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You Received a PPP Loan: Here are some tips for Massachusetts businesses

30 April 2020

Congratulations. You did it. You not only found a bank to accept your Paycheck Protection Program application, but the bank managed to get it to the U.S. Small Business Administration before the program ran out of funding. Lots of your peers are still scrambling to secure PPP financing. Not you. That money’s already in your bank account.

Now comes the hard part.

Out of necessity, the federal government created and opened up PPP in a hurry, before it had figured out exactly how the program would work. For that reason, you applied for PPP loans in a hurry. Many of your peers — maybe you — were ordered closed because of the Covid-19 pandemic. Getting that loan was a matter of survival. Now that you have the financing, you need to stick to the SBA’s rules, to ensure as much of the loan is forgiven as possible. But that’s not easy: The SBA is still clarifying the terms of forgiveness, even as you’re planning to comply with terms you signed weeks ago.

Experts say you might be in for a shock.

“I think many borrowers thought this was going to be fully forgivable, and I dare say, many of them are going to be surprised,” said Jim Browne, a Boston-based partner with the professional services firm Withum.

Just because the application process was a little fast and loose at the start doesn’t mean banks and the government won’t  be bigger sticklers going forward.

“On the back end, there’s going to be more diligence than on the front end, in terms of how this money was expended,” Browne said.

The Business Journal spoke with bankers, accountants, lawyers and entrepreneurs about what business owners should do to ensure they avoid run-ins with lenders and bureaucrats and keep the amount of the loan they need to pay back as small as possible. Here’s the advice they shared.

Don’t be afraid to hire back employees, even if the work’s not there

Many Massachusetts business owners are in a quandary. Their businesses are closed entirely, because they’re considered nonessential, or they’re operating in a much-diminished capacity because customers are stuck at home. They’ve laid off most (or all) of their employees, because the business just isn’t there. 

But under PPP rules, they must spend now 75% of the loan on payroll costs in the eight weeks after they receive the loan, if they want it to be forgiven. (The clock starts ticking as soon as the money hits their bank account.)

To reach the 75% threshold, they can hire back their one-time employees, but those workers may make more under the stimulus program’s enhanced unemployment benefits than they would on the job. And at the moment, there might be little to no work for employees to actually do.

Or they can forget about forgiveness, and treat the financing as a true loan rather than a grant. While the interest rate is only 1%, that may still be a big risk, given how much uncertainty there is around how long businesses will stay closed, and what revenue will look like once they reopen. The loan must be paid back in two years.

To avoid that risk, experts urge business owners to consider staffing back up, even if under normal circumstances they wouldn’t add to payroll.

“I’m advising them to bring them back as soon as they can, because obviously, the whole purpose of the program is to get people off unemployment,” said Thomas Petrocelli, a Wakefield accountant.

Employers should think creatively about how to use staffers. ThinkLite LLC, a Natick-based lighting company that received a PPP loan through Needham Bank, has employees taking online courses during work hours to learn new skills, or working on new research projects, Chief Operating Officer Danny Wadhwani said.

If most or all of the loan is not forgiven, it’s not necessarily the end of the world, given the low interest rate, accountants said. But owners should make that decision knowing the risks.

“If I have to pay that back at 1% over two years, I’m going to do that if it means we can stay alive,” said Joe Caligiuri, owner of Dedham training facility Stadium Performance, who plans to bring back all of his employees by July 1.

Keep careful track of everything

It’s essential that businesses document every penny they spend of the PPP money. The loan is supposed to be reserved for payroll expenses, as well as mortgage interest, rent and utility costs. If they send a rent check to their landlord, they should copy the check ahead of time and file it away. The same goes for electronic invoices.

Business owners might consider setting up a separate bank account for the loan to make the divide between the PPP money and other funds even clearer, though accountants say that’s not strictly necessary.

A good audit trail is important not just for accuracy’s sake, but for speed. Banks faced a glut of applications at the PPP’s kickoff. In a few weeks, they’ll face a glut of borrowers seeking sign-off that their loans are forgiven. Given how busy lenders will be, a misstep could mean significantly more time to achieve that sign-off.

“If you can put yourself in a position where everything is organized and they can easily see what you’ve done, it’s going to make the process so much smoother,” Nutter attorney Joshua French said. 

Keep your counselors on speed dial

Even nearly a month after the PPP launched, there’s still a lot of uncertainty around how loan forgiveness will work. More guidance is expected, but the SBA’s previous attempts at clarification have left a lot of questions, according to experts.

With so much still up in the air, business owners should be in regular contact with their bankers, accountants and lawyers for any updates on the SBA’s thinking. Withum’s Browne recommends reaching out to them daily, or every other day.

At a minimum, businesses should check in with their bank a week or two before the PPP’s eight-week run time is up, according to Salem Five CEO Ping Yin Chai.

Remember, it’s about more than maintaining payroll

One thing that is certain: There’s more to achieving forgiveness than keeping the same headcount. If you cut pay for employees making less than $100,000 a year by more than 25%, that will hurt the amount of the loan that you can recover. 

It’s important to note that, when calculating change in headcount, a firm can compare its current staffing level to either its full-time equivalent headcount in the first two months in 2020, or the same metric for Feb. 15, 2019, to June 30, 2019. If a business had been in growth mode prior to the pandemic, and its headcount was low last year, that will help it out now.

Given the changes caused by the pandemic, employers might also consider whether it makes sense to hire employees with new skill sets, rather than re-hire only laid-off workers. ThinkLite, for instance, plans to hire web developers to bolster its ecommerce platform, since remote work will be more popular in a post-pandemic world, Wadhwani said.

It’s a weird time. But don’t get too weird.

The federal government got blowback when larger, publicly traded companies secured PPP loans before many small businesses did. Officials have indicated that going forward, they will be scrutinizing loan recipients more closely. So no, you shouldn’t go investing the loan money in the stock market, or paying dividends to shareholders.

French has a simple test for deciding whether an expenditure will draw “the quadruple P — the PPP police,” as he calls them. Ask yourself, would I be doing this right now if it wasn’t for the PPP? For instance, if you’re thinking about giving employees big bonuses just to hit that 75% payroll threshold — would you be handing out big bonuses this spring if not for the loan?

“If it’s not something you would have done normally, then I’d be nervous about doing it now,” French said.

bizjournals.com



Free Courses with CEUs For The Week April 27 – May 1, 2020

27 April 2020

Plan to join the CVC Success Group April 27 through May 1, 2020 as we continue our free virtual training presentations with CEUs for the coming week. Read on for the details of each class we will present live in the coming week. Our webinars are presented for the training of the industry workforces. 

Sales Training Monday, April 27, 2 PM EST

Join the Retail Guys Training with instructor Tim Reed presenting his program entitled “Win More Showroom Sales” a perfect class for anyone in sales or sales management, with a showroom or for those who operate without a showroom. So even if you don’t have a showroom the tactics Tim will share will be a benefit for you.

  • Learn how to properly start a relationship
  • Learn how to build trust with your customer
  • Learn how to set a budget expectation
  • Learn how to nurture the relationship to successful sales closure

To register for the free class, click the link https://attendee.gotowebinar.com/register/3389727684660026640. Once you submit, you will receive your private link to attend the session. 

Gas Training Wednesday, April 29, 2 PM Eastern Time

This will be another gas training with industry veteran Bob Wise teaching live. You can ask your questions of Bob during the interactive presentation. This class will be one that will provide you answers on how to address field issues you may encounter during installations, service calls, and callbacks. 

  • Learn why gas components fail in the field
  • Learn the intricate details of how gas control systems operate
  • Learn new methods of troubleshooting field issues
  • Get answers to your callback issues

To join the class, simply click the link https://attendee.gotowebinar.com/register/2732416543831406096. Once you submit, you will receive your private link to join the class as it goes live at 2 PM Wednesday, April 29. 

Chimney Training Thursday, April 30, 2 PM Eastern Time

This will be a course for anyone in the chimney industry. This will be presented by Jerry Isenhour & Tom Urban. In this class we will be sharing methods of how service technicians will communicate and do their jobs in the new next of the changes the market will require.  

  • Learn how to start the trust building and relationship nurturing using new processes and methods
  • Learn how to utilize technology in the coming days
  • Learn how to utilize virtual technology for reporting and for sales communication

To attend this class, simply click the link https://attendee.gotowebinar.com/register/1757912791063879184

Office Training Friday, May 1, 2 PM Eastern Time

This will be a presentation of The History of Chimney Service In America. This class is a documentary of the chimney service industry and can relate how technology has changed the industry. An excellent class for any member of the chimney and hearth industries to increase their understanding of where we have been and where we are going.

  • Learn about the way chimney sweeping was in the 18th and 19 century and how chimney sweeping was part of many communities in the USA with Master Sweeps appointed by local government.
  • Learn how technology removed the chimney sweep from the landscape due to technology. 
  • Learn how an age old trade was revived due to a worldwide energy crisis

To join the class, click the link https://attendee.gotowebinar.com/register/5923380707056150544. You will receive a private link to join the class will be emailed directly to you.

All CVC Success Group live training is conducted using GoToWebinar, attendance at classes is tracked electronically, and CEUs are provided utilizing a code word system. Upon completion of a class, once you have submitted your code words and request for CEUs, CVC will prepare an attendance certificate that is sent to you and filed with the certifying agency you are certified by. 

CAN’T MAKE THE CLASS?

The CVC live classes are recorded and then stored in the CVC Base Camp library of courses joining the over 600 courses that are in the CVC Library. Want more information, simply click on www.cvcbasecamp.com or contact us at info@cvcsuccessgroup.com and we will forward your information on how to subscribe, with learner seats starting at $39.00 a month for 60 days, it is the most cost-effective online learning platform available. 

We are CVC Success Group, and we are here to assist industry members through these challenging times. If you have ideas on how we can provide this assistance, please reach out to us at info@cvcsuccessgroup.com

We are all in this together!


How Retailers Can Survive the COVID-19 Crisis

16 April 2020

I found this article and thought I would share it in light of the Webinar Series by Tim Reed, Creating a Digital Sales System, that Northeast HPBA is offering to our members. This excerpt is very insightful and talks about how retailers and small businesses must Adapt to Shifts in Digital Consumption. 

The part of the article that I found most valuable begins below:

COVID “has changed the way we internet” showing a significant shift in behavior from mobile to desktop. It's essential to ensure that all marketing messages are consistent between channels and optimized for both mobile and desktop.

More desktop time also means higher email open rates. It's a good time to continue emailing your customers as long as the messaging is considerate, provides real value, and is in touch with the current situation. Now is not the time to drive a sense of urgency around nonessential items.

Take a “crisis approach” to measurement. Create new, more frequent reporting based on the most up-to-date results you can derive. Comparing year-over-year or month-over-month results won't provide an accurate picture of digital marketing performance. Instead, build a day-over-day report beginning March 9. Watch higher-funnel metrics (e.g., engagement rates, click-through rates, brand search volume) at a channel and campaign level so that you can quickly evaluate what’s working and what's not.

Adjust your messaging to show care and respect for the customer’s constantly changing situation. More than ever, we need to be customer-first, and this means understanding what customers are going through right now. Retailers should be aware of the torrent of troubling headlines and support messaging that emphasizes an understanding of the customer’s current needs or mind-set. Review every piece of creative to ensure that it reflects that understanding.

It’s not just a matter of being careful in how you message around COVID — there's also an opportunity to extend a welcome hand by finding creative ways to bring your customer service experience to digital platforms. For example, many home décor brands are offering online interior design consultation as a way to stay connected to customers. Consider ways to shift in-person customer interactions and services online with a focus on providing value to best customers.

Take the Reigns

Above all, know that now is not the time to cut back arbitrarily. Never walk away from communicating with your best customers and best prospects. The retailers that act nimbly and decisively today can uncover unique opportunities to maintain those critical relationships in a time of rapid change and upheaval.

You can RSVP to our webinar series with Tim Reed here. Contact Karen@NEHPBA.org for access to the first webinar in the series. 

mytotalretail.com 

Read the full article here



COVID-19 Employer/Employee Questions Answered!

2 April 2020

There have been quite a few employee/employer questions. Some finally have some answers. For more click here

Answers to two common questions:

Q.  If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?

No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

Q.  If my employer closes my work-site on or after April 1, 2020 (the effective date of the FFCRA), but tells me that it will reopen at some time in the future, can I receive paid sick leave or expanded family and medical leave?

No, not while your work-site is closed. If your employer closes your work-site, even for a short period of time, you are not entitled to take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. This is true whether your employer closes your work-site for lack of business or because it was required to close pursuant to a Federal, State, or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx. If your employer reopens and you resume work, you would then be eligible for paid sick leave or expanded family and medical leave as warranted.

For more information, contact NEHPBA, see our COVID-19 Updates page or see the HPBA site.


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