Letter: Ben Wegdam, Middleburg

Editor: My wife and I own three brick and mortar retail companies under the banners lou lou, Crème de la Crème and Zest. We operate 34 store locations and employ 210 people which equates to 100 FTE, since the majority of our staff is part time. 

Just when the Corona virus came in sight, the retail business we own got ready for the transition to spring and summer. Seasonal product was bought and we were in the process of merchandising the stores.

Then the weekend of March 14 and 15 came along. Nice weather on the East Coast and the stores were ready for spring. It was supposed to be a good shopping weekend. However, when we got the traffic reports by store on Monday morning, the numbers were devastating. America was hunkering down.

By Tuesday, March 17, we decided to close all of our 34 store locations. The full-time employees were put on a two-week paid “Corona” leave, including the majority of our warehouse and office personnel. By Thursday, March 19 we had two of the 210 employees remaining.

So here we were. Millions of dollars in spring summer merchandise. Some of it got canceled, but a large portion was in the warehouse or in the stores. And no date in sight to start opening the stores again.

Then the government assistance programs were drafted. Two were relevant for us: The Small Business Disaster Loan Program, and the Paycheck Protection Program (PPP), as part of the CARES act. So we applied as soon as we could….

We went on the SBA disaster loan website, submitted all extensive financial information and finished the application on March 19. Since we did not hear anything on the progress of this application, we called the help desk on March 31, only to find out that they had changed the forms due to high demand and that the status of our application was put on in-active. We were advised to re-apply, which we did the same day. Checking back in this week, we were told that this process could take months, time we do not have.

In addition, we applied for the PPP loan application, as soon as it became available on April 4. As we were awaiting approval for the loan, we reviewed the details of the forgiveness portion of this program.It became clear that this program must not have been written with small retailers and restaurant operators in mind. The way the “forgiveness formula” works does not seem to make sense for retailers and restaurant owners like us, who will unlikely be able to re hire all staff, especially part timers. Too much of a reduction as result of the formula (number of pre and post FTE, which includes FT and PT ) results in the company having to contribute to the employee expenses, without any work that can be done ( since all the stores are closed). Without being forgiven any payroll expenses that have no added value at all for us at this time, we would only do the government a favor by re-hiring. Most of our employees seem happy to stay on unemployment insurance since the $600 per week “Corona”contribution creates a higher pay rate than we are able to offer.

So, with all good intentions Uncle Sam, your programs currently in place do not help small retail and restaurants business and will likely result in many bankruptcy filings once this terrible pandemic fades. Next time a disaster programs get rolled out it may be better to keep your “customer” in mind, just like we all do in the retail and restaurant business.

Ben Wegdam, Middleburg

2 thoughts on “Letter: Ben Wegdam, Middleburg

  • 2020-04-09 at 12:51 pm

    I expect your analysis is spot on. Government rarely makes things better. Between over-reacting and failing to understand the intended and unintended consequences of actions, they often miss the target and the “cure” is worse than the original problem.

    Many small businesses won’t survive this shut down and those jobs won’t be back any time soon.

    According to the CDC, it appears deaths in the USA are substantially lower during January to March than the same time over the last several years.

    “According to data obtained from the CDC’s National Center for Health Statistics Mortality Surveillance System website, total U.S. deaths for the first three weeks of March are DOWN 10% from the average of the prior four years for the same three week period.

    The average for weeks 9 through 11 for the four prior years was a total of 170,555 deaths. For weeks 9 through 11 this year, the total is 153,015, meaning 17,540 fewer people died in America during the first three weeks of March than could be reasonably expected. And the gap between historic deaths and weekly deaths is widening. For week 11, just 47,655 Americans died, 8,773 and 15% fewer than the average for week 11 in the prior four years. And while data on week 12 is not complete, it is trending similar to week 11 and will likely be down by 15% (around 8,700 deaths less than expected) even though 1,919 COVID-19 deaths were reported (in week beginning 3/22).”

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