ELIZABETHTON, Tenn. (WJHL) – Gone are the clatter of silverware on cups and plates and the buzz of conversation that typically fill the air at The Coffee Company.
Still present, though, are the sounds of coffee grinders and food prep – thanks in large part to a federal Paycheck Protection Program loan that owner Frankie Bailey received April 15. It’s allowed her to retain her staff of about 20 even as business runs at about 30 percent of normal.
Now, as she tries to navigate the ongoing crisis, Bailey said she’s got “time to breathe” thanks to a loan equivalent to 10 weeks worth of payroll.
“Believe me, I’ve been counting my blessings the past week and a half,” Bailey said as several workers prepared to go orders and kept a watchful eye on a pot of soup. “I had my first payroll yesterday with the PPP funds, but it’s very different. It took a lot of figuring and calls with my CPA to make sure things were running smoothly.”
That’s because guidance has been slim on the performance aspect of the hastily constructed program, which has loaned out around $500 billion already. And performance is key, because if a borrower uses at least 75 percent of the loan for payroll within an eight-week period and meets other parameters, the entire loan can be forgiven.
“We moved quickly, which I’m thankful we did, but now we have to really assess and make smart choices and be mindful of how the money’s spent,” Bailey said.
Time for accountants to shine
Tommy Greer is a managing partner at Blackburn, Childers and Steagall, one of the region’s largest independent CPA firms. Greer has become the PPP guru of sorts at BCS, publishing a blog, a how-to video and a spreadsheet to help businesses navigate.
“You need to start planning and documenting this the day you get the funds, not at the end of the eight-week period,” Greer said.
That’s made a little harder right now since the FAQ section on the SBA’s PPP web section is still focused on how to qualify for and get the loan. “We’re a little disappointed because there’s not been hardly any guidance on the loan forgiveness aspect of it,” Greer said.
Greer said the key is for businesses to start looking at their payroll costs and how they can pay employees enough, and keep on all their employees, during the eight-week period. Their requirements are based on whichever of two past slices of time at the business they choose — one period in the late winter and spring of 2019, or the first two months of this year.
“You need to be looking at your full-time equivalencies for the two periods they’ve given you, and look at your last pay period. See what that looks like the next eight weeks and see if it covers 75 percent of your total loan.”
Greer said borrowers should also project utilities, mortgage interest or rent and other costs that qualify to make up the remaining 25 percent of the loan. Employers can spend as much of the total on payroll as they wish — it just needs to be at least 75 percent for forgiveness.
“Even when there’s not guidance, we’ve tried to go back to what is the actual intent of the program,” Greer said. “It was to keep people employed at their current job and be able to pay them.”
Letting things steep awhile
In downtown Elizabethton, customers are steady at the door of the Coffee Company. Only one at a time is allowed at a makeshift front register.
Inside on a sunny Friday afternoon, employees bagged orders, brewed coffee, packaged food and stayed quite busy. It wasn’t a full staff, but Bailey said the PPP loan enables her to pay all her 20 workers — some of whom are part time — and take some time to see how the economy’s reopening progresses.
Those who aren’t on their regular shifts are contributing so the business can come back improved, she said.
“We have folks cleaning coolers, deep cleaning our cabinets and countertops, and brainstorming,” Bailey said. “I’ve got someone who’s really great at computer work and website building and I’m putting him on doing things like that.
“I think that’s kind of where you find people’s strengths and talents and find ways to get them involved and still feel invested in the business. When we are full fledged and the dining room opens up and people are more comfortable to be out then I have all of my staff retained for that.”
Bailey said she’s very concerned about opening for inside dining before the time is right. “There’s a lot of regulations to follow and it’s important as a business owner that I do the best that I can to follow that.”
Bailey closed for three weeks in late March and early April because of health uncertainties, and said she’ll continue to make the best decisions she can based on her knowledge. During that period, she was able to do a mass temporary unemployment claim for her staff.
“We want to keep people safe and even now as things are opening up there’s still some concern with, ‘what is this gonna look like, are we gonna see a greater spread because of people moving about now and coming into businesses?’”
Without the PPP loan, Bailey said she’d probably feel more pressure to open up.
“I’m just very thankful that I have some time to breathe, even if I go a full month being curbside, just knowing that I’m making the right call and really just taking it one day at a time and watching it and getting our procedures and processes in place for when we do open.”
Even with its early haziness, BCS’s Greer said the PPP program is probably saving many businesses from going under. It’s also keeping pressure off the already overloaded unemployment system.
“I think everybody involved has frustrations on their end but really when you look at the overall aspect it’s truly amazing as far as what’s happened in such a short period of time, the fact that so many loans have been funded and disbursed, so we’re just trying to be patient,” Greer said.
“I hate to imagine where we’d be without this. It’s getting those dollars out back into the economy and local businesses.”
Bailey certainly wants to reopen her interior, which often hosts book signings and other community events.
The Coffee Company is about people being here. It’s about people being in these walls, and when you don’t have that it’s hard.
“So what I get to do as an employer is continue the culture for my employees so that we’re banded together, we’re doing this, so that when we can open up to the public we’re going to have hopefully all kinds of really happy people to be back in the walls.”