The first round of the Paycheck Protection Program included nearly $350 billion to provide American small businesses with eight weeks of cashflow assistance through 100% federally guaranteed loans. The demand for the loans was so great that all of the funds available were quickly depleted. Congress passed legislation providing an additional $321 billion for the program which the president signed into law today. Comprehensive information on the loan program, eligibility, requirements, and loan forgiveness can be found here: https://bench.co/blog/operations/paycheck-protection-program/.
AMT member Rick Boedeker, Owner and President of TechMach in Rogers, Ark., was able to secure a loan from the Paycheck Protection Program before funds ran out. TechMach is a full-service distributor of CNC machine tools and accessories in the electronics, automotive, aerospace, and medical industries in Arkansas, Missouri, and southern Illinois.
Working closely with his accountant, Boedeker applied for the loan so that he could retain his six employees despite a significant downturn in business due to the COVID-19 crisis. The loan he received covers about 85% of employee salaries during the eight-week period. Fortunately, no employees needed to be laid off, even temporarily.
“We were expecting March to be a pretty big month – it is traditionally one of the busiest months of the year in the machine tool industry – but this March, business was practically nonexistent. We still have some activity, but for all practical purposes, everything ground to a halt,” said Boedeker.
Boedeker says his accountant played a major role in getting the process going and assisting in getting the loan application completed and submitted to the bank. The accountant was ahead of the game and had already done all the research. As a small business himself, he was already looking into the process for his own business.
“I’m fortunate to have strong, established relationships with my accountant, tax attorney, and my bank. I literally only had to make a few phone calls and spend three to four hours on paperwork here at the office to get the application submitted. It happened really quickly – we submitted the application on a Friday, it was loaded into the system by the bank on a Tuesday, approved that Friday, and I received the funds the following Monday,” continued Boedeker.
Boedeker says they really did not experience any bottlenecks. The only thing that slowed the process, and really for only two or three days, was the bank because it did not know exactly how the process with the SBA was going to work and needed to figure that out.
“My accountant, tax attorney, and bank officers all know each other and do business together. This definitely contributed to a smooth process in terms of communication and other factors. Additionally, I’m friends with the chairman of the board of my bank, Generations Bank, and that also made things smooth.”
Boedeker’s advice to others when new loans become available is to act as quickly as possible to get the application in. Additionally, he said, “It helps to have solid, long term relationships with your accountant and tax attorney so that they understand your financial and legal situation from the get-go and can act quickly. All things being equal, these long-term relationships serve to make your business a priority to them which speeds the process every step of the way.”
Boedeker has not pursued any other disaster assistance programs such as the Main Street Lending Program or the EIDL (economic injury disaster loans), but he has not completely ruled them out. These loans are not as attractive since they are not forgiveness loans.
To work leaner in the past several weeks, Boedeker has tried to trim business costs wherever possible. For example, he had been considering changing the company’s traditional phone system to voice over internet protocol (VOIP), and the crisis spurred them to move forward with this. It has saved the business a fair amount of money. As a sales and service company, they have moved to online meetings with customers, using Microsoft Teams.
Boedeker is part of an AMT Leadership group that meets weekly on Zoom conferences calls to share resources, ideas, and opportunities with each other. He has also found this group to be very helpful as a sounding board.
For more AMT analysis on the Paycheck Protection Program, including an informative webinar breakdown, check out these articles: