Paycheck Protection Loans Help Struggling Businesses Stay Afloat During Uncertain Times

Darren Lazan was skeptical at first.

The Landform Professional Services president had heard rumblings of a new virus that had broken out in China. But, at the time, he wasn’t too concerned.

“At first it showed up overseas and people talked about the spread. I didn’t quite make the link yet because I kind of put it on par with the flu,” said Lazan.

But it didn’t take long for Lazan to connect the dots. He says he “put two and two together” when the first outbreak was reported in Washington state, and Minnesota Gov. Tim Walz signed the first stay-at-home order.

And Landform, a company of less than 50 employees based in downtown Minneapolis, was by no means immune to the novel coronavirus.

As COVID-19 made its way to the United States, projects stalled, and Lazan implemented an eight-week strategy that included laying off eight of his 40 workers. Landform didn’t hire seasonal employees back and had all remaining employees take a 25% payroll reduction.

Landform provides a full spectrum of design, development and management services for residential and commercial properties in the Twin Cities. Lazan said the development community can be “skittish,” and that market uncertainty can bring projects to a halt.

“That has a dramatic effect on our business,” he said. “We’re the first step in development and the easiest for clients to put on hold to mitigate their risk.”

Amidst the uncertainty, Lazan got in line for a Paycheck Protection Program (PPP) loan offered through the Coronavirus Aid, Relief and Economic Security (CARES) Act passed in late March.

The initial round of PPP funding put forth $349 billion in Small Business Administration (SBA) loans to help businesses reeling from the economic recession caused by COVID-19. The first bank he asked about the program was tepid – the program wasn’t organized well and there wasn’t any guidance from the SBA, they said. So, he went to another bank. This financial institution wasn’t as negative, but still wasn’t “super enthusiastic,” either.

It was soon obvious Landform needed a more strategic partner in this effort.

The third bank he reached out to accepted an application from Lazan. In early April he got word that his loan was approved; the much-needed funds reached Landform about a week later.

On a recent Friday, Lazan gave the good news to employees. The funds allowed him to keep all his employees, rehire seasonal staff, and bring everyone back to 40 hours a week at their full salaries.

“It was critical to us that our staff stay engaged in the marketplace and not be home anxious about the future,” said Lazan.

Landform was well-prepared for mobility solutions that allowed employees to work effectively from home or from the office during this period. Having the resources to keep staff engaged in the company was the difference-maker.

“It was a huge win for us. A lot of people can rest easy at night now that we’ll be looking out eight weeks at the marketplace instead of eight hours,” said Lazan.

Forest Stewardship Council

Like Landform, the nonprofit Forest Stewardship Council (FSC) depends on more than one industry to remain viable.

The FSC is a global organization that convenes major stakeholders to set standards for responsible forest management. Companies certified to FSC standards – from manufacturers of bath tissue and office paper to furniture and construction materials – are able to display the FSC label on their products.

FSC President Corey Brinkema said the organization realized early on that it would experience a $270,000 hit to its certificate-holder fees due to the pandemic. That kind of loss wasn’t sustainable for the nonprofit. Within hours of learning of PPP, Brinkema said, he was shooting out emails to get an application in.

The organization received a $179,000 loan through the program. The money helped the FSC avoid cutting any of its staff – it has less than 20 employees – and remain “reasonably solid” for the time being barring any other shocks to its revenue.

“This will go a long way towards keeping our national team intact, including seven of us in the Twin Cities,” said Brinkema. “The loan fills a substantial fraction of our budget shortfall.”

Brinkema says the organization should be able to weather the crisis for a least a year with the newly allocated funds.

Color Me Mine

Meanwhile, in the North Metro, Color Me Mine Franchisee Christina Hankins is still adjusting to life during COVID-19 in Maple Grove.

“Some days are better than others. Some days you get a $30 sale and some days it’s five or six orders,” said Hankins, who has managed the paint-your-own pottery location since 2018.

In March 2019, Hankins brought in a gross income of $44,000. This March, during the coronavirus pandemic, it was around $19,000. She’s had to furlough the majority of her workers and her brick and mortar location is closed during the stay-at-home order. She is still making online sales.

Photo: Christina Hankins runs Color Me Mine in Maple Grove

Hankins found out she received a $19,000 PPP loan in mid-April. While she’s grateful for the assistance, she’s still not sure how things will turn out.

Under the law, loan recipients need to put the money towards payroll, utilities or real estate payments within two months of receiving the funds in order for the money to be forgiven. But for Hankins, this rule makes clear a loophole in the legislation: If the state stay-at-home order is prolonged, she won’t be able to make payroll payments on time to receive loan forgiveness.

“What if I can’t open until June? If I pay (employees) to stay at home for eight weeks and I can’t reopen, it’s not worth it,” said Hankins.

Notwithstanding the predicament, the money does help. And, for now, Hankins is focusing on what she can offer others during a time of unprecedented uncertainty.

“Painting is relaxing. At least I can give them that,” she said.