 Okay, we're back. We're live. I'm Jay Fidel, then the other person in the room, so to speak, you know, the virtual room is Jane Sawyer at the SBA, Adventures in Small Business. And boy, are we having an adventure these days. What do you think, Jane? Yeah, it's quite an adventure. That's for sure. It's happening very quickly, lots of uncertainty, lots of surprises, but we're trying to make our way forward and help more small businesses here. So that's it. We're most of my staff working remotely, like so many other businesses in Hawaii. We're lucky to be here, but we have a big job right now. There's a pretty heavy lift to help our small business community. Yeah. Well, this, I mean, you are the, what do I want to say? Not the mother, but the auntie of small business, small business in Hawaii. You've been helping them and affectionately supporting them for years and years, a lifetime even. And so it's, it must be really an experience for you one day to find out that, that the federal government is allocating over $2 trillion. I said trillion dollars. I try to help business and do, and do a resurrection in COVID. And so I'd like to hear how it came to you. I mean, you're sitting there wondering about how small business is going to do. All of a sudden, this is big federal legislation. And then in the same moment, you realize a lot of it is going to be on you, Jane. How was that moment? You know, well, you know, it was trying to see how it was all going to work and realizing just how big a task it was going to be. But like so many other things, it really takes everybody getting involved in chipping in. And when we started to see the structure of this, because we just watched as the pandemic declarations came in and we saw we were going to be staying home and that travel was going to be curtailed. And what is Hawaii about? But small business and hospitality and travel. So we knew this was going to have a terrible impact locally. And to see that they kind of, they responded pretty quickly and put a lot of money into helping employees stay on the payroll, help small businesses at least sustain themselves. But we never knew how big this was going to get, even as they're designing the program. So basically, we were able to, first step was in the middle of March, we could get a disaster declaration for small businesses to get take advantage of the economic injury disaster loan, which was something that is a traditional existing type of loan that's offered through the SBA's Office of Disaster Assistance. But we also knew that that wasn't going to be enough. And typically, that's the kind of loan program that you'd see pop up at the request of the governor gets a declaration from the president or the SBA administrator of the Department of Agriculture, because we've had a hurricane or a tornado, something like that. And it helps the business recover either from the physical damage or the economic injury, what they've lost in terms of revenue as a result of the impact of a physical disaster, or in this case, the pandemic. So that wave came out and we got the first declaration around March 25th. Then on March 27th, the Congress approved the CARES Act. And it's a big, long name Coronavirus Aid Relief and Economic Security Act. And our role was to help small businesses tap into some financial relief. And that would be through an expanded economic injury or AIDL program with the Office of Disaster Assistance or a whole brand new program called the Payroll Protection Program Loan. So not all the programs in the CARES Act fall on the SBA, but some of them clearly do. Which ones are you concerned with? Which ones are you implementing? The ones that really concern us are specifically the AIDL loan, the Payroll Protection Program. And then we have some other small business relief that we're able to offer for our current borrowers or existing borrowers who are involved in the SBA loan programs. Now, if you've had a current SBA 7A loan or an SBA 504 loan, starting this month, you can get some relief in making those payments. Actually, SBA will make your loan payment for you on any one of those loan programs. And they'll do that for six months. So they'll pay the bank the fees, they'll pay for that loan going forward. So we've gotten information out to our lenders and hopefully to our borrowers. It's pretty much we just will, you know, the banks will determine all the loans you have to be in currently in good standing when it starts. So that means your loan has to be paid up. You can't have a workout plan. You can't be in default. But if you're in good standing, we'll cover those loan payments for six months or any one of those loans. And we will defer disaster loan payments that are those long term disaster loans with a low interest. Those will be deferred for six months period. That's helping a lot of businesses right there so they can keep their money working on payroll and rents and other things. So they don't have to pay back an SBA loan debt. So I suppose I don't have an SBA loan. Suppose I don't have a loan. Suppose I've been able to conduct my business on a, you know, a non indebtedness basis. Never had to make a loan. I'm a good manager. No debt, whatever. Does that put me behind the eight ball as far as these programs are concerned? No, particularly because probably right now, most of the businesses may be shut down, you're experiencing some kind of loss, because the regular customers aren't coming through the door. Employees can't come to the office. You're not considered an essential business. You know, your supply chain has been interrupted. So there are programs that will help you with that loss, whether it is the economic injury disaster loan, which will cover, you know, your overhead or your regular expenses that you aren't able to meet because of the pandemic. And that loan application you can find at sba.gov. Right now, because these programs have been in such demand, both programs are shut down, waiting more funding. We had $350 billion into the PPP fund. And that was exhausted in 12 days, 12 to 13 days across the country. Those loans, all that money went away. And that loan program is specifically to help you keep a small business, keep their employees on payroll for eight weeks, at least. There's a portion of it that could be applied to, say, your mortgage interest, your rent, your overhead utilities, things like that to keep your business running. But the majority of the money and the whole purpose is so that you can keep your employee on the payroll, getting their benefits, and not, you know, they may not even have to come into work. But the point is to keep them off unemployment and let the state, you know, not have that kind of pressure, but the small business can keep their employees so that hopefully when we're all back up and we can be out doing business again, we're ready to go, we're ready to start. So and that one is open to there's no collateral requirement there. No personal guarantees, no borrower or lender fees that are payable by the borrow the the SBA because that's normally one of the things that goes with an SBA loan and no payments on this loan for six months either. So this can be a new borrower, new SBA year. This one goes through the banks. So all of our the banks and credit unions here have been participating in a big, big way. In that 12 day period for Hawaii, we saw them get 11,553 loans approved. So that's a lot. Is this to the banks require the applicant? I know it's like past tense already, but did the banks require the applicant to be an existing customer or borrower? Or would my business the one that has never taken any debt with anyone also qualify for that program? You would qualify for that program. You could we you know, we recommended first go to your your borrower of record, your bank of record, who you do most of your business with and start there. Sometimes people had gotten an offer or worked with with another organization, say their PEO, who manages their payroll, and they worked with them to submit a loan application to one of the financial institutions. So it may have introduced a new customer to the banks. And that was fine too. We knew that the money was going to be depleted pretty quickly. It sounds like a huge amount of $349 billion, but it did it did go out pretty quickly. And let's see, I'm trying to look at some of these statistics here. Over a million 661,000 loans were made across the country in just 12 days. Even in Hawaii, in the entire time I've been here as the tutu of the SBA. Tutu, thank you. That many loans at all, you know, in the entire 28 years. So and probably even the entire time the SBA has been here, we haven't seen that number of loans in Hawaii ever before. So now the challenge is getting the money out the door. So we've approved them. We've, you know, managed to bring over $2 billion to the state. And this will go when the when the small business gets their funds, their their role then is to make sure that they get their employees on payroll, get them back into their roles in the business client, or if they have different assignments, maybe different duties, that's important. And then the feature is that if that's what how they use the money appropriately, there is forgiveness. So that man, that money will be forgiven, and you won't even have to pay it back as a loan. What are the conditions for forgiveness? Conditions for forgiveness. Let me look it up. So you have to bring the employees back and have the same number of employees on your payroll, and you have to use the proceeds. I mean, the amount of the loan is determined based on the payroll that you have in the business. And this program is open to, you know, independent contractors, sole proprietors, you can count your own income up to $100,000 when you make this loan request. And even though we've exhausted the funds, it looks like Congress is accepting the fact that there is a need out there because the pandemic has been so severe and it's extending so long. So we're looking at them potentially approving another allocation for this program even later this week. So later this week. Later this week. So if you're just hearing about this program for the first time and you haven't, you know, looked at an application, I recommend you go to SBA.gov, look at the yellow banner at the top and click through to Small Business Loan Relief. And it will give you the information on the PPP program, loan program and application forms, what you need to do to apply. It's very, very, very basic, but you do go through your bank. So you might, if you have a business banker, give your banker a call and ask them how they're going to approach this next, this next wave of Are there bank charges on these loans? Are there loan fees? No, this is all SBA is paying the fees to the bank. Oh, very good. Very good. Very good. So, Jane, you expect the you expect the second tranche of money to be in the order of the first tranche to two trillion plus? I don't think it would be that much. I think, you know, if we looked at what was for this specific program, it was about 300 and about 349, 349 billion for the first wave. And the rumors have the talk we're hearing is probably about 250 billion. So it'd be a little bit smaller, but still to get out, get money out to small businesses, keep your employees, be ready to go when we get through this. You know, so we're looking at funding new things for a business. We're trying to help them sustain themselves through this, keep their employees ready to go. I mean, this is an opportunity if you if you can't use them for the typical work that they're doing, it's the time to do professional development, train up on customer service, you know, do some other things that need to be in the office, scan all those old documents, get those projects underway, assign a team to redo your your employee manual, you know, have your have your people do a white paper on something that's important to you, or even look at how can you volunteer some time for a community activity. That would be okay, too. It doesn't matter what they do. They just get them on the payroll at the same rate of pay or up to 75% of the same rate of pay. And the other thing is that you get them get them back on benefits because you factor your loan amount by figuring your payroll, your annual payroll, everybody up to every wages, salaries, all types of compensation for each employee get that total. You also then can add in other payroll costs. So your health care expenses, the cost for health insurance for your employees, your 501, you know, your retirement benefits, your all of these things can be factored in to what you and you figure your monthly allocation for payroll, then you multiply it by two and a half times. And that gives you the amount of the loan that you would be able to. You can use a portion of that up to 25% under certain circumstances within that period of time to pay rent, utilities, your transportation costs. Say you have a company vehicle, your mortgage interest can't pay your mortgage principle, but your mortgage interest. So it's going to help you with some of those fixed costs that you have just get through. It's not going to so it can help you with things other than straight compensation to an employee. You can you can pay business fixed expenses with it. Yeah, you can pay some of those things, but the point you to get the forgiveness, you need to apply the majority of that, that 75% or more and have the same number of employees at the same rate of pay on your payroll for eight weeks. And that eight weeks usually starts once you get your funding, once you get your disbursement from the bank. Well, this sounds like the Oklahoma land rush, actually. So you have 350 out there. Everybody knows you have whatever the 350, 360 billion. And a lot of them, employers, small businesses are going to want to do that because they're really suffering. And so they rush at it. And you mentioned that out of the three sixty two billion came off Hawaii. Yes. How how how how do you allocate the two billion around Hawaii? Is it first come first serve? It was first come first serve getting into the queue. And as we said, you know, it's through the banks. So the banks do a little bit of screening. And so it's like a four page application which kind of determines your eligibility and nonprofits can also apply for this. So certain types of nonprofits who particularly those who have a role in helping, you know, doing social services, running daycare facilities, providing meals for seniors, eating families. Those those organizations are also eligible to. OK, well, that's pretty good. So now in the next bunch of money, the next bunch of money, obviously there are there are businesses out there that didn't get as a result of the first the first bill. So the next the next trunch hopefully soon will come down the pike. How will they know and how will they get online so that they can get a piece of the second trunch? They should go to their take a look at our website. Make sure you understand the program and feel that you'll be eligible. Then you should call your bank see if go to their website as well. A lot of them have a lot of information and how to apply online because we're not going into the bank if we can avoid it, right? So most of their most of the applications were taken remotely and the bank would be in touch with you. You could submit your application. I don't know if their portals are open right now. That may require a phone call or they may have something posted on their on their website in terms of when they will start accepting application, but the application forms are the same for everyone. They may ask for a little bit more information, but they explain all of that on their web page. And I would start to gather your information together, try and calculate the information. If you have, you know, questions about it, you can go and go to the SBA website. There are frequently asked questions posted there that will help you figure how to calculate your employees payroll or all your PEO. If you have one, talk to your CPA, talk to your tax preparer, look at your old tax documents. So those are all source materials that you'll get. You need to make sure you have ready your EIN number, your social security number, things like that. But those those are the kind of documents to start gathering now and have ready because it probably will go very, very quickly. I know many of the banks still have loans in queue from the first round of applications that were submitted to the banks. They did phenomenal numbers. They were working through the weekends. They were doing double shifts, move people from, you know, the branches. It pays to start right now. It pays to start right now. It pays to get your act together so that when when the land rush starts again, could be in a few days, you got your papers together. You know what the application form looks like. Maybe you filled it out. Maybe the bank even let you submit it. Yeah. So this is a good time to get get organized to look at the SBA dot gov and go to your bank and and find out how you can get on that line early instead of lose out. So one of the question about the first trunch, you said it was two billion out of three sixty. That's not one fiftieth, you know, 50 states. Who makes that allocation of that two billion and will the allocation be the same next time? It's it's not allocated by state or by population. And actually, when people went in and really looked at it from a number of different ways, Hawaii did very well and got a higher pro rata share than many of the other states did. And I think that is, you know, a lot of hard work up front. Our resource partners helping and talking to people, the banks really getting out in front of this as well. So I mean, the average loan size was under two hundred thousand dollars. So even when we hear some of those stories about the organizations that may have grabbed 10 million, it's it was the statistics show that the largest of the loans were under one hundred fifty thousand. And the overall average loan size was two hundred and six thousand dollars. So and it went to small businesses in construction, professional, scientific and technical services, manufacturing, health care, accommodations and food service and retail were the were the types of business that were in the queue first and got more a higher percentage of the loans. So they hadn't really separated it out. And it was the diligence of the the lenders and the banks being able to input into this system. And we stood up this this loan with, you know, it goes against everything any banker has ever learned about financing credit. We don't check credit. We we're not asking for collateral. We're not asking for a guarantee from anybody except for the for the SBA. And then if there's some money that's left and you've you've used it for non payroll or non approved costs, you can it will turn into a two year term loan at one percent interest after the forgiveness is determined. So that's the way you catch the inappropriate ones. If they don't demonstrate that they did, they met those conditions, they will have to pay it back. And you pay it back. Yeah. And if you and if you misrepresented to get credit and that becomes apparent, that's a no, no, and it won't be nice, you know, so they will. So, you know, people need the money to survive. We want to come out on the other side of this and hopefully more people will be hold and totally broken. So, you know, we we hope that we're using these funds well. Yeah. OK, we have a few minutes left. I want to ask you some macro questions. You know, it's the ghost of Christmas future. What do you worry about, you know, Jane, because you are that may I say the to-to of small business in Hawaii and you have such a kindness about you and you must be feeling the pain not only of the people who who, you know, whose businesses are under pressure, but more than that, even the people who have not been able to get a piece of the CARES Act and and who are, you know, therefore under greater pressure of, you know, of collapsing. What about them and what percentage and how many are there and what is what is going to happen to them and in turn what's going to happen to the state? I know it's the three o'clock in the morning wake up question and I wonder what you think about it when you wake up thinking about it. Yeah, yes, I do wake up at three o'clock in the morning a lot, but it is a grave concern because small business is the backbone of our economy. How are we going to get going again? And what is that really going to look like? It's not going to be without paying for most everybody here. So we really do want to do our best to make sure that everybody knows not only about these funds, but, you know, that we have some way to help them in the interim and maybe before we get back up to what might be our normal, a more normal operating speed that they're doing the right things to assess and evaluate their business or look to create new opportunities or if there were things that they needed to do or wanted to do to improve their business, maybe this is a time when you're not producing it, you know, as much you're not seeing as many customers that you can take the time to really work through in a careful and creative way how to improve your business and make it more nimble. You know, how can you invest that maybe a little bit more in your employees and by invest, it can be time. It can be energy. It can be interest to build your own stronger. And maybe that sounds a little naive, but sometimes you've got to grab on to whatever whatever it takes to make the better outcome. You know, so we're hoping that more people will get in and if one one organization does tap into these funds and they can help another, you know, whether it is by adding adding some of the talent of their people, combining forces to do a community based project, something like that. Everybody wins. So but I do worry about, you know, how are we going to get the technical assistance to people who need it? How do we overcome some of our language barriers and some of our prejudice? How do we get, you know, more, more money to more new businesses or younger businesses or those that don't typically have access to capital? They can rise out of the ashes, you know, as they say and start all kinds of new business again, a new maybe a more youthful, innovative economy coming from younger people who are willing to take a chance of being entrepreneurs because there will be there will be ashes to climb from. There'll be there'll be opportunities. So at that point, and this is what I would have asked Jane, I will ask Jane later as a last question and a question going forward. What happens then? What happens to these entrepreneurs who come and make bids in the bankruptcy court, who buy the assets that are left beyond who will buy the assets that are left behind by the failed small business? The SBA will be there. The SBA has other programs traditionally that still exist that will continue to exist when we try to resurrect the casualties. And we'll be talking to Jane about that, too, as soon as we can have another show with her and we will have another show with her. Thank you so much for watching ThinkTech and for adventures in small business. I'm Jay Fidel. We'll see you soon.