In this episode we discuss four main points that Utah small business owners should be aware of:
- The giant corporate handouts that the PPP turned into
- Employees not wanting to work due to increasingly generous unemployment benefits
- Utah’s coming reopening of our economy
- Talking with one downtown restaurant owner about how he is doing
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More about the giant corporate handouts that the PPP turned into
From a Forbes article on the 20th. 71 publicly traded corporations received the funding. They received $300 million.
Due to public backlash, Shake Shack decided to give their money back. They received $10 million. Shake Shack has a market cap of $1.6 billion.
The latest update was that large corps might be shut out of the new round of funding that was opened up on Monday. Massive restaurant chains such as Potbelly and J. Alexander’s received the money.
The new round allocated $310 billion, $60 billion specifically reserved for smaller businesses without existing banking relationships.
Keybank (my personal company bank), didn’t offer any help, nor did my twenty years of doing banking with them make any difference. Smaller banks are stepping up helping the smallest small businesses. Continental Bank helped us as well as other small businesses.
Another small business problem: Employees who are asking to be laid off due to government generosity.
I mentioned this earlier that one of the businesses in my Goldman Sachs 10K cohort is a retail outfit and they are having a hard time retaining employees who want to be laid off. It turns out they are not alone.
The Cares Act is offering an extra $600 per week from the Federal Government on top of existing unemployment benefits.
So concerning the PPP, if your employees would rather get unemployment benefits than come back, then you as a small business owner need to pay all of the money back.
If you are giving PPP money to employees, even if they aren’t coming to work, they won’t qualify for the government benefits.
Unemployment will last four months, where PPP money only lasts eight weeks.
What does this mean? Your workers can earn more by not working than by working in a lot of cases. So we might see a lot of people choose to remain unemployed through the summer because they get more money doing nothing.
So this is just one of the major problems of the Federal Government stepping in. You can only keep workers if they have a greater incentive to work than to not work. Most people will choose to stay home and not work if they are earning more money by not doing so.
Why is nobody in the media bringing this up other than Forbes Magazine? Nobody is talking about how awful this is going to be to get the economy restarted if everyone is getting paid more to stay home. Why aren’t they talking about this?
I’d like to hear from you on this one.
Utah-related news: Restaurants and the economy reopening with huge restrictions
Our testing capacity in Utah is still exceeding demand. This is very good news. They can’t get enough people to come in and get tested, so they are saying anyone who has even one symptom should come and get tested.
Utah’s economy is reopening starting Friday. The preparations that have taken place include randomized testing. The Crush the Curb (test Utah website) is recommending whether or not someone should go in for a test and where the closest testing location is located.
We are learning there are many infected asymptomatic carriers who contract COVID-19 and develop no measurable symptoms. This is bad news. Any person can have Coronavirus and be infecting others and have absolutely no symptoms at all. So it sounds like unless we are doing randomized testing all of the time, we aren’t really going to maintain containment.
Lieutenant Governor Spencer Cox told Fast Company Magazine, “Testing is huge. We have to learn to live with the virus until there is an antiviral. We are just not going to shut down for five or six months.”
So with this, we have very detailed protocols in place for how we are going to handle the hot spots and outbreaks. We now know that with reopening there will be an increase in infection and outbreaks. It’s going to be close to impossible to contain this without an antiviral, but the alternative to higher infection is much worse.
The alternative is we decimate our economy while seeing massive jumps in suicide and drug abuse. We see our social fabric gets torn out from under us where most local ma-and-pa restaurants and bars wouldn’t survive.
So obviously it’s going to be extremely difficult over the next few months. People are going to get infected and die. But we need to reopen our economy, we can’t let millions of people be out of a job and we can’t let our federal government believe they can print an infinite amount of money without collapsing our economy through eventual inflation. (We have an upcoming two-part series on inflation we are offering free on the Utah Stories show)
Still, local restaurants are preparing to reopen.
One new downtown restaurant that was beginning to build an excellent customer base is a place in North Salt Lake’s Marmalade District called Diversion Eatery. We spoke to owner Ryan Peterson.
US: Tell us what is going on with you at Diversion Eatery?
RP: We partner with local breweries and do tap takeovers etc. We offer live music and a lot of social events…
US: What kind of food do you offer at Diversion Eatery?
RP: We have burgers, pizzas, salads. What I’ve done for a stuffed burger here, I ended up taking the top off the burger and making a burger bowl. You can get it on a bun and you can have it taquito-style.
US: Have you applied for the PPP and the EIDL loans?
RP: I’ve applied and received a PPP loan. I didn’t get the City or County loans.
US: What are you planning for the May 1st reopening? What are you going to need to do about that?
RP: I will open up according to the state rules and regulations. We will be doing everything they require. We still need to know what every requirement is. But we were already practicing very stringent sanitation measures. We will do everything they need including our entire staff wearing facemasks all of the time.
US: Where can people find you online and through social media to support you?
RP: Best way is diversioneatery.com. Diversion eatery app. And if you would like delivery and live within a three-mile radius it’s free.
US: I’ve heard that the food delivery places are taking a chunk. Is it a lot better if people use your app or your curbside delivery?
RP: That is correct. Curbside delivery is much better for us.
For the full interview, listen to the podcast: