Reopening (1)

Every day I spend a great deal of time trying to find a way to re-open the 5 closed Boloco restaurants. I could just go ahead and open them, but without some certainty on costs (since sales are a complete unknown and last we checked they were down 50-80% in those restaurants) or an infusion of significant capital ($$), the risk of re-opening only to re-close again is too high.

Recently we received approval for an SBA-funded EIDL loan which is a step in the right direction, but if that’s all we relied on, we would likely exhaust those funds by mid-fall and be right back in the same situation we are in now. We may have another loan from a standard lender at a high rate (11%) but that one will require a personal guarantee and lord knows I have enough of those on the books these days. Enough to topple not only the business but my personal and family assets as well.

Then there’s good ol’ American Express. Every year or two I tap Amex Financing Services for anywhere between $150K-400K to help us get through the seasonal lull of winter. It’s a straight 6% fee no matter when you pay it down, and they make it easy on you because they back the whole thing by our Amex Merchant receivables. You take the $150K loan, let’s say, and they add on $9,000 as their fee, and then every day from that point forward you pay down a certain percentage of the Amex sales we receive from customers. They set it up so that it is paid down usually in about 10 months. Just in time to do it again. It’s great for small businesses that are tight on cash… there are thousands of us. I’m sure its a great business.

Today I called to find out what we might be eligible for this coming winter. Our Amex sales are down massively because we have stores closed, but I figured we might be good for $40-50K to help us get to re-open mode.

“I’m sorry sir, but due to Covid, we’ve paused the Amex Financing program. We hope to restart it soon.”

I knew why immediately, but I couldn’t help but ask. “Is there a chance that by extending loans to your long-time customers you would be spreading Covid in some way?”, I asked, with my serious tone, hoping he would come back with a good joke or a laugh.

“Yes, sir. The virus could come back and we just can’t take that risk.”

“The risk that by providing loans that you would be spreading Covid?”

He still didn’t catch it. “We have no certainty about what will happen next. We value our customers and want to be there for them when they need us.”

“Well, I know this isn’t about you personally”, I said, “but your customers need you now, not later.”

“Well, we just don’t have any way of knowing if our customers will pay us back at this time, so we are pausing the program. Is there something else I can help you with?”

I’m not sure what else he had in mind. No fault of his, that’s for sure. But when AMEX tightens up without even asking for an account number (I had originally asked for the status of our loan, which I never got an answer on, and frankly didn’t need one) we all better keep our seatbelts tight.