Search
Homepage This page's url is: -crn- Rankings and Research Companies Channelcast Marketing Matters CRNtv Events WOTC Jobs HPE Zone Intel Partner Connect Digital Newsroom Dell Technologies World Newsroom Dell Technologies Newsroom HP Reinvent 2020 Newsroom IBM Newsroom The IoT Integrator Lenovo Newsroom NetApp Data Fabric Intel Tech Provider Zone

Coronavirus Stimulus Package: Small Business Loans Could Have Big Channel Impact

‘I've been questioning how do you press the pause button on the economy for a couple months. If you can do that, people can go back to work fairly quickly and get back to having a bang-up year for the rest of the year. ... This is the pause button,’ says Michael Tanenhaus, principal at Mavenspire.

Solution providers on the front line helping businesses and work-from-home employees continue operations in the face of the novel coronavirus pandemic are happy to see the passage of the U.S. government's stimulus package.

That proposal, which already gained U.S. Senate and House of Representatives support and awaits President Donald Trump’s signature, has a couple parts that solution providers say they hope they won't need but are glad to see available just in case.

The package, which at $2 trillion becomes the largest economic rescue package in the country's history, has provisions aimed at helping U.S. employees, small businesses, and industries looking to mitigate the economic disruption caused by the COVID-19 coronavirus pandemic.

[Related: Channel Partners Share Tales From The Trenches During Coronavirus Pandemic]

The stimulus package includes such components as direct cash payments to families and individuals, expanded unemployment benefits, funds for health care providers, and several types of assistance to small businesses and other businesses impacted by the pandemic.

Solution providers said it is the stimulus package's availability of loans to small businesses that could have the biggest impact on the channel.

The stimulus package is in essence a big "pause" button on the economy, said Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and MSP.

"I've been questioning how in law do you press the pause button on the economy for a couple months," Tanenhaus told CRN. "If you can do that, people can go back to work fairly quickly and get back to having a bang-up year for the rest of the year."

Having access to loans targeting companies looking to stay open during the pandemic, along with provisions for forgiving those lines if certain conditions are met, is the biggest part of the stimulus package, Tanenhaus said.

"This is the pause button," he said. "The government helping us pay our cash burn will get the country back in business. This is the promise. We're a big country with a large GDP. If we take two months off, it will be a big bill. But the government has figured out the hard part."

Just because there's a stimulus package doesn't mean problems will clear up, Tanenhaus said.

"We have to pay it back in the long term," he said. "But as a business owner, at least I don't have to do anything drastic."

Mavenspire prides itself as having a predictable cash cycle, and can estimate how things will look for the year by seeing how things worked the previous year, Tanenhaus said.

"We will take the loan if needed," he said. We've already filed the paperwork to get in line. But we don't have the details yet. But if you are future-proofing, you get in line. If you don't need it, you can get out of line. This is all about risk mitigation. Get in line so you have choices."

Mavenspire just brought on six new employees, bringing its total headcount to 21, Tanenhaus said.

"We really needed it," he said. "We spent two-and-a-half months looking for the best people. Some just started Monday. It's a leap of faith, the way things are playing out now."

CPP Associates feels blessed that the economic impact of the COVID-19 coronavirus pandemic hit after a really good 2019, said Patrick O'Dell, the Clinton, N.J.-based solution provider's managing partner.

"Unless this goes on for three to four months and people stop paying bills, we're OK," O'Dell told CRN. "The availability of small business loans will be a great help to many in the channel. Shipments are not going out, and orders are not being paid for. At some point, business cash flows will definitely be hit. So if we can get four weeks of loan relief, it could move the needle for us.

The payroll tax deferment part of the stimulus bill is good for many companies, but not so much for CCP Associates, O'Dell said. "We have the dollars to pay employees at this point in time."

Rick Chernick, CEO of Camera Corner Connecting Point, a Green Bay, Wisc.-based solution provider, told CRN that his company is looking into the stimulus package now.

"We appreciate any help the government may offer to sustain 100-percent employment of our people," Chernick said. "Our people are our first concern, so far we have retained all. They mean everything to us. Second, with our people we continue to provide the best care for our loyal customers and friends. We get daily thank you notes and calls from clients thanking us for helping them stay alive and up and running during this pandemic."

The ability to apply for a loan for eight weeks of payroll that can be forgiven if used to maintain existing payroll amounts is great for millions of small businesses across the USA, said Robby Hill, founder and CEO of HillSouth, a Florence, S.C.-based MSP.

"Businesses are suffering financially because their customers or their business normal operations and therefore normal business income has been shuttered due to the requirement that people limit contact with other people," Hill said. "My only fear is many larger cities forecast disruptions to the economy past eight weeks, and what will we do then to help these companies stay in business and paying their people?"

Hill said he is optimistic the coronavirus stimulus package provides a framework whereby banks and credit unions across the nation can lead the charge in restarting the economy with the backstop of these federal government loan guarantees.

"Many business have had no choice but to issue massive layoffs, and the assistance provided appears generous and timely for the nation right now," he said.

Ivoxy Consulting is fortunate that it has some financial runway to see how the impact of the pandemic pan out, said Alec Taylor, partner and consultant for the Kirkland, Wash.-based solution provider.

"But there will be a point in the not-too-distant future where we, like many others in our business, will have to rely on stimulus dollars to help us get off the runway and stay in the air," Taylor told CRN.

Taylor said that while his business has no plans to cut staff, knowing that there is an unemployment safety net will absolutely let anyone worried about the long-term effects of COVID rest easier.

"We are in a fortunate position in that we are not running on borrowed capital," he said. "We do not have loans to repay. For those VARs that do, any form of debt relief--say, providing a moratorium on debt repayment and real estate lease payments--would be tremendously helpful."

The healthcare stimulus funding will allow Comport Technology Solutions help hospitals provide better patient care, said Lori Koch, director of marketing at the Ramsey, N.J-based solution provider and MSP and a leading healthcare IT solution provider.

"We have created a pop-up hospital offering and are working with Aruba to help deliver these services in place like New York that are in dire need," Koch told CRN. "For other hospitals not hit yet, we are hoping to do both INFRAM (infrastructure adoption model) assessments and/or work with them to get patient engagement solutions like Phunware implemented so they can deliver patient records, wayfinding and telemedicine all with one application."

Koch said Comport's management team is already looking at the business and creating tighter guidelines for expenditures, and so is hoping to not need the coronavirus stimulus package benefits.

Doug Westervelt, CEO of Portland Internetworks, a Portland, Ore.-based solution provider, said that his company so far is in a solid position financially, with most customers operating with normal revenue.

"With little exposure to the hospitality or B2C market, we haven't seen the drastic and immediate effects of social distancing orders that other MSPs have," Westervelt told CRN. "Further, our customer base is diversified, perhaps one of the benefits of not having a specific vertical. Consequently, we don't anticipate needing any loans so long as the economic headwinds don't last longer than several weeks or a couple months. After that, I think it's an abyss none of us want to peer into."

The same goes for unemployment benefits, Westervelt said.

We just hired four spots who start onboarding next week," he said. "Perhaps this will turn out to be too aggressive, but we grew through the last two down cycles and anticipate there will be plenty of opportunity to gain market share and get in front of new prospects when business thaws again."

The stimulus package should help reduce panic and uncertainty across the customer base, Westervelt said.

"With the feeling of support and alternative financing available in the package, our customers are less likely to completely shut down purchases and make rash cutbacks in the face of the unknown," he said. "Even if the full $2 trillion is never spent, the fact that the facility exists should settle the markets somewhat. ... Ultimately, we hope that U.S. businesses will keep their heads screwed on and not panic."

Westervelt said his company appreciates that there are financial benefits for companies who resist laying off employees.

"For the MSPs who commit to keeping their people through the uncertainty, there are rewards for not pulling the ripcord early," he said. "This is good for the employees in our industry without a doubt. Further, because so many of us base our monthly recurring revenues on customer headcounts, anything that keeps our customers' employees working is ultimately a benefit to MSP MRR."

Back to Top

related stories

Video

 

sponsored resources