a global stock rally spurred by reopening economies. Contracts on the main U.S. equity benchmarks nudged lower after Trump told reporters he would announce what the administration would do “with respect to China,” following Beijing’s moves to enact a law that may curb freedoms in Hong Kong. The White House didn’t immediately specify a time.The euro extended gains after the region’s inflation rate fell to the lowest in four years, adding to reasons for authorities to expand monetary stimulus. The dollar weakened for a second day.Global stocks have mostly shrugged off escalating tensions between Washington and Beijing, but Trump’s planned press conference appears to have spooked investors. It comes amid growing good news on the economic front as governments add to stimulus and ease lockdown measures in the wake of the coronavirus. Meanwhile, clues on the next stages for Federal Reserve policy may also come Friday, when Chairman Jerome Powell participates in a virtual discussion.“I’m very cautious on my medium and even long-term outlook for the markets,” Kate Jaquet, a portfolio manager at Seafarer Capital Partners LLC, said on Bloomberg TV. “I perceive there to be a very large disconnect between stock-market valuations across the globe and underlying company fundamentals.”Elsewhere, crude oil trimmed its biggest monthly advance on record, while gold edged higher.Here are some key events coming up:Trump is expected to hold a news conference Friday where he will discuss steps with regard to China.Powell takes part in a question-and-answer discussion on Friday.These are some of the main moves in markets:StocksFutures on the S&P 500 Index declined 0.5% as of 10:23 a.m. London time.The Stoxx Europe 600 Index sank 1.1%.The MSCI Asia Pacific Index dipped 0.2%.The MSCI Emerging Market Index climbed 0.2%.CurrenciesThe Bloomberg Dollar Spot Index declined 0.3%.The euro jumped 0.5% to $1.1132.The British pound dipped 0.1% to $1.2304.The onshore yuan strengthened 0.1% to 7.14 per dollar.The Japanese yen strengthened 0.4% to 107.21 per dollar.BondsThe yield on 10-year Treasuries decreased two basis points to 0.67%.The yield on two-year Treasuries decreased one basis point to 0.16%.Germany’s 10-year yield declined one basis point to -0.43%.Britain’s 10-year yield fell two basis points to 0.193%.Japan’s 10-year yield climbed less than one basis point to 0.005%.CommoditiesWest Texas Intermediate crude declined 3.9% to $32.41 a barrel.Brent crude dipped 3.5% to $34.07 a barrel.Gold strengthened 0.4% to $1,725.46 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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