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Coronavirus SBA Funding Relief Programs Update
By Peter C. King VR Business Brokers/Mergers & Acquisitions, CEO
The following is an update on Coronavirus SBA Funding Relief Programs as of March 18, 2020. We have been able to compile the information with help from our lending partners who were and are scheduled to attend the VR 40th Annual Conference when new dates are confirmed.
Since we pride ourselves at VR as being advocates to small and midsize businesses, the more information we have, the more we can educate our clients. It is our calling; it is our responsibility.
There is still a lot of unknown on these programs, but with the new stimulus bill we will get a clear set of guidelines. Our lending partners have offered their assistance to answer any questions that will arise.
Last week, the SBA implemented an Economic Injury Disaster Loan Program, which is providing small businesses up to $2 million in assistance at low interest rates, and for up to 30 years. Here are the highlights:
  • SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
  • These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
  • SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
A couple days ago the SBA emailed out that business owners should apply online in the Disaster Loan Application Portal at https://disasterloan.sba.gov/ela/. 
The electronic loan application will be screened by their processing center when it is received. As of now borrowers are to go directly through the website to request relief.
You can see more information about the disaster loan program shared in the attachment “SBA Disaster Loan Press Release” and “Facts about SBA Disaster Loans”. If you know of clients or people who need to take advantage of this program, they can be directed to the portal and you could supply them with “Economic Injury Worksheet”, as that will help them to expedite the application with the SBA on information they will need.
The stimulus package that President Trump announced included $50 Billion in funds to be used for the SBA program. Chairman Rubio proposed that the bill have several stimulus measures to be in effect for the duration of one year, including the following key provisions:
  • Waives all borrower upfront guaranty fees for all borrowers, regardless of loan size
  • Waives the ongoing fee for all lenders 
  • Increases the guarantee on all 7(a) loans to 90%
  • Increases the Express maximum loan amount to $1 million from $350,000, and after 1 year, lowers the maximum loan amount to $500,000 rather than the existing $350,000.
  • Gives increased flexibility to the Economic Injury Disaster Loans (EIDLs)
If these points were included, this would be an important development as it pertains to future SBA offerings to our clients. Further guidance on what all the provisions will be disseminated as it becomes available.
And last, you may know of some SBA clients that are looking to have payment deferments as their businesses are being negatively impacted by the coronavirus. The SBA is allowing certain payment deferments in order to provide relief to the small business community. You can see the highlights attachment “5000-20004”with the actual notice from the SBA. Please remember that banks need to do normal due diligence and provide some real information and data as to why they would need this deferment. 
Going Virtual Given Today’s Reality
By JoAnn Lombardi, VR Business Brokers/Mergers & Acquisitions, President
Business owners need consultation now more than ever; and they will find the time to listen. With some people having the hesitation to meet in person, turn face to face meetings & presentations into virtual meetings/events by taking advantage technologies such as:
While your competitors freeze, now is the time to be proactive. What we learned from “9/11” and the “Great Recession” was that those who stayed in contact with their clients, who were there to listen and give solid advice, benefited greatly when the new normal arrived. This will be no different. The belief and principles behind free enterprise will overcome today's problems. 
These servers are strained so log on early to open the meeting before the start time; it’s taking longer than normal. Check with your local association for member benefits; some include conference calling/virtual meeting rooms.
For client appointments, many owners will have trouble with the technology, but it’s worth connecting with them. Even a failed attempt to “go virtual” that ends up as a phone call is a success. 
For presentations and seminars,you can continue to host events and presentations through these same technologies. Just change the location to the login URL instead of the physical location. Use event hosting platforms to reach audiences such as:
Make sure to educate sellers on potential options that may need to include a larger seller note which increases their total selling price. Buyers should be made aware of the potential savings the decreased interest rates will be to them over the term of a loan, and therefore offsets additional risk. In days gone by the “Robber Barons” became the richest families in America when they chose to buy up companies when the markets had crashed. For today's entrepreneur, this could be the best time during their lifetime to acquire the business they thought was great only weeks ago at a discount or better interest rates.
Stay safe and add value by going virtual. When the today’s challenges are behind us, owners will remember those advisors who are there for them now.
A special thanks to Neal Isaacs for his input on how to go virtual.
How Coronavirus Is Impacting Lower Middle Market Activity
Last week, Axial convened a virtual roundtable of members to review the impact of the coronavirus pandemic on lower middle market business owners, M&A activity, and dealmaking. We assembled specialist and generalist investment bankers, corporate buyers and private equity investors (eight in total) to cut across the LMM and understand reactions to the chaos of the past few weeks. What are PE buyers and sell-side bankers doing when it comes to deals under LOI? Are strategic buyers pausing M&A to handle operations? How is the virus impacting industries from healthcare to manufacturing to restaurants to e-commerce and more?
Here are a few quick takeaways from the conversation:
  • Deals under LOI are proceeding with maximum urgency or they’re on hold. We’re not seeing a lot of in between.
  • For deals in earlier stages, there’s definitely a lot of anxiety on the part of sellers and a bit more caution on the part of buyers — there are some who are hitting the pause button to wait and see how the situation shakes out in a few months. But at the same time, buyers remain flush with capital, so there will be others who continue to engage actively on opportunities assuming the worst will be over in a few months (we’re seeing China ramp back up now). For sellers, the advice is to “get as far you can as fast as you can” and beyond that just keep doing what you’re doing and try to keep up operations to the extent possible. If this passes, bankers will be able to pro-forma the disruption. 
  • It’s inevitable that there will be supply chain issues for many companies, but these are fluid and highly variable depending on your business. Companies that rely on China may be in a better position at this point than those who rely on other countries in Europe or domestically as infections ramp up here.
Solar Tint & Audio Inc. | Los Angeles, CA
Home Furnishings | Oley, PA
Teriyaki Madness | Lewisville, TX
Consulting & Training Company | Charlotte, NC
Red Rooster Ice House | Houston, TX
Super-Sized Bowling and Family Entertainment Business in
Long established, super-sized bowling and family entertainment center offers steady cash flow from a consistent and loyal customer base. The owner of the business owns the underlying property, and would either enter into a long-term lease with the buyer or would sell the property together with the business.
For more information:
John G. Hornblower
Congratulations VR Mergers & Acquisitions in San Antonio, TX for the Sale of Salon Suites (40+ Units).
An established, fast growing Salon Suites units rental model that is revolutionizing the way the beauty industry operates. The business provides 40+ customizable suites allowing stylists, massage therapists, nail care specialists, estheticians, and other specialists to provide high level care and ideal space to minimize the risk and cost of establishing their own business. The company offered top quality furniture and equipment enabling tenants to provide outstanding results for their clientele.Unique business with bracket based plans designed to fill the needs of different client groups. The facilities offered a wide variety of services which included but are not limited to a hair salon and spa services. 
Congratulations to Javier Luna.on this successful transaction!  
?For more information contact jluna@vrsanantonio.com.
Coin Laundry with Real Estate | Apollo Beach, FL
Computer Coding School for Kids | Raleigh, NC
Favorito Market | Artesia, CA
Commercial Laundry Business | Aspen, CO
Plastic Forming Business| Hialeah, FL
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