Opening a Business During COVID: A Panel Discussion

Transcript

Emily Galash (00:00:00):

Again, explain more in the moment. Um, we have Roland Chaiton please let me know if I got that, um, pronounced that incorrectly, but Roland does its business impact Northwest, uh, business impact. Northwest is a lender based in the Seattle area and also in Portland and the surrounding Pacific Northwest area. And they really understand small businesses and the needs, and they provide loans to small businesses for a variety of purposes. Um, and we also have Justin darling with an NAI Elliot Commercial Real Estate. Justin has been working with many of our clients and so have some others over it NAI Elliot, um, to help our, our, the businesses we work with find spaces, but not only that, but to help them understand the lease, kind of go back and forth with some landlords really advocate on behalf of the small business owner to make sure that they’re, um, they’re getting what they want and that they understand what they’re getting into. Um, so thank you all for being on the call today. Um, my name is Emily I’m with livelihood Northwest, and I’ll be facilitating, I’ve got some questions and I will be asking sometimes all of you, and sometimes there’ll be some specific questions that applies more to one of you. Um, let’s stop sharing here. Um, let’s go around and first do do some introductions. So Alfredo, would you mind taking a minute and just telling us a little bit about yourself and your business?

Alfredo Climaco (00:01:37):

Yeah, absolutely. Um, so this is stroppy Kali. It’s a cocktail bar inspire on different on a pano Americano culture. Uh, everything started back on the days. What makes you reckon that it was a fusion of two cultures, Puerto Rico and Mexico, and we were committed to provide experiences, uh, Caribbean experiences in the Northwest, um, fruits, colors, flavors from both countries, uh, mix with the flavors of the Northwest. And from that tropical, it was born and, uh, tropically, we committed to share all those flavors through drinks and now two bites as well. So we have a real limited, uh, it’s more menu of drinks and it’s more mineral foods that are focused on sharing. Uh, you know, those moments like every dish we have has a little story behind or every, uh, drink we have, we put it as a story behind it. So that’s how it has more essence of the business. Wonderful. Thank you. Um, Kevin, Would you mind introducing yourself and, uh, just a little brief overview of gorilla development.

Kevin Cavenaugh (00:03:08):

Um, so real development, we do a handful of a handful of buildings around town, actually 20, um, 60 tenants that are retail or restaurant or commercial. Um, most of them, half of them are in the food world. And aside from two formal sit-down restaurants, everything else is, um, like I’ve read. That was one of my tenants, um, micro restaurants, something between a food cart and a sit down restaurant. Um, cause there’s a, there’s a lot of, there’s a lot of space in, in that area and a lot of need, I think in that area, we also have office space and residential space, but, um, yeah, we’re small and weird and happy about that. So like when people are afraid to come who have not an amazing track record, like, like I don’t care, he’s got an amazing idea. Wonderful. Okay.

Emily Galash (00:04:09):

Thanks, Kevin. Um, Rowan, would you mind giving a little intro on yourself and the business impact Northwest?

Roland Chaiton (00:04:17):

Sure. Hello everyone. I’m Roland Chaiton with Business Impact Northwest. We are a C D F I community development financial institution, uh, located up in Seattle Washington, and we cover all of Washington arts of Oregon for lending, uh, all of Washington, uh, for technical assistance for our women’s business center program and Oregon, Idaho, and Alaska through our veterans business outreach center program, we’re directly, uh, connected to, uh, a variety of government programs. Um, as a CDFI, we’re one of about 1500 of those around the country. They are, um, a, their name for a subagency of the us treasury department. Also known as community development. Financial institutions came about in the mid 1990s as a conduit to move federal dollars to the nonprofit sector through grants so that they would have more money to do small business lending and technical assistance. And back then there were maybe 80 original CDFs now, and they’re surrounding I think, 1500 around the country. We, most of them them are nine non-profits. There’s some credit unions in there and, um, most do small business lending and technical assistance and I’ll get into some of the other programs and things later let’s go from there. Thank you.

Emily Galash (00:05:50):

Wonderful. Thanks so much. Rolling. Uh, Justin, would you mind giving a little intro on yourself and, uh, you

Emily Galash (00:05:58):

Know, whether may Elliot or just the work you do with, uh, businesses in the area?

Justin Darling (00:06:05):

Yeah, good morning. My name is Justin Darlene and I’m with NAI Elliott. Uh, we are a midsize family owned and operated full service real estate company, uh, located in the CDID. Um, we really pride ourselves on building relationships with small businesses, um, throughout the Portland Metro area. Um, and we manage properties from Eugene all the way up to Tacoma. Um, my role in the company is as a commercial real estate agent, uh, with a focus on retail and office, um, primarily, uh, in the Portland Metro area, um, in a major focus in the CID. Um, and yeah, I’m really passionate about working with, uh, small brick and mortar businesses, especially folks who are opening up their first brick and mortar and just kind of, um, on that learning curve of, of learning, um, about leasing a commercial space.

Emily Galash (00:07:08):

Great. We’re so excited to have all of you here. So I wanted to start off with a few general questions and when we’ve done panels in the past, we’ve asked some of these similar questions and it’s just really interesting to see the different responses. So, um, I’d love to hear about when you first heard, when you first realized that COVID this global pandemic was going to have a real impact on your industry, on your business, on everything that you’ve been building and all your clients and customers. Um, what were some of your first thoughts and reactions? Um, tell us about when that, that first moment, uh, came to your mind and I’ll just, I’ll go in reverse order. So Justin, do you mind sharing a little bit about that?

Justin Darling (00:08:03):

Yeah, so it was probably right at the beginning of March when, uh, Oregon had its first case of community spread COVID. Um, our office preemptively did a work from home day. Um, it was, uh, in an effort to ensure that everyone could log in remotely, um, work, still resumed as normal, just nobody came into the office. Um, and, uh, it was a real progressive, um, uh, thing to do. And it sort of prepared us all for what inevitably a few weeks later came about, which was an ultimate shutdown of our entire office and everyone working remotely, but that, um, coming back to the office the next day, I think a lot of us started to realize that the climate and the landscape of commercial real estate was really gonna undertake, uh, uh, a shift, um, from what had been happening in previously, um, sort of an upward cycle. Um, and, uh, it was gonna, there was going to be a lot of change. So, um, but you know, there was just a lot of question marks on what that was going to look like exactly. But I think we all suddenly realized that, uh, there was going to be a big shift in how people approached space, uh, commercial space.

Emily Galash (00:09:24):

Great. Uh, Kevin, would you like to, uh, uh, Oh, I’m sorry. I’m reverse sort of Roland. Would you like to tell us a little bit about when you first realized that this was going to have a big impact and some of your initial reactions?

Roland Chaiton (00:09:39):

Uh, the first couple of weeks, they’re sort of mid March. Um, some of the staff is already not coming in. Um, the rest of us were watching real carefully what was going on with the state, um, mandates and then, uh, pretty quickly everybody was told to not come in. Um, the state was shutting pretty much everything down. Um, we realized right at that point that a lot of our loan clients were going to be impacted. We were starting to get emails from them asking for, um, deferrals and things on their loans, uh, abatements, um, telling us that they were being closed down. They had no customers, things like that. So we knew there was going to be really big impact. It just all happened very, very quickly. Um, so we, we had to start mobilizing very, very quickly.

Emily Galash (00:10:47):

Thank you. Uh, Kevin, what, what were some of your first thoughts and reactions?

Kevin Cavenaugh (00:10:53):

Um, not many thoughts. Just it’s all reaction right now. Everything I’m doing is just reacting. Uh, first thing we did is the day before, the day before governor Brown shut down the state, we sent out an email to all 107 tenants saying, pay what you can. Um, you know, I think the quote was, I don’t care if you pay me rent this April. I care if you pay me rent next April, it’s a long game. And I have, you know, thanks to relationships with, you know, with, with banks like Rollins, I can call Roland and say, Hey, like, can we get creative on my, my long-term loan? Um, but someone like Alfredo is living month to month in a small business. So I have the capacity to, to get, create more creative than Alfredo on how I can spread the pain around. And, and, um, and if we all play nicely in the sandbox and so far so good, um, we can ride this thing out, whether it’s, you know, six months or 26 months.

Emily Galash (00:11:53):

Great. Yeah, that’s, I have more questions later about some specific, some specific ways that you’ve been engaging with the tenants that you have and, and, um, you know, as like the landlord on the call, um, maybe differentiating between your approach versus some other approaches you’ve seen landlords take. Um, and, uh, so I’ll say though, what, what were some of your first reactions? What, um, what were your thoughts when you first realized that this was going to be a real, a real issue? I think you’re on mute Alfredo,

Alfredo Climaco (00:12:34):

Right? I’m sorry. Um, I was saying it makes her Regan operates over 45 to 50 events during the year. And my first reaction was really in a freaking mode because we didn’t know where all those events will go. Uh, we didn’t know the, uh, the path over company since we operate in large, um, gathering some on parties and festivals. Uh, so we got to switch or business model, uh, right away like the first, uh, I remember when they, they limited people to 250 people for per event and broccoli a week later when down 200 and then a week later went down to 10 and it was just moving so fast that, uh, we had to be creative. So we start selling food out of, um, another, uh, business partner we have, uh, is not peace. And so Matt Lynch is, um, a partner of us.

Alfredo Climaco (00:13:39):

And so since Matt Lynch closed off his restaurants, uh, we decided to launch a, to go order a restaurant. It was just online. We launched, uh, a Taqueria, so we got to react to it, right, because we didn’t have a small businesses, a small business, we didn’t have an option. Uh, so we became really creative, doing free deliveries, doing a lot of online system. And, uh, we realized that, uh, everything would change. And if we don’t, we didn’t adapt to the situation or business, would it be just disappear, but we had to take actions right away. Okay.

Emily Galash (00:14:28):

Yeah. Yeah. Thank you for that. And this next question is for you, Alfredo. Uh, so you, you just opened a brick and mortar business. Um, what, uh, a month ago, maybe, um, tell us about why you decided to open that business now and what, what made you think that was a good time to open? Was it part

Emily Galash (00:14:52):

Of your plan to shift your offerings, or was it a new opportunity that you saw?

Alfredo Climaco (00:14:58):

I think it’s a lot of things involved on that decision. Uh, try to explain the best way. So, uh, I was, I graduated from the increased project in February, right. And I was ready for opening a restaurant after the summer. So the plan was opening a restaurant in October or November after or highest season, which is summer when this happened. Um, again, we didn’t know where the company will go and it’s our being really creative. We notice the need of places. And I talked to couple of my business, uh, business advisors, right? Uh, some friends, a mentor that I have that I, uh, met and, and had this idea. Well, a lot of sadly, a lot of small businesses going to close nominee inside restaurants, they’re not going to work. Um, but chances of selling, you know, they, they, beginning of the idea was selling drinks to go and food to go so we could have be we’re going to make it possible.

Alfredo Climaco (00:16:14):

So we started looking for a place and at least helped me to connect with Kevin, Kevin who showed us so much support to our business since day one. He said, uh, don’t worry about paying rent for now because it’s going to be hard. And that gave us a lot of relief. Give us a lot of, uh, an especially me gave me a lot of, um, security to open a business because we didn’t know where, where it would go. Maybe luckily it’s successful now, but what if we didn’t sell any, what if we, you know, like it was everything in the air. Um, but, um, another thing that I, I think couple people know me for that. I like a little bit of the risk. And I think until you don’t jump that fear of, uh, that wall, that wall of fear, you don’t know what’s going to happen. And obviously connected with different people, partners talking to mentors and business advisors, uh, you know, I have the strength to launch the business and here I am. Uh, so a lot of support from people from, uh, the Mercado from, uh, guerrilla development, uh, from livelihood. So I think that’s what, uh, encouraged me to be secure about business in, on obviously being really smart about it. But, uh, again, there’s a lot of people involved behind tropically.

Emily Galash (00:18:02):

Great, great. Uh, this next question is for Justin. So I’m, I’m dying to know what you’re so afraid of. Just open a business, new brick and mortar restaurant. Um, is this, is this a trend? Is this unusual? Are, are you seeing an increase in people inquiring about space or a decrease? I’d love to know more about some of those trends and how that’s changed since, uh, you know, in the last gosh, four or five months since COVID hit.

Justin Darling (00:18:43):

So, you know, I mean up until March of 2020, um, commercial real estate was at the peak of, of, I think what a lot of people thought was at the peak of its cycle. Um, and there was a lot of discussion about, um, if and when and what is going to cause a downturn in that cycle. Um, this certainly seems to be it. And so we’re, we’re shifting as this big cog sort of crests and perhaps starts rotating downwards. Um, and the months coming up, uh, previously, you know, um, as we hit that peak, there was a ton of small business owners, um, looking to get their brick and mortar set up. Um, and from March up until this point, we have seen a little bit of a slowdown. Um, we have seen a little bit of a slowdown in, in folks, you know, just not knowing what the future is gonna look like.

Justin Darling (00:19:48):

Um, as a small business owner, you’re trying to mitigate as much risk as you can. Um, and you’re, there’s, there’s, um, there’s variables that are within your control and that are not within your control and, and local and federal shutdowns are not really within their control. So if you’re opening up a business, that’s going to be affected by something like that, then, then you’re going to rethink that. Um, surprisingly, um, we are still seeing a fair amount of business owners willing to accept that risk and perhaps, um, maybe get a little bit of a reward, um, with some concessions that owners are willing to hand out and lease mine and, uh, free rent. Um, um, but ultimately, you know, there, there are also creative thinkers. Um, I think like Alfredo was saying they’re nimble enough to, to, um, and small to think creatively think outside of the box and, and come up with solutions to perhaps do a free deliveries or more online business, um, take a smaller footprint of a space. Um, so I think ultimately to answer your question, we are seeing a slowdown in, in folks who are looking for, um, to lease space currently, but so,

Emily Galash (00:21:16):

Okay. Thank you. Um, and of course with leasing space comes, uh, a lending component and a loan component, usually. Um, Roland, what changes have you seen in the lending world either in general or specific to business impact Northwest, um, since COVID, uh, hit?

Roland Chaiton (00:21:41):

Well, it’s a big question in some ways, because so much changed. Uh, let’s start with the, since COVID hit, we’ve seen, uh, the government step in, in a massive way, particularly SBA first with the E I D L economic injury disaster loan, which was sort of on and off a bit, and then back on more fully, and it had a grant component to it in the beginning, which, uh, went away. I think it was in July, but if the loan itself is still open and provided a great path for longer-term financing for a lot of folks, but the, the main state thing that happened was SBA came in, um, after Congress voted to do this with the PPP program. And, uh, I just go while you were starting this show, I was listening to when they’re thinking, uh, the Coleman report, which is something, lots of the bankers around the country listen to every day for 15 minutes.

Roland Chaiton (00:22:47):

And they were saying 71% of service businesses, and 82% of manufacturers got PPP loans in this country. That’s huge $525 billion went out into the, um, small businesses. Well, in small middle-sized businesses for, from the PPP program of the ideal loans, 20% of service businesses and 17% of manufacturers got those loans. Um, so there was, um, a couple longer round PPP loans. Um, I know we were heavily involved for our small organization doing those, but, um, everybody got creatively involved, um, on the banking side. And so everybody was pushing as hard as possible to get as much money out into the community as possible. Um, initially the lenders themselves have to use their own money to get those loans out, the money that is going to SBA that’s there for guarantees and or for forgiveness. So many of these loans will be forgiven. And at that point, the money will come back in from SBA, which is holding it into paying off the lenders.

Roland Chaiton (00:24:06):

Uh, so those loans can get closed out. So we’ve now all moved to the forgiveness level of this, uh, which is, um, another big situation. And some folks are saying there’s going to be very large. Uh, when I say folks that banking community members are saying, there’s going to be a very large fallout of sort of mainstream businesses with, um, one in three, one in four closing. I don’t know if that is going to be true or not, but this is some of what we are hearing. Um, so these are all like massively big changes. Um, SBA is still playing a huge role here. Uh, regular SBA seven, eight lending is still going strong. SBA micro loans are still happening and going strong, uh, demands in some industries have taken off other things that have gone way down people in the food service world, uh, in certain sectors of it, particularly service in restaurants have been hit.

Roland Chaiton (00:25:11):

Um, very, uh, very much, um, other folks who are doing certain types of, um, production that relates even into the whole COVID situation. They’re seeing their businesses go way up. People do doing, um, work in the online and trend pivoting into online type sales. They’re seeing their businesses go way up. Um, we are seeing a need for many businesses to do pivots, and if they’re not doing the pivots, they’re having, uh, real challenges, um, where I don’t want to say necessarily we’re moving to a new normal, but we’re, we’re definitely in a different place than we’re where we were before. Um, maybe I’ll be a chance to talk a little bit more later about, um, a couple of the protocols that are going to be needed in the sort of food service world for those folks to survive. So, um, that’s also going to be a real important thing, but a lot has changed from the lending side in terms of total dollars that have moved out into the community and the demand that’s still there and what’s coming up. And because SBA has been paying a lot of the principal and interest payments for microloans PPP loans And, um, the SBA seven eight loans for, um, for like the six month period. But once that ends coming up for some folks here in, um, October, uh, then we’re going to really see how people are affected and, uh, we may have to do a lot of loan adjustments after that. We’ll see. So I’ll leave it at that.

Emily Galash (00:26:58):

Yeah, definitely some concerns about kicking the can down the road when it comes to these financial, um, burdens. Uh, thank you. Well, as long as we’re speaking about trends, um, Kevin, I’m really curious, you are, you have over a hundred tenants in of all different types, a lot of food based businesses. And you’re kind of in this niche that is particularly well-suited for the grab and go and less of the dine-in sit down, which is more on the side of, of, you know, those restaurants are being affected pretty heavily because we’re paying for space. They can’t use. Um, do you have any kind of high-level trends that you’ve noticed even among your own tenants, as far as, um, some common themes that have emerged since COVID?

Kevin Cavenaugh (00:27:51):

Um, yeah, I mean, I want to kind of echo what both Roland and Justin were saying. It, it it’s now it’s a different world. We were all for a second saying there’s going to be a V curve where, okay. In three months I was telling my tenants in April, Hey, you’re a really good pizza chef, or you’re a really good software engineer. Um, these are crazy times you didn’t get untalented because of COVID just hang on and people will want pizza and software again, just hang on and I’ll hang on with you. Now. I’m not saying that as much anymore, there will be winners and losers. As Roland was saying, I’ve got tenants that I look at them and I know they’re not going to make it. And, and they don’t know that yet. Or maybe they do know that. And it’s really painful to watch.

Kevin Cavenaugh (00:28:33):

I have other tenants. I mean, micro restaurants are great. Um, one of my, I sit down restaurants that is selling as we speak, uh, and the space won’t be a restaurant anymore. It’ll be absorbed by the neighboring grocery store. Um, but you know, the grocery stores growing their busiest can be, and they’re doing fine. Um, but sit down and restaurants aren’t, he was going to just wait it out. And I kind of said to him, it’s not you it’s, that’s, it’s going to be a year from now. It’s going to be kind of crazy. That’s a whole lot. I can wait with you, but not for a year. Like if someone else wants to pay me, if someone’s handing, waving a checkbook behind you and you’re not paying me rent, I can’t ignore that for that long. I can re I can ignore the book for two or three months, but at some juncture, these are different times.

Kevin Cavenaugh (00:29:19):

The funny thing is next door to Alfredo is the old Sutra space in my product to the ocean. Um, I at nine offers from micro restaurants in the last 10 days wanting to go in there. So people get that this is, there are opportunities now, and it’s Justin’s job, but it’s my job to find the Alfredo’s of the world. Um, and it’s, we’re all in this job to differentiate the good business plan from the bad business plans and land and, and keep these folk going. There’ll be a lot of amazing companies growing out of this. And there will be, like Justin said a lot that, that don’t make it maybe 25% that just go away.

Emily Galash (00:30:05):

Yeah. That’s a, those are some real, real experiences there. It’s a very tough to make that call sometimes of how long to hang on. And, um, and also when there’s new opportunity, um, Roland, I think he has something to add to this. So go right ahead.

Roland Chaiton (00:30:24):

Okay. Thank you. So I thought this might come up later, but it seems like it’s on topic right now. So for all the folks who are out there in the restaurant world, I really have to put a plugin for a television show called restaurant impossible. If you haven’t seen this and you get a chance, please see that, or look forward on the internet and watch some of the episodes. Um, Robert Irvine, who’s the primary person in there. He does an amazing job of going in and helping save some restaurants, but he’s been doing this awhile saving restaurants before COVID hit. Now, he’s going back on the show and helping some of those who sell, save previously, get through COVID. And what is amazing is, um, some of the restaurants actually will make it if they follow some of the really good professional advice. And these are things that not all of us realize or know about.

Roland Chaiton (00:31:29):

And I’ll just give you two examples. Um, even though one restaurant he visited had, uh, people coming back in because they could be open for 25%, uh, seating. People were, were coming back once, but not returning. Um, the reason why he spotted it right away, there was insufficient information posted all over in terms of protocols. What has to happen when you first show up, get registered, go back out to your car, or in some cases, register from your car with texting, and then wait to, we call it in to be seated. There weren’t sufficient plaque cards, sufficient, uh, PPE sufficient, uh, like, um, you know, hand cleaners, things like that. The signage was not easily visible. It didn’t give anyone a sense of safety. So people were not coming back. And until there was professional intervention here to show the owners of the restaurant, what really had to be done, people were not getting the same sense of safety, so they would not come back. So, uh, Everybody needs to pay attention to that. And if you don’t know how to do it, you gotta get the professional help or help somewhere. Um, on the food side, this was really amazing for the takeout. People would order once and never come reorder for takeout. And what did he find out? Well, he had the chef there prepare, uh, the food, and then he sat there and waited for 20, 30 minutes before trying any of it. And maybe it’s good when it’s fresh and hot, but 20, 30 minutes later in the little containers, it was not very good. It was a lot of water in there. Condensation, the vegetables were all soggy. Um, it wasn’t working. And so they had figured out other ingredients, other foods to put into the takeout menu so that they would be attractive and people would actually come back and buy it again.

Roland Chaiton (00:33:35):

The chefs had no idea, but this, um, Robert Irvine had, he knew because he’s been down this road before. So they changed up entirely the takeout menu, and then it was like success. So if you are in the restaurant business, and you’re doing a pivot where you’re doing partial seating, uh, including outdoor space, and you’re doing takeout, if you don’t know the real extent of what you need to do, you might not make it. If you want to make it, you got to make these changes and you have to know what to do, what to look for or get help. So I encourage everyone to watch that show. I learned a whole bunch just watching this, this TV show. I was amazed, but, um, it can make the difference between who survives and who doesn’t survive. That’s all I’ll say.

Emily Galash (00:34:29):

Thank you. Yeah, that’s really important. Um, and so many good points there. I know that, um, we’ve had a couple sessions on kind of the signage and PPE, and we’ve got those recordings. So if anyone is interested, um, there’ll be on our Facebook stream or you can email hello at, but also in the future. Uh, that’s a great point about the food may not perform as well in a takeout format versus fresh on a plate in a sit down dining, dining room. So, uh, really great things to consider. Um, so, you know, as we’re, as we’re talking about whether or not we were really focused on restaurants, but we’ll bring it back to brick and mortar in general. Um, but since we do have Alfredo on the line, who’s got a brand new brick and mortar and say sing all of these challenges. Um, Alfredo, how has business been for you since you opened? And maybe you can remind us when you actually first opened your brand new restaurant and tell us how it’s been since, since opening.

Alfredo Climaco (00:35:38):

Uh, we got the keys, Sorry, there, the phone is running I in the shops, so maybe it’s too loud. Um, uh, everything we got the keys on May 17th, and we didn’t have nothing design it. Um, but, uh, luckily we got, uh, Matt Lynch and, uh, he, he sent a pre pre pretty quick and it was just like random ideas, ideas. And, and I was really, uh, into spastic and, um, pushing all the whole team to get it down, to get it down, to get it done. Um, but, uh, to Matt was involved with another, um, uh, ran a project at the moment Muntinlupa, uh, is re a new restaurant. He was a signer as well. So it took us a little while to get our designer here, to focus on, you know, on, on a restaurant. Um, but, uh, I think the F once we got the whole plan together, eh, it was easier to see the future of the business.

Alfredo Climaco (00:36:57):

Um, there was a lot of, a lot of artists stake, a lot of risk. I, uh, again, we didn’t know what would happen. Um, but, uh, uh, once we realized that, uh, people was interesting on the business, that our people, uh, was supporting the idea, uh, you know, was slightly little by little was easier, but also more insight and more the unknown, because we didn’t know what would happen. Um, so we decided to have soft openings just to try it out, just to see what happens. It’s like, we didn’t do any marketing, we didn’t do nothing. Uh, we didn’t even announce. Of course they are. Uh, we got some articles from the Oregonian from eaters, uh, different magazines, and they were big support, but we didn’t do anything. Uh, we just opened one day and people walking by noticing that it was open and we got really, really little menu and people stopped by like the neighbors, just introducing the neighbors, right. Because it’s a, still a residential area around us. So we just want to be respectful with people. And it’s trying to give a sense of community business where we are, because this is no a I’m a business I’m on here to make money. We don’t care about the, the, uh, the space that wasn ‘t the idea. It was more, more like this great community first letting people know We want to be here and see what happens. And The soft openings, allowed us to…And we were, we weren’t even selling food from our own. We were using, uh, uh, Italian place that is right next to us, that is called 24th and Meatballs and where it says offering their menu. So we talk to them and say, Hey, can we use your fruit? Because we have to provide food. And they say, yes. And it was a little interesting, right? Like trying to tropical drink with our pasta. It was just, it was interesting, but, you know, again, we became creative. We became, we came up with solutions and it was just experiment on the beginning and it worked, uh, people was more interesting On innovation. How could he say better with that Sound? Um, a little, sorry, my, my phone is connected to my computer and it’s like, [inaudible], um, so people was more interested in, on the drinks and they want to escape from the reality that we’re having right now. Right. So people wanted to be outside a little bit. And of course we were taking all the precautions, making a, a visible line, you know, putting, signing where you mask, uh, letting people know that are, uh, spread out on the, on the patio. So luckily we have a big patio. Um, I talked to the city and they approve a space on the street. I talked to Kevin, he approved the space on the street as well. So used to make feel people more comfortable as, um, as a roll-on was saying, you know, if you don’t make people feel comfortable, they’re not going to come back. So, um, that was our commitment to make people feel comfortable.

Alfredo Climaco (00:40:46):

And they was a safe area, even though we were selling something that would have be irritable. And of course it has a lot of connotation of what that thing that you’re going to put in your body is going to have. Um, it’s a risky, it is risky, but following the protocols, safety sanitation, you know, that gives people a sense. That was a challenge. And it’s still being, because, um, let’s say about, and we launch our grand opening last weekend. So Oregonian row again, um, an article or a magazine, all the community that are we’re involved in, they help to give exposure to the business. And even though we, we did the best we could to provide people’s safety, but it’s a lot of nostalgia from people outside listening to music, having a drink. So that the reaction was, it was really big. And, um, uh, I don’t think he went out of control, but, uh, it was a little chaotic for a little bit. We try to do the per base, but the line was around the block. So there were a hundred people on the corner, like waiting for a drink and we did our best. And I think it was a great grand opening. And, um, um, yeah, I don’t know. Ask me more, uh, happy to answer.

Emily Galash (00:42:31):

Great. We’ll come back with some more questions, but I think that’s a wonderful story. A grand opening with the line around the block. That’s, that’s wonderful. Um, in, in the switch, this to Justin, this is a question for you. Um, you know, I know that I’ve, I’ve heard from working with some clients, there’s, there’s a lot of different new needs that people might have when they’re looking into spaces where, um, they might, they might need a facility that’s bigger than they originally planned because they need more space. And maybe we’re talking, not restaurant right now, but something else, they need to be able to space out their customers, um, or space out their, their clientele, or maybe they need more outdoor space. Um, do you have a sense of some of the, some of the things that businesses now need to consider when they’re looking for space that might have, might be more important to consider now than previous to COVID? Um, so small businesses looking for space right now, what are the most important things for them to consider? Um, and if any of those are new to COVID, it’d be wonderful for us to, to hear that.

Justin Darling (00:43:48):

Yeah. So all of those things you just mentioned. Absolutely. Um, I, I think generally speaking, what we’re seeing is just a different approach to the space that is needed. Um, previously we’re seeing a lot of businesses take on a lot of the space, uh, because they had a lot of employees on site or perhaps, uh, for their office. They wanted to have conference rooms and breakout rooms and phone booths and a large kitchen. Um, uh, and, you know, in retail, they folks just were taken out and made perhaps a lot more space than they initially thought that they needed. Um, now there’s in one direction and approach to space where they’re taking on West space. They’re realizing that their footprint doesn’t need to be as large as they initially thought that perhaps I needed, they’re turning to doing more online business. And so, uh, for a retail store, they don’t need as much display space, perhaps they’re limited with how many, uh, patrons they can have in the store at any given time.

Justin Darling (00:44:56):

Um, and then on the reverse end, like you mentioned, um, other businesses are thinking about how they can, um, maintain a social distance scene of six feet in their space and what that would look like, uh, for perhaps a gym or some sort of exercise facility, um, where they want to maintain and provide access to their clients in the same fashion that they had before, while still adhering to any local or federal ordinances that are put into place for social distance. And so, um, just generally speaking, there’s a complete and different shift in how people are approaching the space that they need. Um, and, and I think we’re going to continue to see that evolve and that will become a new reality within the commercial space.

Emily Galash (00:45:54):

Interesting. Um, so the, the provost to Kevin, because he has company developed commercial space, and I, I believe that not only did they just finish and complete a project, a rocket empire machine, but there, they also have other projects. And Kevin, you have other buildings being built and projects that I’m sure are in the pipeline, um, are how are you changing your approach at all the future projects, um, or, or not. And it either way, what is the reasoning behind that? How has is COVID impacting your current and future projects that you’re you’re building?

Kevin Cavenaugh (00:46:37):

Um, not significantly I’ll explain, but I do want to circle back a little bit, um, and kind of, uh, cause such a fascinating topic, uh, on the restaurants that I know, not, not all of the folks on the call are restaurant based, but are talking to 24th and meatballs in early may. And, uh, right next to Alfredo and Alfredo, if you went by this weekend, by the way, you should like send a link on the chat line to your Instagram page or something. And there was like salsa dancing out there last night at, at 6:00 PM. It was like, it was a party. Everyone had masks on, but there were literally people across the intersection dancing like alone because they didn’t feel as comfortable over there, but it was just Portland needed to dance. They needed to drink like, like, like wonderful cocktails out of carved out pineapples like it.

Kevin Cavenaugh (00:47:28):

So I talked 24 of meatballs in may. I’m like, how are you? Cause it looked the opposite of how, um, Tropicale Tropicalia looked last night, it was dead. And I’m like, Oh, how are you guys doing? And they’re like, Oh, we had our best month ever. I’m like, well, what, what you mean by that? It’s impossible. It’s like, no, you don’t see people cause people don’t stay. But people are really tired of eating at home. People are tired of cooking for themselves. Not everyone is an amazing chef and Portland is a food town. So after a month of lockdown, you’re like, screw this. I need to eat some good food. I’m tired of top ramen. So meatballs, the biggest expense for any restaurant is payroll. So instead of three employees, they just had one cooking back there because by the time I show up for my order, I’ve already ordered it.

Kevin Cavenaugh (00:48:14):

I paid for it. I don’t need it. My boss doesn’t need an employee to kind of walk me through the menu. Um, it’s streamlined and it doesn’t matter what you gross. It matters what you net and meatballs netted more than they ever have in their nine year history in April rainy, gross, no outdoor seating, April Portland, Oregon in the middle of COVID. So there are opportunities. It kind of builds on what Roland was saying. If you have amendment menu that works, if you don’t fix it, if you don’t have a good online presence, fix it. But the customer base out here wants what you have. Um, right prior machine just opened. It’s another micro restaurant project at Northeast Gleason and 70th absolutely killing it. Um, that neighborhood is starving for restaurant rounds for drink. Gigantic brewing is the anchor PI spots there. And then three of livelihoods tenants are in, um, first-time restaurant tours almost for some restaurant tours who, who don’t have deep pockets though, deep talent.

Kevin Cavenaugh (00:49:18):

Um, so those are easy. Like I wasn’t even a little bit worried about rocket empire machine, but my, to answer your question, Emily, take a couple years from the idea to the extra course. [inaudible], that’s too long a runway for me to shift aggressively because although I think COVID is going to be here for awhile, I think two years from now it’ll be gone. So I don’t want to, to, to react on a long runway project, but like I’ve got a live work, um, development happening at 39th and Killingsworth coming up. I’m not worried at all about live work. That makes a ton of sense right now. And post COVID that’ll make a ton of sense. Um, I’m trying to figure out heating and cooling. I’m trying to get smarter on heating and cooling operable windows are now a really big thing, a really important thing. I, you know, I liked them before, but I didn’t them in the same way. The tenants didn’t need them. But now that’s one of the first questions they asked, like, how is the indoor air quality? Everyone’s become an engineer on heating and cooling and indoor air quality. That’s awesome. That’s like, that’s, uh, that’s healthy for us as people. So I’m fixing systems within the building, within the idea, but the idea themselves, I mean, I’m working on affordable housing

Roland Chaiton (00:50:28):

And affordable commercial and um, you know, uh, I like opera spaces on all my building. So I I’m, I’m kind of lucky with, with what I do in COVID. A lot of, a lot of other developers are, um, not as lucky, I feel bad for them, but I don’t have to change my stuff that much.

Emily Galash (00:50:49):

Great. Yeah. Thanks for, thanks for that insight. And maybe, maybe at some point we can kind of compare that typical landlord. Cause I know that Rella development really does create more innovative unconventional spaces, at least compared to what has been out there for awhile. Um, so, uh, Roland, see, I’m just going, I was just listening to everybody. I’m slacking on my, my question prep here. Um, I have a very specific question and I don’t know if you, you have clarity on this because I know there’s a lot of guidance and things you’re relying on from the SBA and things like that. But if, if a new business opens now that there’s an understanding of the reality of COVID and the impacts that may have, let’s say it’s a new restaurant. Um, do you have a sense of whether they would be eligible for, for any of these, uh, government assistance programs, the loans and things like that, given that they’re walking into a new loan with the understanding of COVID or is it, um, can you, can you give us any understanding you might have on, on who might qualify if they’re opening a new business now?

Roland Chaiton (00:52:14):

Sure. Uh, everybody can look at starting new businesses, but they need to really think about the industries that they’re going to start in because some industries definitely have a trajectory that’s going to go up. Others have trajectories that are flat or going way down. And in some cases that’s because they are highly impacted by state or federal or even city regulations. So knowing what’s going on in a regulatory sense is going to be real important. Um, but also look at where demand is. And if you’re in a business where the demand is way, way down, for example, we have a couple of transportation businesses and just because of the Cobits they’re way down or they’re shut down, people can’t be on buses. I mean, we have bus companies tour companies to, to jump in and start one of those businesses right now. Um, unless you have something very specific, maybe in some sort of private connection with a company, you may have a real challenge in the short term.

Roland Chaiton (00:53:31):

Um, so thinking about those things is going to be very important, whether you can actually launch in your industry. So take a real hard look at the industry and the regulations then from a lending side, uh, everyone should realize that as I was saying before, a whole lot of money went out, uh, into the economy, through the IDL and more so the PPP program, but those were for existing businesses primarily. Um, if you are a recent and you started, uh, a business and you were able to qualify for an Eid alone, uh, that’s great if you have not applied, but you were in business long enough to apply and you were impacted. I encourage everyone there to apply for that program. Um, there were some miscommunications that happened in some levels by folks, um, thinking that program got shut down. Um, no, there was a grant connection to that program that was closed earlier, but that program still exists.

Roland Chaiton (00:54:42):

Um, it provides 30 year financing at 3.7, 5%, 2.75 for non-profits, um, 12 month deferred payment. It’s at a, a level that even most banks can’t touch. So for a lot of folks, if they can get one of those loans and a number of our clients did, this will be a game changer. Um, if you’re a brand new business and you can’t qualify for those types of loans, there are other loan products out there. The SBA microloan SBA seven, a loans, which is their primary, a guaranteed loan in the guaranteed lending world. SBA will, uh, provide an incentive to the lender to make the loan because they’re going to guarantee it alone either at like a 75 85, 75%, depending on size or 50% of it’s an express loan to the lenders. So the lenders a potential loss is in a worst case scenario are mitigated.

Roland Chaiton (00:55:46):

So then the lender has greater incentive to make the loan. So these things are all happening and we are still doing those types of loans as our banks, but, um, it’s changed. The demand has fallen off some, uh, although we are still seeing lots of startups, uh, and lots of, uh, early stage people asking for financing, um, because BA has gone out and given guidelines to all the lenders, both bank lenders, and non-bank lenders like the CDFI world, uh, about what to be paying attention to in the, let’s say the next till the end of the year, next six months, maybe a little bit longer nine months. Um, one of the things is we have to consider, uh, debt service, not only the regular debt service, a business might have going on, but what their new debt service would be with a new loan, but also the addition to debt service that has to be covered if they got a PPP loan or an Eid, a loan or some other type of emergency loan, how does that impact and will they really have the money to make payments on a new loan or does it have to be structured in a particular way, maybe, uh, lots of deferred payments interest only on the front end while they finish out their PPP or idle obligations or something, at least in the short term, um, they have to, uh, really think hard again about the industry and how the COVID emergency is hitting.

Roland Chaiton (00:57:24):

And do they have enough of a contingency plan? You know, what, if this doesn’t just run for another six months, what if we’re in this for 12 months, at some point it will change, but, uh, they have to take a longer picture and really think ahead and figure out, can you stay in business long enough and get through this? And SBA is asking the lenders to share some of those thoughts, uh, in our underwriting. How is the business planning to cope here? Um, how have any restrictions such as stay-at-home orders, social distancing, travel restrictions, trade limitations, um, client or access to supplies, um, inventory equipment. How is any of that impacting your business? Um, any other impacts that might come into play? Like what if you have to provide protective gear, cleaning materials, other costs, even changing out HVAC systems for, um, air quality, how’s that going to impact your business financials?

Roland Chaiton (00:58:33):

Um, they’re baking everybody in the lending world. Think a lot less about historical performance and more about how do you project into the future the next six months, at least maybe nine to 12, uh, based on what we know with a lot more focused on breakeven analysis and cash flow analysis, what’s really happening to your cash. Um, back to the restaurant impossible, um, example, they went in and asked. So what does it cost us to turn the lights on here? And yeah, if you can’t answer that question and you’re in the restaurant business, you’ve got a problem. So you need to be able to tell your lender what it costs to go in and just turn the lights on and, and be operating for a day a week a month. Uh, and how much, uh, in revenue do you have to generate to cover those, uh, amounts real important.

Roland Chaiton (00:59:29):

If you want, if you’re a new business or an established business, you still need to be able to answer those questions. If you can’t, uh, please get help. We can help provide or arrange for technical assistance for you. There’s lots of options. There’s both internal with us through our women’s business center and the veterans business outreach, but also the SPD SBAs SPDC network, uh, small business development center and the score program. And there are other, um, sources of help that are out there. So, um, and we’re also seeing people, um, going in for change ownership loans, and then there’s the consideration of if somebody had a PPP loan, how does that transition over to a new owner? And these are all things that have to be taken into consideration. So there’s a lot there to think about.

Kevin Cavenaugh (01:00:24):

Rolling. I, I’ve got a quick question for you. I’m allowed to jump in here, Emily. Sorry. Um, so I, I have there’s, uh, that, that, that one out of nine offers that I accepted on the space next to Alfredo that are on this call. They’re a first time restaurant tour, talented as all hell. Um, uh, can they, are, can they reach out to you for a loan or is that, are you only lending to existing businesses?

Roland Chaiton (01:00:54):

We have been lending, uh, to both startups and, uh, existing businesses. We do, uh, startups. We were doing somewhere between 35, 40% startups. It’s probably a bit less now. Um, it’s a bit rigorous still. Um, but if people are prepared, we’ll definitely take a look and if we can do it, we’ll do it.

Emily Galash (01:01:23):

Great. Thanks. Oh, go ahead.

Roland Chaiton (01:01:27):

Fine. Just have them be in touch with us.

Emily Galash (01:01:32):

All right. That’s uh, I was, I was going to ask a similar follow-up question where with the shift of more of an emphasis on what is the future revenue potential versus what is the historical, uh, numbers, uh, does that mean that startups that have a good idea that’s really responsive to the needs of the new COVID markets, if they might have, um, a better shot at getting some startup capital because of being able to make a clear case for future future revenues, that might be too specific of a question, but, uh, it’s an interesting thing to think about

Roland Chaiton (01:02:12):

If people have a good strong business plan and have really thought some things through, um, then it makes sense. So, yeah, we’ll definitely take a look. Um, and if people don’t have something that’s quite up to speed, that’s where we will try and connect them with, uh, technical assistance. So maybe they can rethink some things or adjust some things. So maybe it can work. The whole idea is get as many people working, get as many businesses going as possible and keep everybody employed. Um, but it takes some work.

Emily Galash (01:02:48):

Great. Thank you. Um, Alfredo, this, this question is for you because I know you’re at the beginning of the Tropic Cali journey. So you’ve been in business and, uh, for, for much longer, um, with other other endeavors, what do you see as, what do you think the future holds for Tropic college specifically? Do you see this as a, a path of success? Do you think this is going to get, uh, better, you see growth? Do you see maybe a flow stall and in the future, you see that growth points. Um, tell me what you believe the future holds for Tropic Holly.

Alfredo Climaco (01:03:38):

Uh, us, um, Roland mentioned, uh, it’s really important to have a business projection, a business plan, a plan, a B and C is in case. And I’ve been working really hard on this project and, uh, with the help of livelihood and specifically giving an list who have these have been with me every other week, planning, seeing what the, uh, the weakness of the business, uh, making the projections, how much money being really specific on numbers. Like what’s the specific break even we need right before we make even a dollar, what’s the specific money we need to start paying rent. What if we don’t make it, does it make sense that we open? So we went through all this again for months and months, and the strategy is for, for now, for summer, it’s just, it’s going to be great because we have people don’t want to be inside.

Alfredo Climaco (01:04:51):

So we’re, luckily we have this space and yeah, I totally understand that. Uh, the success of Tropic college now is for many reasons, uh, the net working, been doing the outdoor patio, the tropical vibes, and as a, I’ve been in the same business, uh, I mean not the same name, but on the same industry for 13, 14 years. And I see always the same thread, you know, the toughest months are winter and when in January and February they’re death, but we need to make enough money now to survive the winter. We can just expect that we want to make this money now in the summer, and now we want to blow it out or invest in something else that is not going to give us the enough backup to pay or labor rent or all those expenses. Right. So I believe because COVID, uh, restrictions will be, uh, and this is not a way believe is what our people is been coming with a couple of years.

Alfredo Climaco (01:06:15):

Uh, I think the strategy is to make as much as we can, uh, in the summer having these chances, uh, having a really good connection with the city because the permit, because we were in a neighborhood in a neighbor area where we need to have good relationship with neighbors, because there is a lot of people around because there is music happening because maybe someone spill a pineapple in the corner and, you know, like this little things that I could upset people, and sometimes they will tell you sometimes, maybe day one. And after many times they will explore, call the city and we don’t want to get into trouble. So it’s a lot of things that we are learning also in the fly, uh, without adopting to the momentum. But, uh, uh, I think all of the business she focused on, especially the restaurant industry, focus on having safety precautions and make as much money they can with food, with drinks, free delivery.

Alfredo Climaco (01:07:31):

Like we shouldn’t stop being creative because summer is good and fall is going to be as low. It’s going to as lower down. And of course, winter is just going to be, it’s not going to be affordable, but I have, we have to be prepared for that. And, uh, and be ready for a sprint, you know, um, just hold the money until spring and see what happens. And maybe we could be in stage two where they allow more people inside. And even though there’s trainee, you know, we could have more people gathering around. So that’s our plan. Um,

Justin Darling (01:08:16):

And, uh, um, yeah, I think I’m just reading what I, what, uh, two questions. So,

Roland Chaiton (01:08:27):

All right. My comments last week was that he has a really amazing ice cream shop. Like everybody wants to rush him right now, desperately. And in January, nobody wants to eat ice cream. So historically have to make a ton of money now, and they just hold onto the winter. And the way I see outfitter right now, you know, he’ll have no problem, Emily, can I jump in just real quick about the seasonal effect, both from restaurants and other businesses. So, um, everybody who’s in a seasonal business where you’re seasonally impacted, and particularly if you have financing, uh, don’t hesitate to discuss that with your lender because sometimes the lenders can, uh, defer payments or put you on like interest only payments during a particular seasonal period. Maybe it’s December, January, February, or something like that. We routinely had to do this with, uh, businesses in the sort of fishing world because they couldn’t be out, um, um, in Puget sound or on the ocean, uh, during those months, uh, also charters would go way down and so forth.

Roland Chaiton (01:09:36):

And typically they were doing boat maintenance during that time period. So we would put them on interest only payments. Uh, it might be possible to do that with some of the restaurant industries, if they’ve been, uh, really severely hit or if they know they’re going to be hit because of the, um, just the time of year. And there are other seasonal in, uh, businesses as well, including, uh, agriculture. So we have, um, made adjustments in the past and I’m sure other lenders have to, particularly in the CDFI world. So if, uh, borrowers are not aware that that’s possible, uh, they should inquire.

Emily Galash (01:10:17):

Thanks for adding that there. Um, and my next question is for Justin, um, I’m curious to hear your perspective, if you think there are any, uh, what, what do you think the opportunities out there for small businesses when it comes to the commercial real estate? It sounds like maybe landlords are trying to entice, uh, tenants, maybe with some perks. Maybe you can speak more to that. And if you see, uh, if you see any opportunities out there for small businesses within commercial real estate, I’d love to hear more about that.

Justin Darling (01:11:00):

I suppose my direction would be, um, enter into this relationship, not necessarily seeking opportunities, but seeking to form a relationship with an owner that works for both of you. Um, uh, you shouldn’t predicate opening a business right now because you think you might be able to get the best deal or the best lease rate for the most amount of free rent. Um, you know, you have stakeholders in your business from your, uh, loan officer to your property manager, to your, uh, building owner, um, and your ability to sort of develop those relationships are going to ultimately lead to your success. Um, while we are seeing, um, deals being structured a little bit more creatively now to sort of, I suppose, provide some incentives for both existing and new tenants and buildings, um, that I would advise, not that not to be your, uh, so sort of catalysts for, for, for, um, you know, trying to take advantage of a situation again, this is why this is a relationship that you’re forming with, uh, with the building owner like Kevin and ultimately your ability to communicate and find a solution that works best for both of you, um, is going to lead to a successful outcome.

Justin Darling (01:12:32):

Alfredo.

Alfredo Climaco (01:12:35):

Yeah. Uh, so just you’re saying something really important to me, uh, also to mention a theme bulbs, a lot of us that are, is great to talk to your lender about financing or holding the rent or deferring it, but also is important to understand the other side and don’t take advantage of it. Like Kevin is telling us don’t pay right now until COVID and yeah, we have a contract and everything, and maybe we’re going to say not to, but it’s a fair, I don’t think people should be really aware of that as well. It’s like people helping us just be reciprocated on, on daily side. So I just want to hide it up, uh, highlight it because, uh, it’s, I think it’s really important, uh, to know, uh, otherwise, you know, it could be, um, Randy’s expense. So if you don’t consider your expense in, once you go back to what’s normal is going to be really hard and maybe yeah, you survive the COVID times another reality, that’s it.

Justin Darling (01:13:51):

Thanks, sir. Thanks for adding that. Yeah. Again, this is, this process is about developing and maintaining relationships. So when your business does encounter a crisis, um, you can utilize those relationships, whether it’s with your business advisor, your loan, your building owner, to help, to help you get through. Um, and so you really want to get started off on the right foot, um, initially, um, by creating a contract by forming that relationship, uh, with solutions that work for everyone. So,

Kevin Cavenaugh (01:14:29):

Um, a question for you, Justin, whenever I get a tenant, I always, I try to say, Hey, you should own not rent. Like if, if you add up how much money are you going to give me over the next decade, it’ll be a sad, big, scary number. And like, you should just try your best to own borrow money from like uncle Ned or whatever you can do from your perspective. Do you see opportunities? There’s no blood in the water today, but will there be an when will there be opportunities for people to buy a 2000 square foot freestanding building with an SBA loan? Because the price is really good.

Justin Darling (01:15:09):

Yeah. That’s, you know, I think there’s a lot of that conversation going around right now, um, about is this, or will it soon be a good time to buy commercial real estate? Um, for two reasons we have, um, you know, we have a lot of owners who are, uh, perhaps looking to get out, uh, because of the current crisis, because they have tenants who can’t pay rent and they just, you know, they’re bleeding. Uh, and then on the other side, you have, um, you have, uh, totally cheap debt that you can take advantage of right now to, to get yourself into a building. Um, w you know, we ha I haven’t seen a huge influx of buyers come into the market, but we certainly have seen people sniffing around, um, and looking for those unicorns, um, uh, those, those buildings, those diamonds in the rough that they can either, um, you know, be an owner occupier of, or ultimately become a developer and, and, and, um, and redevelop that building. So, um, we are seeing that not necessarily a lot right now, but undoubtedly, I think as we continue in this current climate, we’ll see a little bit more of that now.

Emily Galash (01:16:40):

And rolling. I’d love to give you either a chance to chime in from the lender’s perspective there. Um, and then also I’m going to tag on a specific question. Um, do you anticipate, you know, from your kind of pulse on the lending industry, do you anticipate a change in, in whether funding may become a little bit more restricted in the, in the future? We’ve so much money go

Emily Galash (01:17:10):

Out interest rates so low. Um, so if you want to respond on the building purchase side and, or, um, any comments on the future of lending and whether that might become restrictive in the future

Roland Chaiton (01:17:25):

On the building purchase side, um, as Justin was saying, the, uh, there’s, there’s some cheap money out there right now, and rates are low, um, both, uh, government guaranteed and, and otherwise, uh, so there’s some opportunity for the finance of that. Um, but you need to line that up first in it, some ways contingent on you having the business plan that can show your you’re going to be able to survive and get through that, um, longer term. Um, if you can do a, um, solid sort of an alternative structure on the purchase, maybe that leverages you into, uh, the building easier, but, um, we have a couple of these, uh, real estate acquisitions going on now. And, um, they’ve been a challenge, um, they’re happening, but things seem, uh, at least from my perspective to be a little bit slower, because things are being looked at more carefully.

Roland Chaiton (01:18:40):

Um, as I was saying before that there’s this big focus on the next six to nine months, people are going to really be able to get through that, that part. Um, I, I think there’s always going to be demand for commercial real estate and for those people who can afford it, um, that’s great. And if they can afford to get into a space where they’re using utilizing part of it, and then there’s additional space where they can possibly rent that out and get other sources of income to come in, um, and help even further that SOF and, um, really good, um, one area that we’ve seen, um, where there’s really interesting possibilities is where people can find business condominiums, um, because they can start the business they’re in the condominium space and own the condominium, um, and they can have one entity own it. And then the business, the operating company, at least, uh, from that, if the business itself, the operating company doesn’t, um, make it, uh, they still have the potential to really let the space out and they can still retain the ownership to the building.

Roland Chaiton (01:20:00):

And so if they can lease to somebody else, there’s still that potential to have income coming in, um, and have that income paves alone so they can keep owning the building and become sort of, uh, successful from a passive real estate investment, um, Avenue and maintain their loan. Um, we don’t see anywhere near enough of these, um, business condominium developments here that when people find them, they tend to snatch them up really fast. And, um, the demand has been strong and just, they, they just don’t exist. But if you get an opportunity with one of them look really hard at it, personally, I would say, do everything you can to get it. Um, from a lender standpoint, it’s really strong, um, As long-term, uh, Or, um, sorry, back to your question about just the financing availability in general. So we’ve just seen the, um, commercial banks and CDFI has put millions actually billions of dollars out on the street. So some of them moved all their money into that, and they were restricting other loans for a while. Um, what will happen now? Well, as PPP loans are forgiven and that money comes back from SBA to pay those off, they should come back into some liquidity. There’s going to be some time concerning. There were a lot will already be on the street and there may not be enough, um, additional capital, but, um, I, I think there’s enough liquidity in the system to carry everybody through. So I’m less concerned about that, um, particularly on the bank lending side and they always have their depositors’ where they get additional money, uh, in the CVFI groups, maybe a bit more challenged to raise capital, um, for additional lending.

Roland Chaiton (01:21:59):

Uh, but again, as the forgiveness situation plays out in more money comes back in, um, that should rebuild those, um, capital basis for lending as well. So short-term, there may be a little bit of difficulty, but, um, as we move down the road, um, that should even out, I’m not as concerned about the money supply for that, and I may be wrong, but it’s just sort of my own personal belief. I, I think there’s a big question about the viability of businesses. Um, when I’m hearing in the banking world that some bankers are expecting one and three are winning four of that sort of main street businesses not to make it, that’s a great concern. And, and, um, we want to do everything we can to make sure that the businesses do survive and that people can retain ownership, that people can stay employed real important. So, um, that, that’s a bigger concern.

Emily Galash (01:23:10):

Great. Thank you. Um, I wanted to, so I’ve got, uh, uh, some folks in the chat, uh, specifically, uh, Sharif would like to ask something he’s okay with the recording. Um, so Sharif, you’ve got a question for the panel. I believe it’s not specific to any one. So if anyone feels comfortable responding, go ahead. But Sharif, if you want to go ahead and ask.

Sharif (01:23:37):

Yes. Um, hello everyone. And thanks for being here. I learned a lot, uh, today, and I’m sorry, I missed the first half an hour. I was in there driving. Um, so my name is Sharif and I, um, I’ve been doing a retail kind of pop up, uh, shops in the last few years. And I also have, um, wholesale retail of a pill apparel, sorry. Um, so I’ve been working on getting a store downtown, um, and, um, the time is now to do it for this to happen. Um, of course year ago, I am very excited because I made a lot of money in just short time in holidays. Uh, again, my business is, uh, peril and also, uh, only, uh, handmade locally from bunch of artists. So it’s not a crucial right now business to be in. Um, but I’m thinking ahead, uh, that could be the time to start, especially if I can with my, uh, uh, the landlord or the sorry, the, uh, the landlord. Yes. Uh, they are, uh, having a percentage for like nine months just starts. So it’s going to be depend of how much we make, we can pay that percentage. So it’s kind of perfect, but again, I’m so scared right now to get and sign the paper because we are about to sign the lease. Uh, and I would like just, um, what you think, um, is, um, uh, uh, proper to do. Thank you,

Emily Galash (01:25:13):

Sheree for you. You’re, you’re looking for feedback on, um, I know that you’ve been working on this project since, before COVID hit and you were about to sign paperwork. Literally you could have been, you could have find the lease the week before everything shut down, it could have happened. Um, and there’s this profitable opportunity you’ve done. Pop-ups, you’ve proven it and now COVID is here and you still want to move forward with your ideas. So you’re looking for, um, Tim advice on, on how to, how to move forward best. Is that, is that what you’re,

Sharif (01:25:50):

Um, I’m guessing I’m hoping for him encouragement or maybe no, don’t do that. You know, I like some crazy, that’s what I’m hoping for. Thank you. This is an easy one. My guess is that Roland and Justin have, have takes too. Um,

Kevin Cavenaugh (01:26:05):

So you’re like a unicorn Sharif, like, like before COVID retail was dead because Amazon was destroying retail. I was losing, um, like 11, 11 supply and the dumbbell great store. They weren’t making it, um, a lot of, a lot of straight retail spaces. Um, weren’t making it, and there’s a lot of ground floors on buildings, pre COVID that were just kind of sad and empty and lonely. And I’m giving space away in my buildings for free, because I want to activate a building. If, if, if I’m trying to rent out office space upstairs and, and a person walks by for a tour and they just see boarded up storefront, it’s not exciting if they see people behind the glass, that’s storefront making money, selling something, anything I will benefit from the salon or whether I make any rent from that space or not. So it sounds like you’ve got a good landlord.

Kevin Cavenaugh (01:27:00):

Um, but my guess is any landlord would give their it to have you, so you are a unicorn, sorry. My recycling’s up trash has been collected. Um, so, so you really are in the catbird seat, no matter what, don’t sign a personal guarantee on your loan. That’s, that’s the strongest advice I can give you. Like if, if nine months happens and your landlord becomes less kind, um, you’ll be screwed if you sign up for a flood guarantee, also Google your landlord, find out what he’s like as a person and what she’s like as a person, um, because everyone can be, can appear very kind upfront and they need you desperately, but as soon as things get normal, or as soon as their lender, uh, put the thumb screws down on them, they’ll in turn, turn to you and be less kind. So that’s my, those are my two bits of advice.

Roland Chaiton (01:27:52):

It makes me think of another, uh, business that we had, uh, that was just highly, highly successful. It started off as a small little, um, pottery school, and it grew through four different spaces. So initially I think they had 400 square feet, and now they have like 6,000 square feet. And what they were doing was, um, making, uh, pottery. And it was first to be instruction, but then people were also making pottery and then they were moving to sell it. And, uh, there was great interest in people getting together to make things together. Now, I don’t know if this would fit at all. Particularly you have to take into consideration the whole social distancing thing, but, um, if you are able to bring people together, uh, to make things sort of in the same sort of creative space, you have the income potential from, for selling that as well as the income potential for providing the supplies and the things, and having people pay to like a membership to be able to come and use your space and make things there and be amongst, um, peers, um, because everybody hates isolation.

Roland Chaiton (01:29:21):

Um, and so they want to do it together and people pay to do this and in an environment now where everybody is so isolated, if there was an opportunity where people could safely come together and work together, even with the social distancing thing going on, you might find that that’s a whole other revenue source that could come into play here, and it might be fairly significant even, um, uh, distancing retail potential initially. Um, so that’s one thought is to, to think about a potential pivot there and add that in, uh, the other piece would be to think about, um, what more you might be able to do, not in the retail, like the online retail competition area, but you see a lot of nonprofit organizations trying to, um, raise capital and sometimes they, um, give away gifts and other things in connection with that sort of capital raise.

Roland Chaiton (01:30:29):

Um, and so maybe you can partner with them and sell things to them so that they have things for those giveaways in connection with their capital raises. It’s a whole other potential, um, um, sort of buyer segment that you may not be tapped into at all, because otherwise going online with your own online store, um, then the question comes up with, should we do our own, should we do an Etsy business? Does do these things make sense? Um, is one thing competing with the other, is there really room there, but if you’re going after a totally different or untapped market, um, that can change the whole dynamic. So, um, if you are able to jump in safely and get a lease in and, you know, move ahead and not have those personal guarantees, because I do agree with that, then go ahead. But if not, then maybe take another week or two or three and think it through and see what more you might add into this, uh, plan in pivot and maybe make this have additional revenue streams.

Sharif (01:31:41):

Uh, I was just going to say, thank you. Thank you, Ron. Thank you. Um, came in when he did go and thank you, Emily.

Emily Galash (01:31:49):

Thanks for the question. And if anyone else wants to ask a question, uh, live in the call, great. Otherwise we’ll, we’ll stop and just a couple of moments and, uh,

Emily Galash (01:32:00):

Stop the recording in a few minutes so that if you do have a question you want to ask, without it being on the recording, then you’ll have the opportunity to do that. Um, but I want to go around and just kind of give each panelists an opportunity to provide any final thoughts or a tip or, um, you know, any, any closing comments if you’d like. Uh, and I believe Kevin got disconnected. So we’ll, we’ll, hopefully he’ll jump on for the, the end. Um, but let’s start with Alfredo. Any, any parting comments or advice that you’d like to, um, to tell us about?

Alfredo Climaco (01:32:41):

Well, um, maybe my advice could be really narrow to the same industry. Um, as a small business, it’s, it’s important to, uh, keep or center and as a human being, it’s really important to Dawn. Our, at least for me is, um, to don’t lose control or panic on the future because that, that could freezes or that could put us in a, uh, in a frozen zone. So in the start of the being a positive and creative, really creative come with solutions or no excuses or problems, uh, talk to people, talk to, uh, your community, your friends, if you’re on target, if you don’t ask, how will you know? So, um, a lot of those businesses, uh, cause I have a lot of friends with small businesses and some of them have express the fear they have for this. Right. And I understand I sympathize with them because I’m there too.

Alfredo Climaco (01:34:12):

But what has helped me is talking to people, communicating with people, ask, uh, asking what if we do this, do you think it’s going to work? Maybe not. So, uh, just don’t hold, uh, nothing because it’s, it’s a time as really important time to know or best self in and to know what we really were made of. And, and of course, meaning a lot of, have a different background, whether business or experience and disparate aspects or industries, but, um, I’m coming from a North country and I live in survival mode alert, um, many years and maybe the help me to create solutions to survive all the time. So how am I gonna do it? I don’t know, I’m just gonna do it because I have to survive. Um, and that’s been helping me. And as I’ve already mentioned, it is being smart about a writer down, coming with ideas on paper, putting it on a test, going for faces, putting us experiment, see what happened, executing it and launching it. So, um, I think that that could be my best advice. Um, um, yeah.

Emily Galash (01:36:06):

Thank you, Alfredo. Um, and let’s, uh, as we throw this to the other panelists also to give their final thoughts, um, as a question in the chat also about kind of the future and it’s all, and the change in whether my might change things again. Um, and if we have any idea of what we think the future holds and what we might be looking at to, um, to determine and measure what’s changing and how quickly, so if you have any thoughts on that, or if you just want to let us know your, your parting final comments, um, either way would be wonderful to hear, uh, Justin let’s let’s have you go next.

Justin Darling (01:36:55):

Uh, well thanks for the question, Scott, I will say on the commercial real estate side real quick, one metric that we look at that is a real finger on the pulse of, of lease rates is, uh, our residential apartment rentals. Um, and that is almost to day a real good indicator of whether lease rates are going up or going down. Um, retail and office will follow later. It’s a little bit bigger of a cog and it takes a little bit slower, slower to slow that down. But, uh, what we’ve seen in apartment rentals is that lease rates have begun to dip. Um, and so we expect retail and office rates to follow. Um, and just in terms of the process of, of opening up, uh, your own brick and mortar, if you’re a small business owner, um, I would say really develop relationships, um, with your business advisor, your owner, your loan officer, um, develop those relationships and, and utilize them.

Justin Darling (01:38:05):

Um, you’re not in this alone. If you have questions, ask, pick up the phone, have that line of communication open. Um, if you’re interested in doing so work with a broker, um, it doesn’t cost you anything. Uh, they are a resource and an advocate for you. You have a lot of things that you need to focus on as a business owner. Um, so having someone who can help you with a lease and structure it, um, to ensure that, that, um, you know, you’re getting the most out of the least that you can get, uh, can be really helpful. They can help structure termination agreements or structure a personal guarantee, the best lease rate. Um, uh, and just, just remember that this is a process, um, and at the very beginning of the process, it’s great to get this wonderful, fantastic idea that you have in your head down on a piece of paper, as Alfredo said, as a business plan, if you can get that business plan out of your head and down onto a piece of paper, that’s a great tool for you to utilize, to give to someone like Roland or to give to someone like Kevin, uh, as, as you go through the different stakeholders and, and leasing that commercial space to start your business, because then they can understand what your, what your business is going to be about.

Justin Darling (01:39:22):

Um, so just develop those relationships, um, keep those lines of communication open, um, and don’t, don’t, don’t be afraid to advocate for yourself or to have other people advocate for you. Thank you so much. Um, Roland, any, any response to the question from Scott or final comments from you?

Roland Chaiton (01:39:47):

Sure. Um, as far as what’s coming with the COVID, um, there’s two sides. One is nobody knows where this is going to come out. And then there’s the other side of looking at some trends that we’re seeing and we’re hearing about, and this is just straight from television news and the internet news, um, numbers of, uh, doctors that have come up with certain alternative things that they are using even in the hospital settings to, uh, reduce some of the mortality. Uh, so even though infection rates might be, um, flat or rising in some areas over mortality thing may be coming down, um, and they have new tools and new things that are happening there. So I’m personally very excited that there’s going to be, or that there is this potential that they’ll come up with other therapeutics and other things even perhaps before a vaccine that could be game changers.

Roland Chaiton (01:40:53):

And we’re starting to see more of that. Um, if people read, uh, online about the efficacy of combinations of vitamins C and vitamin D and, and how that has changed mortality, uh, for this, even for people getting sick, they may do some things themselves personally, um, that may help, uh, reduce that and take the scariness away from this. If this, if there wasn’t just this huge level of focus around the mortality part, like if this was just the flu every year, we go through the big flu things and yes, there’s mortality, but it’s nothing like with COVID. But if that could go away, if, if this became more like a regular flu, it would change the dynamic dramatically. And I’m optimistic that we will see, um, therapeutics and other things coming out in the near future. Eventually, maybe vaccines that, um, will change the way things are going here.

Roland Chaiton (01:41:59):

Um, that said, uh, people still are going to go into business. Uh, we’re going to do everything we can to get those new ones into business and also keep the existing businesses going. Um, one thing, uh, as a tip, if you haven’t already approach, if you’re an existing business and you haven’t already, um, applied for an E I D L loan, um, you might just try and see what happens. I’ve had a lot of people tell me, Oh, I’m sure I would never get it, but then they didn’t apply. And when I encouraged them to do that in the applied, they got something which was really good, and it was very helpful for them. Um, one key tip around that is keep your application, uh, well, below $150,000. And that seems to be a threshold where, um, people are not going past that. And so the least amount of money you can do with that, um, uh, perhaps the better and increase your chances of actually getting an approval with that loan, uh, when product, um, people do need to think a lot about pivots for their business.

Roland Chaiton (01:43:14):

Um, if they had something that was working in, in, it’s not working anymore, there may be a pivot that they can do to change it up and get a new revenue stream or to cut costs and to make things happen differently when people pivot, I think they have a chance when there’s absolutely no pivot and everything is just declining and that’s, what’s going to keep going. So I really encourage people to pivot. And if you don’t know how there’s help out there, reach out to us, reach out to the SBA, reach out online, uh, reach out to livelihood Northwest, but reach out and get help and do the pivot. I’ll leave it at that.