2021 was a challenging year for businesses, and most are happy to be done with 2021 and looking forward to 2022. We see headwinds in the trends that last year were considered emerging, but that doesn’t mean businesses need to struggle or fail. There will continue to be challenges but we can work through them using creative tools and financial analysis.
This is a time to look forward with optimism grounded in analysis and problem solving approaches. In addition to the basics - cash flow management, operating cycle management - it is time to consider price volume variance, sensitivity analysis and alternative scenario planning for impacts related to inflation, commodity prices, labor issues and supply chain concerns.
Throughout 2021, we covered all of these trends and offered many great strategies to overcome the difficulties and ensure success for a business. Let's take a look at the top 10 below. Also please see this link to answer a 1-minute survey letting us know which content you liked: Survey here
#1: Working with a Company Through the Refinance Process
Incumbent lenders often feel the need to give the company some time to work through the process on their own. When the company is unsuccessful everyone becomes more frustrated.
What can a lender do to encourage the refinance?
There are several tools incumbent lenders can use to help create more opportunities for a successful refinance.
Do you know which tools and techniques can help?
#2: Have All PPP Loans Been Forgiven?
Considering that $782 billion of PPP loans have been made, with $522 billion under the 2020 program and $260 billion under second round program, these loans may be forgiven if funds were used for the intended purposes. Most people would assume these loans have already been forgiven. Surprisingly, that is not an accurate assumption.
Of the 2020 PPP loans, $159.1 billion of loans have not yet submitted applications for forgiveness!
While less than 1% of submitted loan applications have been denied, the real story seems to be the amount of loans that have not yet applied for forgiveness.
What does this mean, and what are the next steps? Read more here!
#3: Who Wins vs Loses with Changing Commodity Prices?
This past year has brought a lot of change, but who would have anticipated what has happened to corn, soybean, and other commodity prices. Looking at the 30 year price trends for corn and soybeans, the market is now at $6.00 per bushel of corn and $575 per metric ton of soybeans.
These prices for corn, soybean, and other commodities have not been seen in markets since 2013.
What does this mean, who benefits and who loses?
#4: FMG Industry Analysis: Property Management & Real Estate Holdings
Focus Management Group continues its industry experience series with a look at property management and real estate holdings.
With the changes in office, retail, and manufacturing space brought about by Covid-19 closures, lock downs, and mandates for additional work space and floor plan changes, real estate property management and ownership has emerged as a troubled space.
While payment deferrals have helped property owners and their tenants, those payment deferrals are being re-evaluated.
What types of assistance and strategies are available...?
#5: What is the Restaurant Revitalization Fund?
The Restaurant Revitalization Fund is a $28.6 billion resource for liquidity for restaurants. Funds received under the RRF are grants, and do not require repayment. The RRF program is administered directly by the SBA.
To be eligible for the funding, the applicant must operate twenty or fewer restaurants, and must be privately owned. Privately owned franchisees of publicly traded franchisors are eligible.
We have included the SBA Application and multiple examples of sample applications, so you can see what the calculations might look like.
#6: PPP Loans Second Draw
Click here to see what the qualifications for the second draw PPP loans are!
#7: The Shuttered Venue Operators Grant portal is reopening
The SBA initially opened its Shuttered Venue Operators Grant (“SVOG”) portal on April 8, 2021. Applicants experienced difficulty uploading application documents and the SBA closed the portal for repairs. The SBA has not announced a definitive date for restarting the portal that allows applicants to apply for the Shuttered Venue Operators Grant funds, but is expecting the portal to reopen by the end of the week of April 18, 2021.
During this period potential applicants should evaluate their ability to generate liquidity using the SVOG program and ready themselves to apply for the grant money once the portal is open and operating.
Which types of entities & establishments are eligible?
#8: Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act: PPP Loans Round 2
On December 27, 2020 the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was signed into law. While the implementing regulations are not required to be issued by the SBA until January 6, 2021, the Act does provide insight into the new and revised programs.
The purpose of this article is to provide an overview of the Act to allow borrowers and lenders to take advantage of potential liquidity enhancements.
The Act provides $325 billion in funding for the following:
$284.45 billion to provide PPP Second Round PPP loan funding.
$20 billion for EIDL advances.
$3.5 billion for SBA 7(a) debt relief.
$2 billion for SBA lending enhancements.
$15 billion for grants for live venues, theaters, museums and zoos that have been shuttered.
#9: FMG Industry Analysis: The Dichotomy of Restaurant Performance During a Pandemic
We continue our industry analysis series with a look at the restaurant and dining industry. Typically when Focus Management Group works with a restaurant, we are concerned about food costs and labor costs, and changing consumer tastes and demographics. Those concerns still exist and have been aggravated by Covid-19 shutdowns and lockdowns, and the work from home and new normal trends.
Today we need to build on our normal playbook for restaurant recovery to address these new issues.
#10: How is the Poultry Industry Impacted by Commodity Prices?
Rising corn and soybean prices are boosting financial prospects for the producers of those crops. The flip side of that pricing success is that the consumers of corn and soybeans are feeling tremendous cost pressures.
Poultry producers and processors, and egg layers and processors, have seen their feed costs increase 50% or more since the second half of 2020.
The poultry business has notoriously tight margins, which means feed cost increases may be an insurmountable change for many market participants.
This is a critical period for liquidity and profitability for the entire poultry industry.
Also please see this link to answer a 1-minute survey letting us know which content you liked: Survey here
It will help make sure 2022 is as informative as 2021 was!