How to Make Small Business Relief Programs More Effective


Back in March, when the pandemic started to transform life in the U.S., bookings plummeted for Beechnut Kennels, a nearly 50-year-old business spread across nine acres outside of Annapolis, Maryland. Work from home also meant that suddenly, people didn’t really need pet daycare or boarding services, says Beechnut owner Melissa Medick.

The business—which Medick was in the process of buying before Covid-19 started to spread—has never had to spend much on marketing. It’s small enough, she said, that the dogs recognize every staff member. “People know us, we know their dog’s name when they walk up,” she said. “They’ll move away and travel three hours to bring their dog back to us. You become an extended family for their pet.”

Shortly before closing on her purchase, she applied for and received a Paycheck Protection Program loan of around $90,000 to help keep the 13-person business running. The catch: For the loans to be forgiven, she had to use most of the money on payroll even though there wasn’t much work to be done. That meant laying some people off once the money ran out—today she has eight employees.

just as the U.S. Senate passed legislation to extend the government’s PPP application deadline to August 8 from June 30, Bloomberg Businessweek spoke with Medick about how she would change the PPP to help early borrowers like herself. The interview has been edited and condensed.

What happened after the pandemic hit? 
We used to range between 50 and 60 dogs per day for daycare. For boarding, we have 55 overnight rooms which were booked the entire summer and every weekend. Boarding is 75 percent of our gross revenue. We went from a booked summer with a wait list to 10 percent of our normal business in about two weeks after they started the travel restrictions and the stay-at-home orders. Customers were super apologetic but everybody basically just canceled because they were staying home from work and not taking trips. That’s what sustains our business: People being gone and needing pet care.

What were your immediate reactions?

I was scrambling. I had just purchased the business after working here since 2007. It was a family-run business and I had kind of become family to the elderly owner. For a couple of years, I’d been going through a very long and expensive endeavor to get the purchase to be feasible. I was looking at the pandemic and the purchase at the same time. I went ahead with it. I emptied my savings account and took on a huge loan for the first time in the midst of the pandemic. I think we were probably one of the last loans my bank closed at the time. 

You applied for PPP when the program launched in April. What was your experience? 

My bank was heroic. They stayed up night and day feeding clients into the Small Business Administration’s PPP portal. It was Easter Sunday when they called me, saying, yours is in and approved. Of course, we had no business at that time and you had to bring back your employees to get the loan forgiven. The bank was afraid the program was going to run out of money, so instead of waiting 10 days to sign as I had wanted, I signed the next day. I was funded on Easter Monday. At the time, everyone was thinking, ‘in two to six weeks everything is going to get better.’ 

What did you do to make your loan forgivable? 

My CPA warned me, saying, ‘I bet the rules are going to change. Maybe you should hold the funds because if you spend it all up front, you’re going to have nothing in the end.’ But I explained that I needed to spend it because you can’t retroactively add employees to payroll and still get forgiven. I said, ‘I don’t want to disqualify myself for being forgiven because I can’t take on a loan. That’s impossible for us right now.’ It was tricky because all the rules that you needed to be able to make the right decisions to ensure you were going to be forgiven were not in existence yet for those of us who borrowed early. You were flying blind. If you needed to guarantee 100 percent forgiveness, you did the extreme to avoid finding out you hadn’t done it right at the end.

Basically we brought everybody back on and paid them their normal wage. It was stressful because every moment of every day, you were just wondering if you were doing the right thing or if you were going to get stuck with a loan. I spent way too much time trying to read through laws and contact people. It was a lot for a small business to spend time on. It took three or four hours three times a week to keep records, check in with CPAs, lawyers, and banks to keep aware of changes. We had the SBA speaking on webinars giving information that if you look back now was 100 percent wrong. There was a lot of misinformation to sift through.

What did you do when the forgiveness rules changed? 

I had hired new people and ended up laying them off because I had been told to hire them within an eight-week time frame. It was basically a waste of money that could’ve gone to help our business for the remainder of the year. Had I had the rules that exist now, I could’ve used the money well. It could’ve kept the business healthy. 

What do your colleagues say? 

Our industry does intensive training for employees to learn how to care for animals. Our staffers aren’t expendable. A lot of us applied for PPP right away because we didn’t want to lose our staff. When I reached out to professionals in a Facebook group I’m part of, there were roughly 25 pet care facility owners across the country in similar positions to mine. Changing PPP would save them. I reached out to them to compile a list to submit to senators to show them it’s not just me.

What do you want to happen now? 

PPP essentially puts early borrowers that did the right thing at the most disadvantage as we reopen the economy. We were basically an unemployment program. There’s PPP money left in the program that hasn’t been tapped. I’d like there to be a loan modification that allows those who got loans and spent them before they releasedthe new rules to get an additional 60 percent of the loan. That way we could use the money the way everybody else is using it. These are the people who followed the original rules and employed people. That’s why they’re out of money. My kids were home and they needed me and I was working 12 hours a day trying to figure out how to use this PPP. 

Today I’m operating at a lower staffing level than I’d prefer. I’m at seven full-timers and one part-timer. It would be amazing if we could start our PPP now according to the new rules. It would change our year from extremely frightening and taxing for all to feeling like we made it. We’re still below 40 percent of our overall business. Until people feel truly comfortable traveling, we’re not going to get 100 percent recovery.

What’s your guess about the future of your business? 

I don’t know if I’ll get paid through the whole year. I was planning to pay myself back some of my savings because buying the business was a huge risk. I’m not going to be able to do that for three years. 

We will not make it based on how we have been doing business. If I can succeed in pivoting the business the way I can picture the community still needing pet care services, I think we can survive. For example, we had just sunk $200,000 into renovating one of our buildings but it wasn’t finished. It was meant to relieve the boarding wait list that we were constantly running. I’m now looking for a trainer to use the space, as is, since dog training is something people need even if they’re home. A lot of people went out and got pandemic puppies. They’re going to need help with those pets. We also started marketing. I’ve spent seven grand in a month or two to try to broaden our client base.

But I will tell you: It is a huge difference between survive and thrive. We were thriving, and this would have been one of our best years yet. Now we will be worried about surviving for two years because I don’t see people returning to commuting to work and traveling to the extent that they were.

I don’t think businesses are going to bring their employees back right away—even after a vaccine. If they know they got things done even though their employees were home, they’re going to try to save money by not renting office space. Which means people are going to be home with their pets.

For more stories, strategies, and advice for Main Street business owners, check out the Bloomberg Businessweek Small Business Survival Guide.

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