As state after state continues to mandate that nonessential businesses shutter their doors due the coronavirus crisis, independent shoe stores are looking to the new stimulus bill to help keep them afloat.
According to retailers, Small Business Association Loans (SBA) are topping their lists as a way to maintain payroll as employees return to businesses nearly decimated by the coronavirus crisis.
While $350 billion is slated for these loans, the deal is also set to include $250 billion in checks to individuals and families, $250 billion in jobless insurance benefits and $500 billion in loans for distressed companies.
Skip Chandler, owner of Chandler’s Shoes in Salt Lake City, who made his own decision to close the store, said an SBA loan should help him make it through a month or so. “I’m pleased about that,” he said, noting his staff is not being paid in the interim.
Tentatively reopening on April 6, Chandler has been conducting limited business by contacting customers who had previously placed special orders and delivering them curbside at his store.
Like Chandler, Daniel Ungar, president of Mar-Lou Shoes in Cleveland, considers SBA loans a promising option. “This will depend on factors such as the speed at which loans will be available,” said Ungar. “Speed is of the essence. Even though virtually all vendors will be voluntarily extending payment times, they will still need to get paid in 30, 60 or 90 days. And fixed expenses and other variable ones will also need to get paid in the immediacy.”
While the stimulus package has its benefits, Ungar said it makes up for just a fraction of the overall toll the event has taken on the population. I strongly believe that the idea of pent-up demand is almost laughable. True, there will be some. But when stores open, there can’t possibly be throngs of shoppers who will buy — not for many months. Even with the stimulus dollars, I think the trepidation to spend money will be high for a long while.”
Payroll issues have also been a key concern for Gary Goodman, owner of Goodman’s Shoes in Indianapolis, who was ordered to close the store from March 26 through April 7 and has ceased payments to employees. However, he said the stimulus package could help him meet payroll for employees returning after April 7.
“Our business is 108 years old and we’ve been crippled,” said Goodman. “We’ve never seen anything like it.” Goodman, who said business went south beginning on March 3. “It’s very stressful. I’ve had no income in the store and don’t know how my landlord expects me to pay rent.”
At Schuler Shoes in Minnesota, CEO John Schuler is also banking on the stimulus bill to cushion the store’s payroll issues. Schuler, who considers it an “unemployment bill on steroids,” said, “I think it should help our cash flow primarily by helping us with our payroll responsibility every two weeks.” He added, “It will help us and our employees have cash to buy supplies and pay [our] bills.”
To help spark business in the meantime, Schuler is putting a greater emphasis on e-commerce by offering free shipping or curbside pick-ups. “It seems to be working,” he said. “We’re also contacting our vendors and lenders and asking for help in the area of extra terms to pay the invoices. We’re not asking to not pay, just some extra time to pay. We’re also looking at ‘merchandise on order’ and unfortunately having to cancel a lot of product.”
Goodman also expects to cancel some orders. ”It happened so quickly. We moved out all our future orders 60 days at first, but [we] might cancel fall,” he said. “If we get back to work and don’t have any business, or it’s slow, we will just live on what we have and do special orders.”
Among the early SBA filers is Rick Ravel, owner of Karavel Shoes in Austin, Texas. “We’ve already sent in all our financials,” said Ravel, who was forced to close his store on March 24.
Although Ravel is encouraged by the option of receiving a loan, he questions the fine points. “The government is not set up to do the loan, so it will be the banks,” expects Ravel. “You know they’ll get the money at 0% and then probably charge 3% to 4% when it should be 2% to 2.5%.” The next question, he said, will become, “How long will it take to receive the funds.”
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