It’s taking all hands on deck these days to help keep small businesses afloat during the COVID-19 pandemic.
Independent shoe stores are working with vendors and landlords to renegotiate deals, while the government has stepped in with a range of loan and grant programs as part of its historic $2.2 trillion stimulus package, called the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Among the financial aid options available to stores is the Paycheck Protection Program (loans that allow small businesses to pay their employees), Small Business Administration funding programs such as Express Bridge Loans and Debt Relief and an Economic Injury Disaster Loan Emergency Advance (EIDL).
While retailers agree these loans are easy to apply for, they are a short-term solution as the U.S. shutdown shows no immediate signs of ending. However, for many small businesses, they can help sustain operations in the meantime.
Here, independents share their financial issues and how they’re navigating the stimulus package process.
President, Tip Top Shoes, New York City
Among Wasserman’s first moves was applying for the PPP loan. “Initially, our bank was a little bit slow on the draw, but once they got their system up and running, we [were able] to submit our paperwork.” While the loan assists with payroll for an eight-week period, Wasserman remains uncertain if he will be able to reopen before the money runs out. “Covering the payroll is great,” he said, “but the question remains — are customers ready to shop. The entire situation from top to bottom, leaves us with far more questions than answers.”
President and CEO, Alan’s Shoes, Tucson, Ariz.
Miklofsky applauded the speed at which the government put the CARES Act together, although he remains skeptical the SBA EIDL loans are properly funded. “The legislation does a lot, but isn’t perfect based on the timing requirements, such as requiring a specified eight-week disbursement period that will occur while most retailers are closed and some employees will be receiving higher-than-normal unemployment benefits,” he said.
And in addition to payroll, Miklofsky much address payments to vendors. “These loans can’t fix the issue where spring merchandise was already in the door, got old and became less valuable as the product was sold at a discount nationwide,” he said. “There also remains the expectation that retailers pay full rent during their, slow, closed and rebuilding periods. Additional loans may be available if the retailer can demonstrate it will be in compliance with banking requirements moving forward. No banker will make that loan without collateral (real estate equity) and personal guarantees.”
CEO, Schuler Shoes, Minneapolis
Schuler’s nine-unit chain applied for PPP and SBA EIDL loans, so far receiving approval for PPP. The process, said Schuler, was seamless since the store had all documentation requested in order, and it has already received approval for the PPP loan. “Reporting payroll [numbers] was a big part of it,” he said. “Since our [system] is fairly sophisticated, it was easy to pull what was wanted. However, I don’t know when we’ll see the money in our account. Once we get it, the clock starts ticking and we have eight weeks to spend it, so I’m in no big rush if I have to wait a couple of weeks.”
Owner, Eneslow, New York
Schwartz furloughed all employees during March, closing all stores on March 19. “We applied for the $10,000 maximum EIDL and PPP loans, the latter which is 2.5 times annual payroll. But we have not gotten anything approved,” he said. “There was also supposed to be a $75,000 interest-free loan from New York City that’s still sitting on the shelf somewhere.”
Meanwhile, the retailer is facing issues with its business interruption insurance policy. “We have it for loss of revenue caused by civil authority,” said Schwartz. “However, my insurance company has denied responsibility, noting it specifically excludes viruses. To me, [this marks] a groundswell [of opposition] for all businesses in America who pay insurance for years and years. There has to be a screaming cry from the retail and wholesale industries.”
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