COVID-19 Economic Impact on the Printing Industry
Contributing to your community is particularly important, according Reeves, Lang, and Carlsson-Szlezak. They call it “embeddedness,” explaining that every company is part of a socioeconomic system. Because of COVID-19, those systems are universally under stress. Turning inward “will create mistrust and damage the business in the longer term.” In contrast, supporting “customers, partners, health care, and social systems in a time of adversity can potentially create lasting goodwill and trust. A key element of dealing with economic stress is to live one’s values precisely when we are most likely to forget them.”
Louis Mosca, author of “Coronavirus & Your Business: 3 Steps To Protect Your Employees & Your Organization,” forbes.com, emphasizes that communication with suppliers should closely monitor the state of delivery channels. Are interruptions likely? If they are, when and how severe? What are the alternatives? Mosca recommends designating a “point person” to collect this intelligence daily, because conditions are changing that quickly.
Finally, Reeves, Lang, and Carlsson-Szlezak remind us that communication among the management team should be on a “rapid response” cycle. Performance metrics should be collected, evaluated, shared, and acted on immediately because “a crisis doesn’t imply immunity from performance management, and sooner or later markets will judge which companies managed the challenge most effectively.”
With all the upheaval, it’s easy to forget these basics. But practicing them faithfully is essential to both weathering the crisis and coming out stronger.
Updated: March 31, 2020 @ 4:00 PM
Accessing CARES Act Loans
Washington came through with the money. Now how do we access it? Here’s a summary of the small-business loan programs included in or enhanced by the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Paycheck Protection Program
- Companies with 500 employees or fewer, operating on or prior to February 15, 2020. Companies with more than 500 employees in industries that meet certain SBA criteria are also eligible.
- Loan Amount: Up to $10 million, based on payroll costs. Payroll costs include total W2 wages and salaries (capped at $100,000 per year per employee), health insurance costs, and employer 401k contributions.
- Loan Structure: Up to 10 years at a maximum interest rate of 4%. No origination fees, and the SBA will instruct lenders to defer principal and interest payments for between six and 12 months.
- Qualified Uses: Loans can be used to cover payroll, healthcare benefits, paid sick leave, mortgage interest, rent, utilities, and interest on some debt. Loans apply to costs incurred through June 30, 2020, retroactive to February 15, 2020.
- Loan Forgiveness. An eight-week loan forgiveness period begins the day a loan is originated. A loan will be eligible for forgiveness (conversion to a grant) if it has been used to cover the qualified expenses listed above. Borrowers will have to document that it was. And forgiveness will be reduced in proportion to the reduction in average employment during the forgiveness period compared with average employment during the same period of 2019. (Reductions in wages and salaries exceeding 25% of a company’s total wages and salaries will also reduce forgiveness rates.)
- Hiring Back. Borrowers who rehire workers or make up for reductions in wages and salaries by June 30, 2020 will still be eligible for at least some loan forgiveness. (See our previous post, “Loans and Layoffs,” for tips on avoiding layoffs and maintaining eligibility for forgiveness.)
- Borrower Requirements. Documentation that the loan is necessary because of economic disruption caused by the coronavirus. No collateral or personal guarantees are required.
- Applying for a Loan: The SBA is administering the Paycheck Protection Program through 1,800 approved lenders. Contact your bank to see if it is in the network. If it isn’t, contact the SBA to find a lender who is by emailing firstname.lastname@example.org, calling 800-827-5722, or going here.
In any case, begin getting your company’s tax returns, financial statements, and payroll data together (as mentioned, payroll costs will be a major factor in the loan application and forgiveness process), so you can apply as soon as you have identified an SBA-approved lender.
Small Business Administration Loans
In response to the pandemic, Congress has significantly expanded SBA loan programs and streamlined access to them. Businesses that currently have a SBA disaster assistance loan may still be eligible for a Paycheck Protection Program. Moreover, the SBA has deferred payments on all existing disaster loans through December 31, 2020. Learn more and apply for SBA loans here.
- Economic Injury Disaster Loans (EIDL): Working capital loans of up to $2 million to help small businesses overcome the temporary loss of revenue due to COVID-19. These loans cannot be used for business expansion, bonuses, etc.
- Economic Injury Disaster Loan Advance: Small business owners are now eligible for an EIDL advance of up to $10,000. Owners must first apply for an EIDL and then request the advance. The advance may be used to cover payroll, sick leave, rents, and operational costs. The funds will be made available within three days of application even if your application for a full EIDL loan is denied.
- SBA Debt Relief and Enhanced Debt Relief: The SBA will pay the principal and interest on 7(a) loans issued prior to September 27, 2020, as well as principal and interest on current 7(a) loans for six months for small businesses impacted by COVID-19.
- SBA Express Bridge Loans: Allows small businesses that have a relationship with an SBA Express Lender to quickly access up to $25,000. Bridge loan provides relief while applying for an EIDL. Apply by contacting your SBA District Office.
The loans carry many provisions that must be evaluated carefully before committing. But tapping into Washington’s unprecedented effort to help small businesses access the aid they need quickly and efficiently is worth the effort.
Andrew D. Paparozzi joined PRINTING United Alliance as Chief Economist in 2018. He analyzes and reports on economic, technological, social and demographic trends that will define the printing industry’s future. His most important responsibility, however, is being an observer of the industry by listening to the issues and concerns of company owners, executives and managers.
Previously, he worked 31 years at the National Association for Printing Leadership. He has also taught mathematics, statistics and economics at various colleges.
Andrew holds a Bachelor’s degree in economics f rom Boston College and a Master’s degree in economics — with concentrations in econometrics and public finance — from Columbia University.