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Spaulding Smails

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  1. Below is the SBA summary that my banker sent over. Paycheck Protection Plan (part of the H.R. 748) ** The Bill has passed the Senate and is set to be voted on in the House on Friday (3/27). The President will need to sign, then the Bank will need to receive implementation guidance from the SBA before the program is available to our customers. ** Key Program Details (subject to change prior to final Government approval): Eligibility – Small businesses, non-profits, self-employed, and independent contractors. (Churches and/or religious affiliated businesses MAY qualify – details to come) Must meet SBA Size Standards (based on NAICS Code of subject business). Loan Amount – Lesser of $10MM OR any outstanding balance on SBA Disaster Relief loans obtained between January 31, 2020 through date debt is eligible to be refinanced (information included within your Disaster Relief loan documents) PLUS: Existing Business: 2.5x the average monthly payroll cost incurred and paid over the year prior New Business (less than 1 year): 2.5x the average of 2 months payroll from January 1 st to February 29 th , 2020 Seasonal Business: 2.5x the average of monthly payroll from February 15 th or March 1 st , 2019 through June 30, 2019. *Payroll costs include salary, wages, and payment of cash tips, employee group health care benefits, including insurance premiums; retirement contributions; and covered leave. Salaries/Wages over $100,000 per employee will not be included. Loan Requirements - No Personal Guaranty No Collateral Requirements $0 Guaranty Fee Business must certify loan is necessary to continue to operate, retain their employees, and/or make mortgage and utility payments and that you have not applied or received another 7(a) loan for similar purposes. Loan Forgiveness – Calculated based on payroll costs, mortgage interest, rent, utilities for the 8 week period paid after loan origination. Payroll costs over $100,000 per employee will not be considered in the forgiveness application. *Amount will be reduced if the # of employees used to determine loan amount is decreased or salary expense is reduced* Business must certify funds were utilized to keep business operational and retain/pay employees.
  2. My banker just sent me a summary. I've never really considered an SBA loan, but this one may be pretty enticing. I'll be curious to see what type of conditions accompany it. But, on the surface, it seems to be a pretty solid deal that would help a ton.
  3. That's good insight. I haven't read through the bill, but our HR consultant indicated that we WOULD be on the hook for up to 80 hours if a shelter in place prohibited our people from working (assuming they can't work remotely). If it's limited to those six reasons (essentially direct effect of COVID-19), then we're in a much better spot as a company, but our employees are now up a creek. I understood the FMLA piece that extends beyond that timeframe the same as you. Let me know if you have any more insight or can cite the specifics of that provision that I can share with our consultant. FYI, it sounds like the DOL updated the effective date for that first bill to April 1 to coincide with the start of the quarter as opposed to the previously communicated April 2 enactment date.
  4. Below is the summary of the second stimulus package that I just received from our HR consultant. If true about advance refunding, this could be a huge shot in the arm for many businesses from a cash flow perspective. Lots to be verified and digested here, but it's a start. Late last night Senate lawmakers struck a deal for a $2 trillion stimulus package aimed at helping the people, states and businesses devastated by the coronavirus pandemic. The Coronavirus Aid, Relief and Economic Security Act — or CARES Act — covers an array of programs, including direct payments to Americans, an aggressive expansion of unemployment insurance, billions in aid to large and small businesses, and a new wave of significant funding for the health care industry. The Senate is expected to vote on this later today! Here are the highlights as it stands : Financial assistance to Americans (direct checks based on income level) An extended unemployment insurance program for laid-off workers that will allow for four months of "full pay," and raise the maximum benefit by $600 per week. The provisions for UI will be back dated to January 27th. $150B for the Health Care System. $150B to state and local governments. The CARES Act provides for advance refunding of paid sick and family leave credits so that employers can get the money they need to provide paid leave in the near-term. $350B for small businesses impacted by the pandemic in the form of loans…and some of these loans could be forgiven (portions pertaining to payroll costs)! Businesses could receive a maximum of two and a half months’ worth of payroll costs, up to a maximum of $10 million, but forgiveness would be proportional based on how many employees the employer retained compared to its pre-COVID-19 levels. Employers can receive credits and loan forgiveness for pay provided to workers who were laid off on March 1 or later if they rehire and pay them.
  5. Get em Sea Bass! AIA sent out a memo from their attorneys basically outlining the same thing. There are numerous conflicts with Travis County orders, direct contradiction of previous information, and the memo provided by Development Services last night essentially "fails to provide clarity".
  6. The boy and I are rolling out Saturday morning as well. Need to fill protein feeders. We'll see if we can call in a gobbler. May sit in the blind a few evenings to see if an axis doe or pig walks out. I'm so damn ready to get out there and turn off for at least a few days.
  7. Yeesh. $500K is a big nut. We're at about $350K/mo bare bones. 80% of that is labor.
  8. WIP is solid. We're over-billed on a number of jobs and gross margins are tracking ahead of budget on 8 of our 10 largest projects. I have two stinkers that are getting drug out and eroding profitability, but otherwise we're fine. BTW, you nailed the weekly payroll number. Damn near to the penny. Well done.
  9. When the dust settles, bring on the thoughts and questions. I'm all ears for how the heck to deal with this.
  10. Subscribed. I've posted in two of the other threads, but I have a construction (residential and commercial) and facility maintenance company in Austin. 65 employees currently. 80% of my workforce can't work remotely. I was incredibly optimistic yesterday that construction was an "essential business". Local trade organizations, my builder customers and my attorney agreed. Last night, the City of Austin Development Services sent out a memo strictly forbidding construction. We have until Friday to "make safe" job sites. Now, I'm scrambling to figure out how we deal with those repercussions. Tons hinging on the details of this most recent $2T bill and its effects on unemployment and small businesses. An interpretation of that is going to have a huge bearing on my decisions over the next week. From a general business sense, here's my takes: THE GOOD -Our balance sheet is super clean. Minimal debt. We own our property. Big line of credit sitting idle. Lots of assets paid in full. -We pay our vendors and subs super fast. I can extend those terms and create additional cash-on-hand if needed. -Our company is very diverse. We offer a wide range of services to a wide range of markets. I want more of that diversity when this is all over. It's going to be huge in saving our ass. -We have a strong backlog. Though not on par with a big commercial firm, we have a legitimate 90 days of work. I want to challenge my team to secure more work. It was said above, but we're going to shift our business model during this downtime to create more commissioned sales opportunities on the service side. -I should still have cash coming in. We have 30+ days of revenue store in accounts receivable. Assuming those invoices don't hit snags, I may actually see cash reserves increase in the next few weeks. THE BAD -The first bill includes guaranteed 80 hours of paid time off for employees. That takes effect April 2. That's my deadline. Though that would be reimbursable to me in the form of a payroll tax credit, it would be a huge hit on cash flow to float 65 employees with minimal revenue. I have our HR consultant helping me figure out what we're going to do, but we have to act by April 1. That's probably going to be layoffs for a few salaried overhead positions and anyone that has been with us less than 90 days. -If this thing lingers for longer than a few weeks, we're probably going to have to lay a bunch of people off. I don't envy restaurants, hospitality, etc. They've already had to make those decisions. I'm dreading it. I've developed a tiered approach, but I'm guessing I'll have to reduce workforce by 1/3 if we're not back to work April 13. -When we get back to work, demand is going to be pent up. It will be short-term, but jobs that were underway are going to want to catch up. Jobs that were supposed to start April 1 are going to want to start immediately. Jobs that were going to start mid-April are still going to want to start mid-April. We're going to see a big push with limited resources in a very short amount of time. -The supply chain will be taxed when we get back to work. Nothing will be easy to get. We've already banned our guys from going to Home Depot between 7 AM - 5 PM because the lines are so long. -We'll probably see a jump in the price of materials. Tightened supply will lead to higher prices. -We're going to get undercut. We're a premium service provider. We lost a job this week to another smaller contractor. The ripple effect will be stronger and more continuous as people get desperate for cash and sacrifice profitability. -The backlog is going to come to a screeching halt. Once we work through what we have, new jobs are going to be few and far between. As mentioned elsewhere, commercial development is going to take a huge hit. You have to think that residential construction will be the same. Hence my previous point about a much stronger focus on service. Thanks for creating this thread. Great to have a sounding board. If nothing else, misery loves company!
  11. The calls I participated on were primarily preparatory in nature. To your point, our three largest construction projects all have limited force majeure provisions with no pandemic-specific language just as you described. We're going to see if our February 20 draws fund by March 31 and use that as a barometer for work continuation. We're not over-extended too terribly much if we limit it to that timeline. Our GCs have indicated that the jobs are on track to fund. Despite all that, we are absolutely tightening up our receivables. We have reduced our DSO by 15% in the last week. On the service side, we've started collecting payment at time of services rendered, even for long-standing customers who have terms, but we're waiving credit card processing fees. This has really expedited payment, and the decrease in exposure through AR has outweighed the credit card fees we will incur. I'm trying to build up as much runway as possible to float as many employees as possible as long as possible if work really does get shut down.
  12. On the ground up project, has it broken ground yet? It's obvious that developers are going to undoubtedly suspend new projects, but I'm curious how many will push on with active projects vs. shuttering half-way through construction. I guess that's a cost-benefit analysis comparing future investment to complete, tenant viability, debt service and degradation of an unfinished structure among other factors.
  13. 100% this. I think the decision to keep construction active by some states and municipalities is multi-faceted. There's probably less risk of a four-man roofing crew being exposed while putting down a TPO roof at the strip center in Florence than when they go to HEB or Walgreens or the gas station on the way home. I would hope that most politicians driving these orders understand that. Second, it's extremely difficult to differentiate some businesses (mine included) that provide both essential and non-essential work. We provide construction and facility maintenance services. On the facility maintenance side, we service essential services like medical, restaurant, manufacturing and child care facilities. While we're prepared to shut down 2/3 of our business, our attorneys have advised us to continue working until we receive specific directives that shut down our construction sites. We're practicing social distancing on the job and have equipped all of our employees with additional PPE and sanitizers in accordance with CDC guidelines. Lastly, I think there would be tremendous financial and legal repercussions if construction did shut down. We've had a number of preparatory calls with our legal team to discuss Force Majeure clauses in our contracts. But, how do owners, lenders, tenants and all other parties react / respond when a location is set to open May 1 but gets delayed due to the impact of shelter in place orders? Or, if you're a homeowner on a lease-back of a house you're selling while you wait for your new home to finish construction, and that gets delayed, are you out on the streets for a few months? I know these financial and legal issues pale in comparison to loss of life and the overall impact on the global economy, but at some point, they're going to have to be considered and discussed.
  14. I'm thinking the same thing @Noogman. Assuming we don't have a bullshit shelter in place by the end of next week, I'm going to head to the ranch for a few days. Spring turkey season is upon us. Wouldn't mind busting a gobbler and maybe a hog or two. Given the circumstances, I may whack an axis doe if one walks out.
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