The biggest news this week is the exhaustion of both the EIDL and PPP funding. There are also indications that some areas of the Nation will be re-opening. And layoffs continue
Maryland State Specific
Governor Hogan is proposing a plan to open the State. On the other hand, the latest restrictive order (masks) is set to go into effect tomorrow, 4/18/20. A press conference is being held today at 2:30pm where we expect the State to confirm schools will remain closed for the rest of this school year.
We, at GST, continue to forecast mid to late May as the Phase 1 re-opening date for the State. It is important to note what the Phases entail (from Federal Guidance) and we have attached them here to this note. You should be aware that we (here in Maryland) appear to be at least 6-8 weeks removed from Phase 3, even in the best of circumstances. We’ll know more from the Governor today, who may even signal some time frame for the start of Phase 1.
CARES PPP & EIDL
Neither of the Federal “bailout” funds is currently accepting applications. The websites point to a “Lapse in Appropriations”. We expect Congress to re-authorize funds for at least the PPP within the next week or so. Ideally, both programs will receive additional funding. If you have not applied for both, you should do so as soon as they become available again.
Fortunately, most (> 90%) GST clients took our advice, applied early, and either have funds, have an approval, have docs, or have an E-Tran number and are active in the system (which means you should receive funds under this current $349 Billion funding package).
Regardless of the status of PPP and EIDL currently, and where you are in the process, many loans will not be funded for another 2-4 weeks. So, ensuring your cash on hand will get you through this period is critical.
State of MD Funds
These funds (except for the Manufacturing fund) have been closed for a while now. If you got your application in, it is likely still being processed so do follow up, inquire, provide documentation when prompted, etc.
We’ve had several clients receive approvals on either the loan or the grant. We’ve seen no indication that Maryland will offer new funds, or add to the caps of these programs. If your request is being processed; follow it through to the conclusion so you’re not “bumped” from the system.
Another 5MM this past week. We expect this to continue and even see a risk of increase should Congress create too much uncertainty through partisanship around expanding the relief efforts. On the “good news” side of this equation, there are ostensibly great people, who want to work, and produce great work that are now out of a job or soon will be. So, you should consider evaluating your team, and potentially identifying areas to top grade your employees.
If you’ve yet to develop cash flow models, you could be placing your business at risk. You should be able to model various scenarios and how they impact the survivability of your company on a cash basis.
Given the amount of time it is taking to turn around approvals and funds from the Government relief efforts, your ability to forecast is vitally important. If you have not completed any modeling, and need assistance, reach out to us. Given the wide variety of future predictions; to wit…
“Everything will come back immediately and be better than before…” to,
“We’re entering a 3-5-year depression the likes of which has never been seen…” Business owners are left in the unenviable position of wondering what will actually occur.
Our advice has been, and remains, to plan as if the worst-case scenario is a certainty. Make sure you have ample cash. Make sure you right size your team and operations. Focus on sales, existing and potential revenue streams.