On March 16, the Mayor of San Francisco, London Breed, issued a home order for the city, forcing many local businesses to close amid the coronavirus pandemic. One of these businesses was a popular flower business Farmer’s flowers, which was started over nine years ago by Christina Sembel.
The company, which provides personalized flower arrangements to customers across the country, was on track to achieve a record year after opening a second distribution center in Ecuador in January, Sembel said. But, with the coronavirus outbreak sweeping the world, Stembel says that all has changed since then.
CNBC do it spoke to Stembel and other women entrepreneurs about the impact of today’s pandemic on their businesses as they fight for federal funding, pivot business operations and manage custodial needs of children.
In the first week after Farmgirl Flowers closed, Sembel said sales fell 60% and around $ 150,000 worth of flowers had to be thrown away. In addition, its team of 197 had to be reduced to 40 due to a slowdown in business operations. Fortunately, Stembel says, she was able to connect many of her laid-off employees with another local company that was hiring.
To deal with the downturn in business, the San Francisco-based entrepreneur applied for the Paycheck Protection Program, a Small Business Administration (SBA) loan to help small business owners stay afloat during the COVID-crisis. 19. Before the first round of funding goes out in early April, Stembel says she researched everything she could about the program. This included, she said, participating in six conference calls, including one with Ernst & Young, to get an overview of how the loan worked.
“I was able to access information that other small businesses did not have,” says Stembel, who participated in the Ernst & Young call because she had previously participated in the Entrepreneurial women winners program, which provides additional resources to a select group of women entrepreneurs.
Use it Youtube channel To share the knowledge she learned from her network, Stembel says she received a lot of feedback from other small business owners who had no idea how the P3 loan would work. “I have received hundreds of emails from all the information I posted from people who were like, ‘I just didn’t know this was going to run out? “And, I knew that from all those conference calls… so I made sure I was ready.”
When the SBA launched its first cycle of $ 350 billion in government loans on April 3, Sembel was on his computer and ready to send his documents at 12:01 am. nine working days for them to get their system up and running and ready. ”Eventually, after waiting a few days, Stembel was able to apply. But, like many women and minority small business owners, she s was refused a loan to finance the program. quickly exhausted before April 16.
“You know, most of the priority companies already had access to capital,” says Amaya Smith, co-owner of a beauty boutique in Washington, DC called Brunette beauty cooperative with her friend Kimberly Smith. “We have seen the stories on Shake Shack and the Lakers give back money. This program was supposed to target small businesses, and unfortunately I think it exacerbates a lot of the disparities that we’ve already seen in funding. “
According to some experts, up to 90% minorities and women small business owners will be denied a P3 loan because financial institutions prioritize pre-existing clients when distributing funds. While this might sound like a rational idea to banks, Joseph Parilla, a member of the Metropolitan Policy Program at the Brookings Institution, explains why this method is unfair to many.
In 2018, the average amount of loans granted to women-owned businesses was 31% less as the midsize loan for male-owned businesses, according to the online credit market Biz2Credit. In addition, major banks approving 60% of loans by white business owners, compared to 50% of Hispanic business owner loans and 29% of black business owner loans, Parilla said there was no way the PPP loan could be fair.
When the coronavirus outbreak began in early March, Kimberly and Amaya were already taking steps to adjust their business model to keep their business afloat. They immediately started following CDC guidelines to make sure there weren’t large groups of people in their store at the same time, and they started offering hand sanitizer to every customer who walked through their store. door. Eventually, they turned to offering a pickup option for in-store products, before officially closing their doors on March 25.
“I can say we’ve seen about a 75-85% drop in revenue,” Kimberly says, while explaining that most of their product sales have always been in-store.
To keep in touch with their customers and maintain a certain level of funds, Kimberly and Amaya directed people to their website to purchase products. They also offer virtual consultations to customers who want to learn more about a product before purchasing it.
“You know, we’re really pushing each other out,” Amaya said, noting that they also launched a GoFundMe page make ends meet. So far, thanks to customer support, the two co-founders have raised over $ 5,000 to help with business operations.
“Obviously, GoFundMe is coming faster than the PPP loan,” Kimberly says, while explaining that they are still waiting to see whether or not they will receive money from the second round of SBA funding launched on April 27.
In addition to waiting for the approval of a PPP loan, Allegra LaViola, owner Sargent’s daughters art gallery in Manhattan, also faces the overwhelming responsibility of being an entrepreneur without child care.
Like many parents, she and her husband paid school fees up front to have their 2-year-old stay in daycare during the summer while they worked. But, with daycares and schools shutting down, LaViola says they are now paying for a service they don’t receive and are unlikely to get any money back.
In the event that her gallery and other businesses open soon, she says childcare will always be a priority. Although she and her husband now both work from home, LaViola says that under normal circumstances they are both outside the home with her husband working in an office and her in her art gallery. .
“How can I work if I have to take care of a very small child who cannot be physically left alone,” she says, while explaining that her son’s school is closed for the whole summer. “Financially speaking, a lot of our daycare was already prepaid, so we have already used our childcare budget. So even if I could find a babysitter who agrees to babysit my child, how am I going to pay for it? “
LaViola emphasizes that the stress of childcare is just one more burden to the many other challenges she faces as an entrepreneur with a physical location. Fortunately, she says, she only has one paid employee, who understands the need to reduce her hours. And luckily, says LaViola, she was able to negotiate a deal with the owner of her gallery. to benefit from a discount on the rent. But, if things continue as they are without any funding, the mom and the entrepreneur say she’s not sure what the future holds.
“I just don’t know how long I’ll be able to do this.”
For more information on small business resources or PPP loan financing, visit the CNBC Small Business Coronavirus Resource site. here.