Expert Connexions: Resources for Small Businesses Impacted by COVID-19

In this virtual chat, Laurie Lonsdorf of the Small Business Development Center shares the latest resources and information to help support small businesses during COVID-19.

Laurie channels her first-hand experience as a former business owner into a passion for helping others to start-up, run and market their companies. Laurie provides one-on-one business counseling and delivers a range of business training focused on startup and marketing issues.

For more information on the Small Business Development Center: https://sbdcmichigan.org/

Transcript:

Julie: Welcome to our special Facebook live series called expert connexions where we are interviewing experts with information and insights to help us through this COVID-19 pandemic. I’m Julie Holton, I’m the founder and principal strategist of mConnexions. There is a lot of news today about relief for individuals and businesses that will be coming from the federal government. The US Senate passed a two trillion-dollar relief bill to offset an attempt to offset some of this financial distress that this country is facing. That bill now goes on to the house and of course, you can follow all of the details on that from our local media. Today we want to talk hyperlocal. We want to talk about the impact on businesses and the resources available to help businesses. Our guest has been an invaluable resource to me personally when I was launching mConnexions and continuing as I’ve been growing my company. Laurie Lonsdorf is a consultant through the Small Business Development Center. Laurie, thank you so much for joining us today. 

Laurie: Oh I’m so happy I could be here and I really appreciate you putting this series together for all of your followers.

Julie: Oh thanks, Laurie. So Laurie provides one-on-one business consulting especially for small businesses, for freelancers, for contractors, so Laurie I want to talk about that first a little bit because you work with the Small Business Development Center and I’m assuming that many of our viewers are aware of SBDC, but for those that aren’t can you tell us first what is the Small Business Development Center and what do you do?

Laurie: Yeah I’m going to say probably more of them don’t know about us because we kind of fly under the radar, but the SBDC is a federal program where you can find us nationwide and in the state of Michigan we have ten regional offices mostly located at universities and community colleges here in the Greater Lansing area is that kind of where your target market is?

Julie: Yes, all throughout Michigan especially in Lansing.

Laurie: Okay great we are located at Lansing Community College and we serve Ingham, Eaton, and Clinton counties and we work with people, small business owners, to start their businesses, to grow their businesses, to help them transition, and I’m going to say maybe I’m adding kind of that fourth node right now to help them through those financially challenging times and keep things moving hopefully. Yeah, and I know you’ve been so busy Laurie helping your clients through this. It has been quite an experience for us. We are trying to absorb so much information it’s just it’s a constant barrage of information coming in about what’s happening you referred to the federal relief bill. There’s information on loans, there’s information from the state and employee’s unemployment, and there’s so much that we’re trying to process and distill some of it so that really the businesses don’t have to be the experts in everything, but you know we’re learning on the fly and we don’t know everything so it’s kind of a moving target and we just kind of put that out there for learning and hopefully, we’re a step ahead of you so we can help you along. One thing that I want to mention about our services is that they are free because we do receive funding from the federal government, the US Small Business Administration and you’ve essentially paid for our services through your tax dollars. So I like to say you might as well take advantage of coming to us and seeing if we can help you.

Julie: Absolutely and I know those services have helped me. Laurie and her entire team are an incredible resource here. So, Lauri, I imagine that your phone just doesn’t stop at this point. So a lot of questions and kind of some concerns to work through here and I know that for any resources or answers that you don’t have you have connections to resources. So first let me ask you, what are some of the conversations that you’re having with small business owners? What are some of their biggest questions right now?

Laurie: Yeah I’m going to say kind of the first wave was really when the executive order came down and closed the restaurants, whoops I see Julie may have popped out I’m going to see if – oh good you’re back. So when the restaurants closed we were forced to close they could still continue with takeout, that was sort of the first wave of people really panicking. You know what I do? Oh my gosh, how do I manage this and one of the things we encourage them to do is to take some decisive action. You know don’t sit don’t wait and figure out you know so many of them have had to reduce their staff. They really had to weigh either reducing their staff, putting them on unemployment, or keeping them on and just carrying the burden out of savings. At this point, most can’t afford to do that and the unemployment packages are increasing so it’s really making more sense for people just to go on unemployment at this time. It’s also safer for the workers I’m going to say, but one of the biggest questions we’ve been getting is what kind of relief is there for me and I’m going to say the biggest form of relief and I’m going to kind of grab some of my cheat sheets here is with the SBA the Small Business Administration emergency injury disaster loan. We just refer to it as the disaster loan and so there’s a lot of information out, people who have explored this they’ve seen it on our site, they’ve visited the SBA site, some may have tried to apply and it looks pretty complicated because it is and so that’s one of the first things that people have reached out to us for and why don’t I just kind of give the high level of what’s involved in that loan. So one of the first things we want to educate people on is that it is a loan it’s not a grant. By and large, when we’re working with small businesses there aren’t usually grants available. There’s no free money. As things roll out now and relief comes down there may be some pockets here and there, but this SBA loan is a loan, so you have to kind of prepare yourself to be able to pay it back and let’s see it’s free to apply, it’s a rather lengthy process, but one of the good things is its very low cost it’s 3.75 percent. You can apply for up to two million dollars and the awarding of this loan will be based on the economic injury. So how much do you expect to lose possibly over the next six months and I sat down with clients well virtually of course because I can’t? I can’t meet with them face to face anymore, but we’ve walked through some worksheets kind of determining what that looks like? What does that loss look like I expect to experience over the course of time and so we’ve helped them to understand whether this loan is right for them or you know and really what’s the information they need to complete the application process?

Julie: Okay and Nathan is asking here, what do you consider the threshold from a small business to maybe a medium-sized business?

Laurie: Well for the purposes of this loan, it does somewhat depend on the industry but for most industries, it’s going to be 500 employees and fewer. So that’s a lot larger than what most of us consider to be a small business. Yeah for sure.

Julie: Okay and Vickie is asking so I’m just going to jump to some of these questions so as you have questions you know to add them to this chatbox here we’ll go through them. Vickie is asking, is there a willingness or capacity that you’ve seen so far to assist nonprofits?

Laurie: This loan is available for nonprofits actually. So we at that Small Business Development Center, we don’t work with them just because the SBA directs us and they say we aren’t allowed to provide assistance to nonprofits, but this loan is available.

Julie: Okay excellent. So, Vicki, you can get information on that loan from the SBDCs website and work through that process. Okay, excellent. Thanks, Laurie. So let’s talk a little bit more about what are some of the immediate steps right now that small businesses should be taking?

Laurie: Number one, well you need to do some really strong critical analysis of your business and you got to look at your numbers and the number one thing you need to do is preserve your cash. So make sure there is no cash going out that isn’t mission-critical. That’s if you’re still able to function. You need to cut your expenses down to the bare minimum. I was just speaking with somebody in the food industry today and he said well I’ve cut everything down I could which is operating with a skeleton crew to do some takeaway food and we’ve just got bare minimum overhead costs and still it looks like right now he could break even, but might not in the future. Might not next week because that break-even often means the owner isn’t able to pay themselves. So yeah I’d say that’s one of the most critical things that you want to do is really understand where you are financially and stop any payments that don’t make sense. Then talk to your creditors and make sure they understand what you’re experiencing and they know what’s happening obviously because we’re all in this together, but you need to call out, you need to reach out to them, and let them know what you personally are experiencing and you need to ask them if you can get deferred payments. Now I know some lenders are already willing to defer payments. They don’t forgive that portion of the loan. They just kind of put it on the back end of your loan, but it could give you some really critical breathing room so that you don’t have to make those payments. I’m going to say so if you own a building, that’s really huge. Do this for your personal life as well. If you have rent payments, you got to reach out to your landlord. I think very soon down the road some kind of relief will come down for landlords so that they can provide relief to their tenants because I think that’s one of the biggest concerns of individuals right now. Is how am I going to pay my rent.

Julie: When we’re talking about business, it’s hard right now to separate personal life from business life right because we’re experiencing all of it at once and Lori I want to emphasize one of the things that you just said because I heard even federal officials during their news conferences emphasizing this, don’t assume make sure you’re calling. Whether it’s your mortgage company, your creditors, anything that would provide you with relief. You need to make those phone calls because you can’t just assume that they’re deferring payments for everyone.

Laurie: They will never do it automatically. This doesn’t matter any time, not just during this economic crisis, but you always need to call your creditors and make a real payment plan. They will probably ask you when you think you can pay and I don’t know what kind of deferment plans you know let’s say you have a Discover card you know that would be more of a personal thing that you need or if you have a business credit card. I don’t know how far out they’re doing, but you know you need to find out what those deferments are. Are they doing deferments of three months? Can they do six months? Can you do a year? You know whatever it is, make an agreement, follow up on that as you know the agreement. If you need to change that agreement, contact them again, but make sure you’re contacting everyone because you want it. You want them all to know what you’re experiencing right now and that you just aren’t receiving the cash flow that you normally would have. Right absolutely and Laurie I know you have some more tips you want to talk through there. So what’s next on your list? Well and I’m going to say one more thing about creditors, make sure that your payroll, taxes, bank insurance, these are sort of the critical payments that have true consequences if you don’t make them so that needs to be your top priority of contacts. So then I think the next thing is to see if you can maybe get some money to kind of show you up. So you might reach out to your bank. Reach out to the bank that you already have an established banking relationship with and see if they have any quick turn loans. Quick turn loans might be something that they could do in just you know a couple of days. Normally when we work with businesses and they go through commercial lending, you know a startup, they do a business plan, financials, well nobody has time for all of that. Also if you have that relationship already, they should already know what your banking history looks like, they see how much cash flow in the past is coming in and out of your bank account. So give them a call to find out if there anything they can turn around you know in a short time. I find that the branches are often a better source for these quick turns than the commercial lenders themselves because commercial lenders don’t like to deal with small amounts and right now we’re probably thinking about a small amount until you can actually get one of these major loans the SBA disaster loan. The disaster loan will probably take about a month. About 21 days to be reviewed and approved and about five days’ business days to be paid. So yes getting some working capital I think is the next thing to make sure you are capable of operating.

Julie: Right which certainly starts to relieve some of that pressure right. I think for many small businesses right now you’re in the pressure cooker. You’re feeling it from so many directions and I get it you know Laurie you owned a business for a long time. You get it, so we know we feel you. I’m a small business owner right now and I work with a lot of clients who are small business owners and so we know right now it’s that pressure cooker feeling. So cash flow is the first way to start relieving some of that pressure so you can start to then strategize and look at the next steps.

Laurie: Yeah and you know I shepherded my business through the tech boom and bust and then the Great Recession and none of that compares to what’s happening now or what’s really going to be the fallout as this continues and the long-term economic effects of the COVID-19.

Julie: Laurie I want to quickly – we’ve got so much to go through so.

Laurie: I know what else do we want to talk about?

Julie: We’re here to answer questions. so we aren’t going anywhere so if you have questions we’re going to – We’ve got a question from Stephanie. Stephanie right before I ask this question Laurie I want to ask you, talking about this SBA disaster loan and I know you’re also here in Michigan looking closely at the Michigan small business relief grant and this is a grant. Can you talk about that a little bit because I know I was having a conversation this morning with a business owner, that three weeks ago her business was thriving, expanding, growing, doing amazing, and now she’s on the verge of do I just close my doors completely for good and so because you know and I think there are many business owners in that situation where you here a loan and we don’t know when we’re going to see the light at the end of this tunnel and so, of course, a loan is a very scary idea. For some it may be great it’s going to be a necessary and great option, but I think for others I mean the idea that maybe there will be some grants to provide some relief could be helpful. So what are you learning so far about this grant?

Laurie: Okay so the Michigan Small Business Relief Program is going to have two portions. It’s going to have a grant and a loan. Right now we don’t know much about the loan, but the grants the money ten million dollars have been distributed across Michigan to different economic regions. Here in Greater Lansing we’re going to have six hundred thousand dollars and it’s going to be administered by LEAP, Lansing Economic Area Partnership, and the grants are going to be in ten thousand dollar amounts and this is going to be some talk about quick turn money. Man, this is going to be a rapid-fire application process. Applications should be open to the public probably by Friday and Tuesday the 31st at midnight is when they close the application and then a bunch of reviewers digs down and however many applications there are have to review them all and eventually hope to have the 60 awardees to be paid out, I think the 8th of April, so we’re talking really fast. So this is going to be highly competitive and one thing they probably will be looking for is that economic injury you are experiencing. So essentially anyone who has been affected by number one, the governor’s executive order. So the executive order is now of a stay at home. It started out as just the restaurants and the coffee shops and then it was brought in, the second way was bringing in the salons and the spas and tattoo parlors and now it’s essentially anyone that’s a non-essential business is affected. So if you aren’t among those categories then there are a couple of other criteria, you need to be located in one of our downtown or historic areas. You need to be somebody who provides services to one of the affected businesses. So let’s see what else I know about this. Nonprofits are eligible as well for this grant and I don’t know anything about what the application is going to look like because they have been just working at lightning speed trying to pull all of this together and all the other regions across the state have been working on their applications as well and we’re going to see something very soon. So if you think you want to apply for it, definitely check it out. It will be on the LEAP web site which is what purelansing.org I think.

Julie: Yes, okay great and that will be coming out Friday. So coming out tomorrow.

Laurie: Remember it is highly competitive and those that probably are demonstrating a higher level of economic injury. An economic injury means jobs lost. So payroll lost right. The payroll is lost. We can’t keep these people here um and that could also include the owner’s drawers or salary. It could be the rent, utility. So all of those items that you are no longer able to afford because you don’t have any cash flow coming in because of the crisis.

Julie: Okay Stephanie wants to know what tips you have Laurie for subcontractors or freelancers who aren’t employed but don’t necessarily run a small business and I know you talked about this just yesterday in a webinar.

Laurie: Yeah so your 1099 independent contractors. So what I said yesterday is typically you don’t aren’t eligible for unemployment because, in order to receive unemployment like you know somebody who loses their job, they work for a company, that company has paid into the state unemployment fund, but typically those that are self-employed which means the business owner or somebody who is a freelancer, independent contractor, isn’t covered, but it looks like this new relief package, that’s we’re waiting to be approved for federally, is going to have some provisions for all of those levels including the independent contractors for some type of unemployment. I don’t know what that looks like yet. So if that’s what you’re looking for, maybe that answers your question.

Julie: Watch for that and certainly we’ll all be closely watching as that develops. Local, you know media outlets, newspapers, will have a full breakdown of what all is included in that bill and what that means for all of us so yes. Okay, Laurie thank you. You know what are some of your thoughts for businesses as we you know we’re kind of in this I don’t want to call it a holding period because I think many businesses are scrambling right now so it’s not a holding period, but I think there’s a level of effort that’s being done to plan for the right now as you said like cash flow whatever that looks like, but also you know as we start to try to look ahead, whether that’s a day ahead, a week ahead, a month ahead, what kinds of things should we be doing to maybe start to look beyond and start planning may be strategically or logically with what comes next?

Laurie: Yeah so I’m going to say maybe some of those businesses and even organizations that workers have been sent home, but you’re still able to maintain operations. This is the perfect time to dig into those projects. Sort of that long term strategic planning or what sort of programmatic changes do we want to make? If SBDC were an organization that you know this was a down time we would be thinking long term about what kinds of training programs we should bring on or what kinds of services can we bring to people? Start visioning what the company could look like, but also start really working on those projects because I know I have a stack of projects that I can never get to and this is that perfect time to do that.

Julie: Absolutely especially as we start to think ahead. You know I know we’ve been I as – for those businesses that cannot be doing what you know it’s not business as usual right now. You’re not whether you’re – I keep thinking of examples that I don’t want to give because I don’t want to call anyone out, but there are a number of businesses that we that are in a kind of a wait-and-see mode, but there are things that we can do instead of just waiting for right and so kind of looking at some of these, dusting off some of these strategic plans that we haven’t looked at in a while. You know working on things, like improving your marketing skills, learning a new skill in general and looking at how that may kind of shape the course of where you want to take your business. Would you say those are all things you know anything you would add to that?

Laurie: Those are great things. Now is the perfect time to learn a new skill, learn that new application that you’ve been wanting to get better at. There’s so much training available right now and I think that’s an ideal thing for a business that is more in that holding pattern too. A business whose hair is on fire; you shouldn’t be doing that. You should be making those critical decisions right now and preserving everything you can and making those next critical steps you know and choices to move forward save the business, but for that business that yes that is in sort of breathing mode, yeah that’s a great thing to do. Dig down, do that professional development. All of these wonderful conferences have been canceled, but look how much stuff is moving online. You know what you can find online? Have some meetup discussions online with other similar minded professionals? You know yeah great idea I love that.

Julie: And Laurie speaking of resources, tell us so SBDC has a lot of resources. There are webinars digitally that you can go through. Tell us about what we can find on your website.

Laurie: So we have a specially dedicated COVID-19 page and you just click that red button at the top of our website SBDCMichigan.org and scroll down to the big green banner and you will see all of our COVID-19 specifically related content. Every day we are doing a COVID conversation and its kind of a Q&A format much like here with a different expert speaking on a different topic. Today’s topic is going to be I think it’s about restaurants and next week we’re going to revisit our HR and employment issues, so we’ll have updates on all those things we’ve alluded to today. They’re recording all these so you can download them on demand. A really good one, my colleague Brooks Kindle did something called navigating the cash flow crunch and I’d say lots of great resources.

Julie: I love that. A lot of great free resources too. They are all free. Laurie is there anything else that I haven’t asked you and the audience too if there are any questions you have while we still have Laurie, feel free to ask. Laurie anything else that we haven’t touched on that you want to make sure and convey to our audience?

Laurie: Manage your business, that’s you know. Be decisive, don’t put your head in the sand. That’s one of the most important things. One of my co-workers said her client was just struggling with what’s happening and so all she wanted to do was take control in some form and so she was purging her house. She was cleaning and that’s the kind of thing we do just so we can have that sense of control, but really that’s not what you should be doing. You should be looking into your books; you should be figuring out the next steps. Some people are going to have to make the really hard decision of closing their businesses permanently. That’s inevitable. There’s going to be some fallout. You don’t want to be that person. You want to take control in the beginning and make sure you have thoughtfully worked through all the options and looked at all the different opportunities to keep your business operating.

Julie: Absolutely Laurie thank you so much and I think you know the other thing that I’ll add to that because that’s really important I think to make sure that you know to the extent that we have we have control over how we plan and how we respond and so we can’t respond unless we have all of the data in front of us and we’re working through it. So I will emphasize if you need someone to talk to, reach out to Laurie or her colleagues at SBDC. They are available to help for free. They are busy, but they are always welcoming to new people. So you know and whether it’s SBDC or another organization, maybe you already have trusted advisors that you work with, that’s what they’re here for and now is the time to call on those relationships and use your network and remember we’re all going through this at some level or another. So Laurie again thank you so much for taking the time today.

Laurie: You’re so welcome Julie. I really appreciate being here.

Julie: And tomorrow we’re going to talk about taxes. So tomorrow we have Nikali Luke of simplified tax and accounting, will be joining me to answer all of your tax-related questions. I know this is not an area of expertise for me at all, but there have been a lot of changes obviously and so we will be talking with him about that. That’s tomorrow Friday at 1:00 o’clock. Every interview we’ve done so far is right here on our Facebook page. I did I think ten last week and then one each day this week. So a lot of resources for you. Experts in their fields to answer your questions. So if you’ve missed something, anything from how to clean during this coronavirus, how to focus on your health and wellness, how to parent with your homeschooling and trying to work from home at the same time and then, of course, all of these amazing business-related topics. We’ve also put together a special page on our website where we are sharing resources like what Laurie provided today from the Small Business Development Center, so you can find all of that at mConnexions.com. If you have any questions or if there are any topics that we can help you with, feel free to reach out to me directly at [email protected] and I will see you back here tomorrow for our next expert connexions conversation.