By Michelle Price
Special to the UCBJ
COOKEVILLE – With the deadline for applying for the Paycheck Protection Program (PPP) loans nearing, there are still some small businesses debating whether the loan is the right avenue to pursue. The Upper Cumberland Business Journal spoke to three owners of small businesses in Cookeville to get their insights and thoughts on the PPP loans and the process involved to receive it.
The three business leaders interviewed include Britt Akers, president and owner of One Hour Martinizing; Jay Albrecht, general manager and owner of Seven Senses; and Jason Reff, general manager and owner of Golden Corral.
How has COVID-19 affected your business?
(answers relate back to when COVID-19 was at its worst)
Akers – It has majorly impacted us. All the business travel has quit. Businesspeople who normally wear nice suits and ties and have their shirts folded aren’t traveling. Churches have not been meeting – wearing things that we clean. All the proms. April and May are my biggest months of the year, and we went from the biggest months to the worst year probably in history of cleaning. We’re down over 50% from where we normally would be. Never in our family’s time of being here – we’ve went through recessions and 9-11 – but never anything that has affected our business like this. I’ve never had to lay anybody off. I’ve tried to not, even during this time, but the hours I was able to give still weren’t enough, and I did have a couple of people file for unemployment.
Albrecht – The coronavirus affected my business in a couple of ways. The first being when guests started staying home out of health concerns. The second when the government mandated the closure of our dining room, resulting in an 80% drop in revenue. This is revenue we simply never recover.
Reff – With us being a “buffet,” everybody serves themselves. I had to think about the health of the public, more than I did anything, because that’s our name. That’s why we decided to shut the doors, because the public and the expectations we have set are so high. And our employees, we didn’t want them to get sick. It was a hard decision, but I think it was the right decision going down the road.
We closed March 22 at 4 p.m. Unfortunately, with Putnam County, we have the F-4 tornado that went through in early March and that week before we had record sales. Then with that going on and the COVID scare, sales just kept going down, down, down. We pretty much got double whammied here in Putnam County.
We tried to stay open for the first responders, but for us, we are constantly cooking, and we were throwing more food away than we were serving it. We just had to make an executive decision to say ‘This is not working out for us,’ and we had to furlough all our employees, managers, myself and hope for better days.
Why did you decide to apply for the PPP loan? Did you also apply for the EIDL?
Akers – We have really good staff, and I wanted to keep my people busy and on the payroll. Economically, we weren’t going to be able to stay afloat without getting some help from a bank or a program like that. I just financially wasn’t going to be able to keep it going.
Albrecht – I applied and received PPP money for one primary reason – to keep my employees as whole as possible during this crisis. My nearly 30 employees were able continue receiving a paycheck without interruption, and I have a full staff ready to work now that we’re able to partially reopen our dining room.
Reff – For me, as long as we go through the guidelines, it can be forgiven, which is a big thing for small businesses. I’m sure a lot of small businesses like myself, we do have backup cash flow, but usually that’s three to four weeks cash flow. When you don’t have the cash flow coming back through, you need something to help you out with getting your cash flow built back up. This program will allow us to do that, because I’m using this money to help pay my employees, so I’m not paying it out of my own pocket. I possibly will because the guidelines keep changing daily according to my accountant. Hopefully we will do everything right and the loan will be forgiven down the road. It was a lot of paperwork. A lot of restless nights wondering if you were going to get approved. I applied through the first round of the PPP loan and it literally took almost three weeks for me to get approved. The EIDL took four and a half.
How many employees are affected by this?
Akers – We had 20 on our payroll. I know three filed for unemployment, and one had quit just before this. During the time I wasn’t sure if I was going to get this, I was working the front counter all the hours – working 7 a.m. to 6 p.m. – and not giving my people hours until I knew I could get some help. Then I was able to restore their hours.
Albrecht – I have nearly 30 employees and was able to keep all who wanted to work employed and paid as if they were working regular hours.
Reff – Counting managers, employees and myself – a total of 75 people.
What bank did you use?
Akers – F&M Bank. Suzanne Woods was spectacular to hold our hands through it. She was super.
Albrecht – I approached the bank I’ve proudly done business with since the beginning of my restaurant, and they assured me they could get it done. SmartBank (formerly Progressive Savings Bank) processed my information and secured my money from the SBA during the first round of the program.
Reff – My bank was First Horizon. I try to keep everything local. I do a lot with the veterans, the schools. I try to keep everything I can with the locals in our community, and it was new to them. They weren’t used to the SBA loans and how tight they were and all that.
What was your experience with the loan? With the ease of completing application and processing?
Akers – My experience with the bank was easy. All my books were current, so between me and my bookkeeper, anything they asked for we just provided and went on.
Albrecht – In the beginning, the process was a bit convoluted, as it became obvious even lenders did not have solid information from which to work. That seemed to calm down a bit just a few days into the process, but I believe the process ended up more complicated than it was originally intended for all involved.
Reff – First Horizon did a good job with their application – everything step, by step, by step. The actual loan itself was a little complicated, but they were there to answer any questions. It was more about getting things from previous years and matching numbers. The first time I applied for it, I was off by $0.17 and didn’t realize it, and it didn’t go through because I was off $0.17. That’s how strict the SBA was. You have to be very precise – down to the penny. The gentleman I dealt with was wonderful. He had a lot on his plate, I’m not the only one he helped out. He was calling me sometimes at six or seven o’clock at night, and I thought ‘Man, is he still working?’ You don’t hear that with that kind of establishment, but he stayed late nights, sent me emails late – there’s one time I got an email at 1 a.m. from him saying ‘Everything’s going good. You just don’t worry.” That means a lot to me that he cares enough about my business and my employees and the business I do with First Horizon. It made me feel good. I’ve been with them for 16 years. I would not choose another bank in town.
What has the loan allowed you to do that otherwise you wouldn’t have been able to?
Akers – Spend time cleaning. (Akers utilized employees to deep clean the building and several storage buildings the business uses.) 75% of it is going to payroll. I’ve used the other for utilities and rent and interest expense on our note to the bank. It is so detailed in what you can use it for … you just have to follow their guidelines. What it’s doing is, what business we’ve been doing, I’ve been able to take that money and put toward the normal expenses. For the note it’s allowed me to take the money towards my big payments, and the recurring expenses like getting your lawn care or the tuxedo expenses, where I buy tuxedos for proms and weddings, outside vending services and things like that. So, it’s kept us going.
Albrecht – Simply put…keep my employees employed and be ready to get back to action almost immediately. Without the PPP loan, I would’ve been forced to lay off most of my staff, putting my business future in a complicated state, especially with the unemployment incentives that exist now. We used a lot of extra time to deep clean the restaurant and take care of some needed maintenance issues that are hard to tackle when we’re doing regular business.
Reff – Open back up. I really don’t know what I would have done to get working capital at this point in time, because banks are clogged with loans right now, and if I said I need a $100,000 working capital loan, I would have been on the back burner.
Your overall impression of the PPP program.
(answers were prior to the extension of the PPP period from 8 to 24 weeks)
Akers – It’s just for 8 weeks and I think that everybody is hoping that after the eight-week period that things are headed back in the right direction so we can stand on our own without the assistance, but I’m very grateful for the program, and that I was able to qualify and get the help. The business has been here since ’67. I don’t know how we would have been able to do it without the assistance.
Albrecht – The PPP program is a life saver for many small businesses and their employees. The true measure of the program will be, however, when the payback process begins. How forgiving will the SBA be, will the terms change, and how will they deal with businesses like mine that may not yet be back to full capacity when the snapshot takes place. I’m thankful for the money now, but I am slightly worried about what comes next.
Reff – My only worry is going down the road. We are allowed to use the money over eight weeks. I worry that there’s going to be other circumstances or guidelines. Did you spend too much here? Did I go over by $0.02 on payroll and then it would be unforgiven, and I would have to pay it back over a two-year period. It just depends on the people in Putnam County if they are going to come back out and eat. It’s going to help us, but it’s not going to help us if I don’t do the business, because everybody is used to cooking at home and going to the grocery stores because there haven’t been any restaurants for people to come and sit down and eat. That’s the scary part. It’s going to be rough but it’s going to be worth keeping my employees because I have employees that have been with me 16 years. That’s unheard of in the restaurant business. And I appreciate every last one of them
The general consensus is that the PPP loans are definitely worth the time and hassle it takes to apply. For some small businesses, this loan can make the difference between remaining open or closing the doors forever.
The deadline to apply for the PPP loan program is June 30, 2020. Three banks were referenced in this article, but there are many good banks across the region participating in the program. A list of all the participating banks in the state of Tennessee can be found here.