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[Rick Braa] Use all available government programs
Acclaimed restaurant consultant Rick Braa took the time to host a comprehensive webinar on financial strategies and tips to make use of during the coronavirus crisis. In the first part of this webinar, he went over the various government programs that are available and encouraged members to use all available ones.
The first program he outlines is the Small Business Administration Economic Injury and Disaster Loan. It comes in at roughly $150,000 along with a $10,000 grant. Braa encourages everyone to try for the $10,000 grant because you can get it even if you choose not to take the $150,000.
“I always advise everyone to apply for this,” Braa said. “It’s a 30-year loan, 3.75% with one year deferred payments.”
Use this loan for working capital because of economic injury, Braa said — things like changing your dining room around, paying off loans or accounts payable. Do not, he stressed, use these funds for the same purpose as the Paycheck Protection Program (PPP). At the end of the year, the SBA EIDL loan can be paid off at $750 per month and there’s no prepayment penalty, so when you’re ready and able to pay it off, you can.
“It’s a very, very good loan,” Braa said.
The PPP loan should be used “wisely”, Braa said.
“Don’t blow it,” he adds.
There’s considerable talk and work on extensions and more at the federal level in Congress, with groups like the National Restaurant Association heavily involved, but these talks are all still in the working stage. Changes to this are likely to happen quickly. Braa cautions that those who got a big PPP loan the first time can probably expect a lesser one the second time around — but all information remains pending.
Lastly, there’s SBA debt relief loans, which come with six months of paid principal and interest for new and existing loans.
“If you are in the market and can qualify for a new loan, it’s not a bad strategy. If you’re able to get a new loan, you’d have six months paid for you,” Braa said. “Six months out of your seven years, if you have a seven-year loan, paid for you. That can give you a bit of runway.”