Nearly all industries face a difficult road ahead. The economic impact of the global pandemic hits both supply and demand sides, as well as the bridge between the two. Shipping dropped substantially in the early days of the outbreak. With manufacturing down in China, where the outbreak began, imports and subsequent freight from Southern California fell precipitously. Now, the federal government offers loans to both small trucking companies and owner-operators alike seeking assistance.
Previously, loans from the the Small Business Administration were unavailable to owner-operators. With the passage of the CARES Act, newly available lending offers independent contractors the option to borrow. Additionally, the expansion provides loans to small trucking companies with fewer than 500 employees. The SBA bases loan amount on 2 and a half months payroll. If companies retain all employees, they could be eligible to convert their loan into a grant. Effectually, the government offers free money to small trucking companies via the stimulus. However, provisions are still being finalized.
Few loan restrictions allow companies to apply the funds as necessary. Borrowers may use the loans to pay a mortgage, rent, utilities, and interest. Those permissions add to payroll, the chief target.
Loans Rescue Impacted Small Trucking Companies
In speaking with FreightWaves, Randy Hooper, a partner at certified public accounting and tax firm Katz, Sapper & Miller, said his all his trucking clients inquired about the loans. 22 in all, they range in annual revenue from $25 million to $600 million.
The smaller companies want to apply, the larger ones wonder how they might participate.
However, rules over eligibility regarding the number of employees could change in the near future. Presently, the SBA holds a hard cutoff at 500 employees.
Though, some larger trucking companies say they won’t need help. Brent Nussbaum, CEO of Nussbaum Transportation Services Inc., employs 520. Just beyond the maximum, Nussbaum said he wouldn’t borrow even if allowed. “The money ultimately ought to go to those that need it,” he told FreightWaves. “It’s debt this country can’t afford in the first place,” he added.
Yet, other companies more directly impacted by the pandemic hope to patch themselves over with the stimulus. Stephen Halsted and Sandy Goche told FreightWaves they turned down several jobs due to destinations in outbreak hot spots. They operate out of Southern Ohio as a 2-person expedited trucking company. “Our safety is the most important thing,” said Halsted.
In order to prioritize safety without financial ruin, the SBA loans seek to protect smaller trucking companies weathering the storm.