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The Latest Developments
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Strictly Business Magazine Article:
We were Honored to be quoted in an article about buying and selling businesses: https://strictlybusinessomaha.com/features/buying-selling-a-business-in-omaha-ne-2020 </p>
NEW SBA PROGRAMS OFFER ONCE IN A LIFETIME OPPORTUNITIES
The new SBA loan enhancements could be greatly beneficial for your small business clients. Loans approved between 2/1/21 and 9/30/21 will be eligible for limited-time benefits, subject to availability of funds. New benefits include:
• SBA will pay their principal and interest for up to three months up to $9,000
• No SBA fees, subject to change based on additional guidance from SBA
• Fully amortized/no balloons
• Loans can include working capital to support their operations
• Loans from $250K - $5M+, varies by product
• Loan terms 10 years for business acquisition, up to 25 years for real estate
• No prepayment penalties for loan terms under 15 years
The Second Stimulus Bill
As most of us know at this point, the second stimulus bill has been passed. We wanted to provide some details specifically on how it will help business owners in general, as well as buyers and sellers of businesses.
- If you received a PPP loan in the first round, the money you spent with the funds for approved expenses is now tax-deductible. There are also new categories of expenses that can be forgiven.
- If you received one of the EIDL grants up to $10,000 and also received a PPP, the grant will no longer become a PPP loan that is not forgivable.
- If you received six months of payments on an SBA loan as a benefit from that round, that benefit will no longer be considered taxable income.
- A second round of PPP loans for businesses whose gross revenue was down at least 25% in one quarter of 2020. The formula will be similar to last round unless you are in highly affected industries like restaurant or hospitality where you can receive more (3.5x instead of 2.5x)
- Simpler, 1-page forgiveness application for PPP loans under $150,000.
- If you already received an SBA loan last year and received 6 months of payment relief, you can get up to an additional 3 months (capped at $9,000 per month).
- The bill creates strong incentives for lenders to make new SBA loans. If you receive one before 9/30/2021 - all fees will be waived, and the first six months of payments will be forgiven entirely - up to $9,000 per month.
- If you didn't receive an EIDL loan or grant (or didn't get the full amount), you can reapply as the program is extended through December 31, 2021.
What this means if you are selling your business or thinking about selling
- A simpler way to get forgiveness on your PPP loans, if you are in the process of selling get this filed ASAP as dealing with a PPP loan during a transaction can be difficult and delay a deal.
- Tax relief on expenses that were at one time believed to be non-taxable.
- If your business qualifies, you can receive additional funds through the 2nd PPP round or EIDL programs to keep your business in a good cash position.
- If you have existing debt, or you have down well through the pandemic now may be the time to talk to a lender about acquiring an SBA loan with fees waived and payments forgiven.
What this means if you are buying or considering buying a business
- The incentives for lenders make the SBA products the least expensive they have ever been.
- If you close on a business before 9/30/2021 (or before the money runs out), you will receive your first 6 months of payments forgiven, up to $9,000 per month / $54,000.
What to Ask Before Seeking an SBA Loan During COVID: https://bit.ly/2Wo6DQL
TOOLS FOR CURRENT AND PROSPECTIVE BUSINESS OWNERS NOW AVAILABLE TO HELP YOU DEAL WITH COVID-19 CORONA VIRUS EPIDEMIC
1. Create a Business Bridge Plan TODAY
To survive this and other emergencies, the first thing you need for your business is a PLAN! Transworld has developed tools for you so you may quickly develop a Simple BRIDGE Plan to Get Your Small Business Through Any Emergency: https://tworld.com/bridge
2. Pandemic Unemployment Assistance (PUA) program
Even if you own a small business as an LLC or sole proprietorship, or even if you are an independent contractor; under the recently-passed "CARES Act" you may qualify to receive unemployment under the terms of the Pandemic Unemployment Assistance program, which is similar to the Disaster Unemployment Assistance program. Download information on this NOW.
3. Paycheck Protection Program (PPP)
You need not lay off all your workers, including yourself! Under the provisions of the New Paycheck Protection Program (PPP), most businesses may qualify for an SBA Loan that will be ENTIRELY FORGIVEN if you retain your staff and don't use more than 25% of the entire amount given to you for anything besides salaries, mortgage interest, rent, utilities, etc. Potentially you may also qualify for this program if you are a sole proprietorship, single-member LLC, or 1099 contractor. Click the link below to download more info on the program:
4. It's not too late to bring your employees back
Even if you already sent your employees home on layoff, you may still recall them now and avoid your company having unemployment claims. Don't delay - apply ASAP for the Paycheck Protection Program:
5. Economic Injury Disaster Loan Emergency Advance
This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties. This loan advance will not have to be repaid.
6. If your employees or their family members contract COVID-19 and take paid sick leave, you get tax credits
If your employees get sick or give care to family members sick with COVID-19, and you provide them with paid leave, you get tax credits that may cover a lot of or all of your costs. For more info about the COVID-19-Related Tax Credits for Small and Midsize Businesses, visit https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
The Time is NOW to Mitigate - The Sooner We All Do, The Sooner We Will All Get Back to Business
This is also a great time for investment. Stocks and business acquisition prices will be more competitive than ever, and great deals will be made that will pay off handsomely in the future.
Excerpt from a great article on the subject:
The US administration's ban on European travel is good: It has probably bought us a few hours, maybe a day or two. But not more. It is not enough. It's containment when what's needed is mitigation.
Once there are hundreds or thousands of cases growing in the population, preventing more from coming, tracking the existing ones and isolating their contacts isn't enough anymore. The next level is mitigation.
Mitigation requires heavy social distancing. People need to stop hanging out to drop the transmission rate (R), from the R=~2-3 that the virus follows without measures, to below 1, so that it eventually dies out.
These measures require closing companies, shops, mass transit, schools, enforcing lockdowns... The worse your situation, the worse the social distancing. The earlier you impose heavy measures, the less time you need to keep them, the easier it is to identify brewing cases, and the fewer people get infected.
This is what Wuhan had to do. This is what Italy was forced to accept. Because when the virus is rampant, the only measure is to lock down all the infected areas to stop spreading it at once.
With thousands of official cases - and tens of thousands of true ones - this is what countries like Iran, France, Spain, Germany, Switzerland or the US need to do.
But they're not doing it.
Some business are working from home, which is fantastic.
Some mass events are being stopped.
Some affected areas are in quarantining themselves.
All these measures will slow down the virus. They will lower the transmission rate from 2.5 to 2.2, maybe 2. But they aren't enough to get us below 1 for a sustained period of time to stop the epidemic. And if we can't do that, we need to get it as close to 1 for as long as possible, to flatten the curve.
So the question becomes: What are the tradeoffs we could be making to lower the R? This is the menu that Italy has put in front of all of us:
- Nobody can enter or exit lockdown areas, unless there are proven family or work reasons.
- Movement inside the areas is to be avoided, unless they are justified for urgent personal or work reasons and can't be postponed.
- People with symptoms (respiratory infection and fever) are "highly recommended" to remain home.
- Standard time off for healthcare workers is suspended
- Closure of all educational establishments (schools, universities...), gyms, museums, ski stations, cultural and social centers, swimming pools, and theaters.
- Bars and restaurants have limited opening times from 6am to 6pm, with at least one meter (~3 feet) distance between people.
- All pubs and clubs must close.
- All commercial activity must keep a distance of one meter between customers. Those that can't make it happen must close. Temples can remain open as long as they can guarantee this distance.
- Family and friends hospital visits are limited
- Work meetings must be postponed. Work from home must be encouraged.
- All sports events and competitions, public or private, are canceled. Important events can be held under closed doors.
Then two days later, they " added: No, in fact, you need to close all businesses that aren't crucial. So now we're closing all commercial activities, offices, cafes and shops. Only transportation, pharmacies, groceries will remain open."
One approach is to gradually increase measures. Unfortunately, that gives precious time for the virus to spread. If you want to be safe, do it Wuhan style. People might complain now, but they'll thank you later.
How Can Business Leaders Contribute to Social Distancing?
If you're a business leader and you want to know what you should do, the best resource for you is Staying Home.
Who's staying home because of COVID-19?
A list of all the companies WFH or events changed because of covid-19
It is a list of social distancing policies that have been enacted by US tech companies-so far, 328.
They range from allowed to required Work From Home, and restricted visits, travel, or events.
There are more things that every company must determine, such as what to do with hourly workers, whether to keep the office open or not, how to conduct interviews, what to do with the cafeterias... If you want to know how my company, Course Hero, handled some of these, along with a model announcement to your employees, here is the one my company used.
It is very possible that so far you've agreed with everything I've said, and were just wondering since the beginning when to make each decision. Put in another way, what triggers should we have for each measure.
Risk-Based Model for Triggers
To solve this, I've created a model (direct link to copy).
Coronavirus - When Should You Close Your Office?
How To Use Coronavirus Work From Home Model This model should help you and your company make a decision
It enables you to assess the likely number of cases in your area, the probability that your employees are already infected, how that evolves over time, and how that should tell you whether to remain open.
It tells us things like:
- If your company had 100 employees in the Washington state area, which had 11 coronavirus deaths on 3/8, there was a 25% chance at least one of your employees was infected, and you should have closed immediately.
- If your company had 250 employees mostly in the South Bay (San Mateo and Santa Clara counties, which together had 22 official cases on 3/8 and the true number was probably at least 54), by 3/9 you would have had ~2% chances to have at least one employee infected, and you should have closed your office too.
- [Updated as of 3/12] If your company is in Paris (intramuros), and it has 250 employees, today there's a 95% chance that one of your employees has the coronavirus, and you should close your office by tomorrow.
The model uses labels such as "company" and "employee", but the same model can be used for anything else: schools, mass transit... So if you have only 50 employees in Paris, but all of them are going to take the train, coming across thousands of other people, suddenly the likelihood that at least one of them will get infected is much higher and you should close your office immediately.
If you're still hesitating because nobody is showing symptoms, just realize 26% of contagions happen before there are symptoms.
Are You Part of a Group of Leaders?
This math is selfish. It looks at every company's risk individually, taking as much risk as we want until the inevitable hammer of the coronavirus closes our offices.
But if you're part of a league of business leaders or politicians, your calculations are not for just one company, but for the whole. The math becomes: What's the likelihood that any of our companies is infected? If you're a group of 50 companies of 250 employees on average, in the SF Bay Area, there's a 35% chance that at least one of the companies has an employee infected, and 97% chance that will be true next week. I added a tab in the model to play with that.
Conclusion: The Cost of Waiting
It might feel scary to make a decision today, but you shouldn't think about it this way.
This theoretical model shows different communities: one doesn't take social distancing measures, one takes them on Day n of an outbreak, the other one on Day n+1. All the numbers are completely fictitious (I chose them to resemble what happened in Hubei, with ~6k daily new cases at the worst). They're just there to illustrate how important a single day can be in something that grows exponentially. You can see that the one-day delay peaks later and higher, but then daily cases converge to zero.
But what about cumulative cases?
In this theoretical model that resembles loosely Hubei, waiting one more day creates 40% more cases! So, maybe, if the Hubei authorities had declared the lockdown on 1/22 instead of 1/23, they might have reduced the number of cases by a staggering 20k.
And remember, these are just cases. Mortality would be much higher, because not only would there be directly 40% more deaths. There would also be a much higher collapse of the healthcare system, leading to a mortality rate up to 10x higher as we saw before. So a one-day difference in social distancing measures can end exploding the number of deaths in your community by multiplying more cases and higher fatality rate.
This is an exponential threat. Every day counts. When you're delaying by a single day a decision, you're not contributing to a few cases maybe. There are probably hundreds or thousands of cases in your community already. Every day that there isn't social distancing, these cases grow exponentially.
Share the Word
This is probably the one time in the last decade that sharing an article might save lives. They need to understand this to avert a catastrophe. The moment to act is now.
2 MSc in Engineering. Stanford MBA. Ex-Consultant. Creator of viral applications with >20M users. Currently leading a billion-dollar business @ Course Hero
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