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York distributor partners with Turkish manufacturer to custom build PPE

To address holes the pandemic poked in the medical equipment supply chain, York medical equipment distribution company Legacy Medical Sales, LLC,  partnered with a Turkish manufacturer to make its own products.

Since its founding in 2019, Legacy has served as a distribution channel for companies such as Irving, Texas-based pharmaceutical and health care equipment distributor McKesson– either shipping products directly to clients or from its York warehouse.

Distributors today are just as busy getting personal protective equipment to businesses and health care providers as they were at the beginning of the pandemic. The difference is that the need for some personal protective equipment has decreased while the need for products like lab coats have increased, said Peter Collipp, co-founder of Legacy.

“We are supplying lab coats to Cook Hospital in Chicago,” Collipp said. “We would face the same challenges if we tried to buy them from the big companies, and if we went to the secondary market we would be paying high premiums. From the manufacturing side, we could create products to their specifications.”

To fill the need that Legacy found by focusing on distribution alone, the company went to a Turkish manufacturer that is fulfilling Legacy’s orders and shipping them to the states.

In the past, Legacy sourced a majority of its product from China, but when looking for a partner that would allow it to manufacture products on a smaller scale, the company settled on a company in Istanbul.

“The pandemic really exposed some major problems in the medical equipment supply chain,” said Jason Vogelsong, co-founder of Legacy. “We have full control of the process, and that’s important. When you are relying on others for anything, there is a degree of uncertainty. By selecting manufacturers and developing those relationships ourselves, we can see the whole process, including any risks that may arise.”

Legacy currently has no plans to bring its manufacturing to the states but may look to do so in the future, said Collipp.

Harrisburg restaurateur faces fines, jail for pandemic-related fraud charges

A Dauphin County restaurant owner faces $2.6 million in fines and up to 90 years in prison after allegedly defrauding the federal government out of $237,500 in loans from the Small Business Administration.

Scott Levy, owner of the Hershey Road Family Restaurant in Harrisburg, applied for $227,500 in loans through the SBA Economic Injury Disaster Loan (EIDL) program and Paycheck Protection Program (PPP) before spending a majority of the money on personal expenses and transferring $125,000 to his mother in Florida, according to federal prosecutors.

Levy, 58, was charged with bank fraud, wire fraud and money laundering, the U.S. Attorney’s Office announced on Tuesday.

According to allegations filed by the U.S. Attorney’s Office for the Middle District of Pennsylvania, Levy was approved for $159,900 in EIDL proceeds in June 2020 and a $77,600 PPP loan in May 2020 on behalf of his Harrisburg restaurant.

The court alleges that Levy did not use the funds for their intended purpose when he gave half the funds to his mother to place in safe deposit boxes and spent the rest on personal expenditures.

His business, Hershey Road Family Restaurant, closed last July.

The case is to be consolidated with another tax fraud case that Levy plead guilty to last November.

Levy admitted late last year to tax fraud and related offenses after he failed to pay more than $230,000 in federal income and payroll taxes from Jan. 1, 2014 to Dec. 31, 2018.

Levy’s attorney, Joshua Lock of Harrisburg-based Law Offices of Joshua D. Lock, said that the firm will not be commenting on the case at this time.

PPP’s extension gave borrowers needed time to apply, funds expected to dry up before end date

An extension to the Paycheck Protection Program (PPP) from March to May allowed more time for small firms and businesses looking to draw from the program for a second time to benefit from it. But without additional funds, the program is expected to dry up soon.

The newest wave of PPP loans began early this year and was signed into law by President Trump in December.

The third round of the program allowed businesses to apply for a second PPP loan if they had 300 or fewer employees, demonstrated a drop in revenue for one calendar quarter compared to the previous year, and showed they used all of their first-round money.

Late last February, the Biden administration revised PPP small business loans to reach smaller, minority-owned firms. However, the federal business loan program was scheduled to end just a month after businesses had a chance to cash in on the significant increase in funds they would receive.

It also gave businesses who were unable to apply for the first round of loans a chance to do so, but because of an eight-week hold on applying for a second round, many of those businesses would have been unable to apply for their second round by the March end date.

Biden signed the PPP Extension Act of 2021 in late March, allowing borrowers to continue to apply for PPP loans until May 31. At the time the act was signed, the Small Business Administration (SBA) had already approved nearly $196 billion out of the $290 billion in funds set aside for the program.

Between businesses applying for their second loan at a max of $2 million and small businesses now borrowing against their gross income rather than their net profit thanks to the new PPP rules approved by the Biden administration, the program is expected to be out of money weeks before the new deadline.

“For the last month and a half the burn rate has been $10 billion a week,” said David Patti, director of communications and marketing at Chester County-based Customers Bank. “The guy who could qualify for $1,000 now qualified for $10,000. That unleashed pent-up demand and there are now a lot more people in line.”

As of April 26, the SBA reported having $18.5 billion left in its PPP loan pool, according to Patti.

Despite the swiftly dwindling funds, the extension has proven to be beneficial for borrowers newly eligible for the program, said Jeramy Culler, vice president and business banking manager at F&M Trust in Chambersburg.

“The changes were made late in this round of the program, and the additional time allows borrowers who were previously ineligible to compile their information and submit applications,” said Culler. “It also provides additional time for those borrowers who didn’t receive a first-draw loan until 2021 to meet the use of funds criteria for a second-round loan. I expect there to be continued interest from borrowers until the money is exhausted or May 31, whichever comes first.”

Banks also had more time and resources to manage the loan applications coming in from borrowers since the first wave of PPP was already behind them.

Last year, lenders had two weeks to prepare for the bevy of borrowers that would knock on their doors. This year, banks were able to take advantage of their experience from 2020, said Matthew Long, chief operating officer of Ephrata National Bank.

“That was in the height of COVID. We weren’t sure what to do from an employment perspective,” he said. “We did a very manual labor-intensive process to do it quickly. As we looked at this further and moved into the second wave, we took advantage of tech because we had more time on our side to reevaluate.”

Recently the SBA launched a new round of Economic Injury Disaster Loan assistance to provide $5 billion in additional assistance to small businesses and nonprofit organizations impacted by the pandemic.

This and other programs such as the $28.6 billion Restaurant Revitalization Fund are part of more targeted aid for businesses compared to the broader PPP, which could help lift up businesses hit hardest by the past year, said Patti.

“The Biden administration thinks it’s time to focus on hotels, restaurants and others and that’s all fair to now say ‘Let’s get help to the people who have lingering problems or problems unique to their sector and be much more tailored to their policy,’” he said.

The truth behind popular misconceptions about the PPP

The federal Paycheck Protection Program (PPP) application deadline has been extended to May 31, offering small businesses another opportunity to secure critical funds to curb the economic ripple effects of the pandemic.

Originally scheduled to expire March 31, this new legislation signed last month by President Biden puts a lot of money back on the table. Since its creation a year ago, the U.S. Small Business Administration (SBA) has approved more than 8.2 million loans totaling $718 billion. More than $50 billion remains available.

Although many lenders have reopened their PPP application portals, some small-business owners are still sitting on the sideline, having doubts about whether the program is right for them. They might not know if they qualify, and they might have concerns about the process related to loan forgiveness.

Here are five myths about the PPP – and some information that could help to clear up any misconceptions before the clock runs out.

MYTH #1: The PPP is just for big businesses.

FACT: If you’re considering your first PPP loan and have fewer than 500 employees, you’re eligible for a PPP loan. In fact, even if you have no employees, the program may be available to you (see myth #2).
As of August 2020, 75% of businesses that had received PPP loans had nine or fewer employees, according to the U.S. Small Business Administration (SBA). Furthermore, nine out of 10 loans were for $150,000 or less.

MYTH #2: I can only get the PPP if I have employees.

FACT: If you run a business, even as a sole proprietor or an independent contractor, you may be eligible to apply for a PPP loan. Meet with your business banker to discuss your options and eligibility.
If your business has filed a 2019 or 2020 tax return (Form 1040 Schedule C for 2019 or 2020 for independent contractors), you can apply. Those without employees will need to submit IRS Form 1040 Schedule C to report your net business income.

MYTH #3: My business probably won’t meet the credit and eligibility requirements.

FACT: If your business was in operation Feb. 15, 2020, you have already met a key eligibility requirement. From there, you will need to provide documentation showing that you were in business and demonstrating payroll.

Small businesses owners may also worry that their credit status could keep them from getting a PPP loan. Although you will apply through a lender, there is no credit check requirement when applying for a PPP loan.

MYTH #4: If you have other SBA financial assistance, you can’t get a PPP loan.

FACT: Business owners can apply for the PPP and other SBA financial assistance (including the Shuttered Venue Operators Grant), such as the Economic Injury Disaster Loan (EIDL) and Section 7(a) loans. However, you can’t use your PPP funding and your EIDL loan for the same purpose, such as payroll. Note: An EIDL loan must be repaid.

And, while each program has its own requirements, don’t let the idea of applying for one loan sway you from applying for the other. Now is the time to use all the resources available to you. Just make sure you follow the guidelines of each program and maintain your documentation on how you’re using each loan.

MYTH #5: The forgiveness process is complicated and won’t apply to my business.

FACT: The keys to loan forgiveness are understanding the requirements of the program and maintaining the appropriate documentation.

First, full forgiveness of your PPP loan is not guaranteed. However, if you use the PPP loan proceeds as required by the PPP rules, your loan should be forgiven. If some or all your PPP loan cannot be forgiven, the terms of the loan are better than most at 1% APR for 60 months with payments deferred up to 10 months following the end of the chosen covered period. If you apply for forgiveness prior to the end of your deferment, the deferment ends when loan forgiveness is remitted by the SBA or if the loan forgiveness is denied, when the decision is communicated.

The SBA also recently released new guidance and forms to make forgiveness much simpler for loans under $150,000. Be sure to ask your banker about this or consult the SBA’s website prior to applying for forgiveness.

The PPP may not be the answer for every business, but it is worth considering. Speak with your banker for additional information on SBA programs or consult your attorney, CPA, or other advisor to help determine eligibility.

Jess Seburn is M&T Bank’s regional manager for business banking in Central Pennsylvania.

PPP round 2 is easier, more targeted, applicants say

Harrisburg-based restaurant and brewery The Millworks, closed since December, plans to reopen in March.

Ahead of that reopening, the restaurant will receive its second round of PPP. For restaurant owner Josh Kesler, the new round of the Paycheck Protection Program has been a much easier navigate than it was last April.

Since its creation early last year, the program’s restrictions on what businesses could do with the money to receive loan forgiveness was the subject of criticism. In its second go-around, businesses like The Millworks now have up to 24 weeks to spend the funds and can use them on an expanded list of expenses including operations, supplier costs, worker protection and property damage.

Lenders have also had time to streamline their submission processes.

“The first round was helpful but it created a lot of uncertainty and anxiety,” Kesler said. “In the second round, the process was much clearer because everyone including the SBA, financial institutions and borrowers had all been through it before.”

Last month, the U.S. Small Business Administration (SBA) launched the newest round of the program, backed by $284 billion in funding through December’s coronavirus relief bill.

PPP gives eligible businesses a low-interest private loan meant for payroll and other costs. Businesses that follow the program’s specifications can then apply to have their loan forgiven.

The most recent round, which can be applied for until the end of March, allows businesses that never applied to use a process nearly identical to the first round. Businesses seeking a second draw from the program must have 300 or fewer employees, demonstrate a drop in revenue for one calendar quarter compared to the previous year, and show they used all of their first-round money.

This year’s program is also focused on getting funds to smaller businesses. Whereas the first round gave 2.5 times a business’s average payroll costs with a max loan of $10 million, businesses drawing a second time are limited to $2 million.

Despite the new rules, the first two weeks of new loan submission went smoothly, said Nora Habig, M&T Bank’s central and western Pennsylvania region president.

“In the first round we had to set up the process,” she said. “This time it was about changing the things that needed to be adjusted and not so much making the entire process (from scratch).”

In its first two weeks, M&T received more than 14,000 completed applications requesting approximately $1.9 billion in PPP funding for businesses employing about 360,000 workers.

Lenders with more than $1 billion in assets began submitting applications to the SBA on Jan. 18, while smaller banks were approved to begin on Jan. 15.

Jeramy Culler, vice president and business banking manager at F&M Trust, said much of the Chambersburg-based bank’s prep before submissions opened was focused on making the process as efficient as possible for borrowers.

Harrisburg-based Centric Bank had about 755 submissions for $81 million by Jan. 26.

Submissions often spike in the first weeks of the program, according to Patricia Husic, president and CEO of Centric Bank. However, while the program went much smoother than it did the first time, smaller businesses without their own financial staff can still hit roadblocks, she said.

“The moment when these business owners need to get all this data together to submit, they don’t have the sophistication to pull it together,” she said. “When you have a company with a controller, that’s not an issue. A lot of these companies don’t have a CPA on call.”

In a third potential round, Husic said she would like to see the process eased in a way that puts less stress on those companies without readily available financial help.

PPP loan applications open today with a tighter focus on small business

Lenders with less than $1 billion in assets can now submit applications for the second round of the Paycheck Protection Program (PPP) starting today, but borrowers looking to use the program a second time will have more hoops to jump through than they did last year.

The newest rollout of the program by the U.S. Small Business Administration is nearly identical for first time PPP borrowers, but businesses looking to draw from the program a second time, will face a number of changes to ensure funds go to more small businesses.

The program, which gives eligible businesses a low-interest private loan to go to payroll and other costs, is funded through the $284 billion, bipartisan coronavirus relief bill signed into law last month.

During the first round of PPP loans, borrowers were given 2.5 times their average payroll costs with a max loan amount of $10 million. Anyone who has yet to apply for a loan through the program will still be eligible for that amount, but businesses drawing for a second time be limited to $2 million.

Borrowers in the restaurant and hospitality industries drawing from the program a second time have the opportunity to draw more from the program at 3.5 times their monthly payroll.

Businesses seeking a second PPP loan must have 300 or fewer employees, demonstrate a drop in revenue from one calendar quarter compared to the same quarter the previous year, and show they used all of their first-round money.

Ryan Hurst, a partner at CPA accounting and business consulting firm RKL, said that the majority of questions he is fielding concern the the added steps for second-time borrowers. The new round is designed to have a stronger emphasis on smaller businesses.

“Previously there was no real quantitative test to this,” he said. “This time, they say if you want a second loan, there needs to be a quantitative test because you can show performance and see if it declined or not. The attempt is to get more money into the hands of those that need it.”

While there may be more hurdles for borrowers seeking a loan, the administration has also made a number of changes this time around to give borrowers more freedom on how they spend the money. Previously PPP could only be used for payroll, rent, mortgage and utilities. The new law includes operations expenditures, supplier costs, worker protection expenditures and property damage costs.

Borrowers drawing for either their first or second time will qualify for full loan forgiveness if, during an eight-to-24-week period, employee and compensation levels are maintained, the proceeds are spent on eligible expenses and at least 60% of those proceeds are spent on payroll costs.

For businesses borrowing under $150,000, Hurst said it should be a relatively easy process to receive loan forgiveness.

“For a forgiveness application coming for loans under $150,000, that is supposed to be a simple one-page application for those borrowers,” he said. “If someone has a loan of $140,000, they can certify a number of things and say we used all the money and followed the rules and they can go on their way a lot more easily than someone with a larger loan.”

Harrisburg-based Centric Bank opened its loan portal for businesses to get a head start on their PPP loan applications earlier this week. Patricia Husic, president and CEO of Centric Bank, said that the bank has a much more automated loan portal this year, which should take the heavy lifting away from small businesses and make the processing of those loans much quicker.

“For some last year I heard it took them six to eight weeks to get their funds,” Husic said. “How do we turn it quickly and get it into their hands? Those are the key areas where I feel like we are in a better position.”

The SBA plans to reopen the PPP program to lenders of all sizes on Tuesday.

New federal stimulus package welcomed, lawmakers point out issues

State lawmakers praised the coming of the $900 billion federal stimulus package approved by the Senate and Congress this week but noted that much more must be done before the nation recovers from its public health and economic crisis.

The fourth major spending legislation targeting Americans in the midst of the COVID-19 pandemic is awaiting President Trump’s signature after being approved by both the House and Senate on early Monday morning.

The legislation, which includes a new round of $600 stimulus checks, a $300 extension to unemployment benefits and a second round of access to the Paycheck Protection Program (PPP), was long overdue, Gov. Tom Wolf said in a statement on Tuesday.

“The emergency relief funds authorized under the CARES Act were crucial to helping our nation survive the spring surge of COVID-19, but those funds expired while desperate need remained,” said Wolf. “Americans continue to struggle due to the economic consequences of this global pandemic.”

The second round of forgivable PPP loans will provide 2.5 times the monthly payroll costs for businesses from a $284 billion federal pool. Businesses will also be able to deduct expenses paid with PPP loans.

Tom Bené, president & CEO of the Harrisburg-based National Restaurant Association, said that Congress’ action will keep tens of thousands of restaurants from closing for good.
“A second round of PPP, combined with unique enhancements for the restaurant sector, will provide critical access to capital,” said Bené. Restaurant operators and their employees are dedicated to serving their communities, and today’s bipartisan agreement will give them the opportunity to do that through the holidays.”

Both U.S Senators Bob Casey (D-PA) and Pat Toomey (R-PA) issued statements noting that they were relieved to see additional aid released to Pennsylvania, but saw flaws in the legislation.

“While there is much in this bill that I disagree with, including wasteful government spending and misguided policies that will dampen the recovery, the good it does outweighs the bad,” said Toomey.

He added that he was glad to see Congress extend unemployment eligibility for the self-employed and gig workers, reauthorize PPP for small businesses, pick up the cost of distribution and administration of the COVID-19 vaccine and provide assistance for education.

Casey wrote in a statement that the relief bill does not include critically-needed money for state and local governments to prevent service cuts and layoffs for firefighters, law enforcement and local health departments.

“It also lacks meaningful policies and investments to protect nursing home residents and workers and to allow seniors and people with disabilities to receive needed care at home,” he said.

Bankruptcy filings are down over last year, but a wave is expected if the lockdown continues

Businesses and individuals considering bankruptcy during the pandemic might be holding off for now while the crisis unfolds, but experts expect bankruptcies to rise as companies continue to struggle.

“Many industries are under extreme stress, especially those dealing with hospitality, retail, various types of service businesses, manufacturing, commercial real estate, and transportation,” said Brian W. Bisignani, principal with Post & Schell, P.C., based in Lancaster County. “It is not just big companies or small companies, and it is not simply one geographic region, but a broad cross section of companies and throughout the country.”

For now, though, statistics from the U.S. District Court, Middle District of Pennsylvania, show that bankruptcy filings for the second quarter of this year are lower than the same quarter a year ago. For the three-month period ending on June 30, which was during the height of the pandemic, 817 new bankruptcies were filed. The three main bankruptcy chapters are Chapter 7, which is a liquidation, Chapter 11, which allows for a restructuring, and Chapter 13, which gives individuals the opportunity to create a repayment plan with creditors.

The 817 filings for the Middle District, which spans from southcentral Pennsylvania through the Lehigh Valley, included 625 Chapter 7 filings and 192 for Chapter 13, with no filings under Chapter 11. 

In comparison, for the same period in 2019, there were 1,526 filings. Those included 953 filings for Chapter 7, 11 for Chapter 11, and 559 for Chapter 13, with three listed as “other,” according to court records. 

Sara A. Austin, with the Austin Law Firm based in York, said that businesses are now just starting to think about filing, and a lot of those cases will be in the retail sector.

“This area will start to pick up as the lockdowns continue and people shop less and buy less,” Austin said. 

“As for personal filings, that has not even begun yet,” she added. “For many, they need to figure out how to pay for the roof over their head and food on their table. They are not worried about paying the credit card, medical, personal loan or other unsecured debts they might have, and those are the ones that a bankruptcy will discharge.”

Austin pointed out that entities holding the debt are not filing lawsuits because they know there is no way to collect, which is another reason why there are so few personal filings so far.

“At some point, especially when foreclosures begin again, this tide may turn and people may file to bring mortgages current and to keep houses,” Austin says. 

Observers also suggest that the lower numbers in the second quarter compared to 2019 simply reflect a doldrum that will not last after stimulus money works its way through the economy and businesses and individuals use up savings. 

“During the initial part of the crisis, these companies relied on cash and other reserves, including credit lines from their lenders,” said Bisignani, whose practice exclusively works in the areas of corporate and business bankruptcy cases and financial restructuring. “In fact, a number of companies simply drew down their credit lines and parked the cash.”  

At this point, at least In some instances, reserves are low or exhausted.  

“I would suggest that you will see increased corporate filings throughout the remainder of 2020 and certainly into 2021,” he said, noting the severe contraction in the national gross domestic product since the pandemic started.  “ …  You are seeing the beginning of a wave of corporate and business bankruptcy cases. That trend is going to continue, and in fact, increase.”

Statistics for July and August were not yet available, but other experts expect spikes, as well.

Douglas J. Smillie, chair of the litigation department with Fitzpatrick, Lentz and Bubba in Allentown, said many creditors are in “forbearance mode, whether forced or voluntary.”

“For example, many banks are granting payment moratoriums,” Smillie said. “In other cases, the state has placed a hold on evictions and foreclosures. This means that some of the pressures related to finances, such as foreclosure, eviction and collection lawsuits, have been on hold.”

For a lot of businesses, the mandatory shutdowns have pushed them to the brink, forcing them to consider bankruptcy, he added.

“An interesting issue, particularly related to COVID-19 and the CARES Act, concerns the availability of PPP (Paycheck Protection Program) loans to business debtors,” Smillie said.

The federal Small Business Administration determined that such funds would not be available for companies in bankruptcy, which has led to litigation to compel the SBA to make the loans. 

“The courts have split on the issues, and there have been some creative solutions, including the quick dismissal of a bankruptcy case in order to allow the company to obtain PPP funds, followed by the prompt re-filing of a bankruptcy,” Smillie said.

Expert advice

Bisignani works with creditors, so his advice to business clients is to be careful and to try to work with companies that were healthy before the pandemic but couldn’t avoid the severe distress caused by the crisis. Exerting too much pressure might force the companies into bankruptcy.

“Some of these companies are presently adapting and will successfully adapt to the new situation, while others will not and will have no alternative but to file for bankruptcy protection,” he said. “We are already seeing that happen.”

He also looks at how well a company is run. 

“Those that are well capitalized and well managed by competent professionals will withstand the crisis much more readily than those which are not,” Bisignani said.

He and the others don’t expect a return to normal anytime soon, with Bisignani saying that the future will be different for various businesses.

“Certain industries will take literally years to return to normal,” he said, noting that the airline industry is one example. “Other industries will recover more quickly.  … The real question is when will the pandemic come under better or more effective control — and that is currently unknown. When that happens, things will start to return to normal.”

One of the biggest changes will be in the commercial real estate market, where a lot of lease holders are not paying rent or asking for a partial deferral. Meanwhile, a lot of companies are rethinking whether they need as much space because people continue to work from home.

“All of that is going to impact the value of certain types of commercial real estate,” Bisignani said. “It also means that the office environment as we knew in 2019 and before may never return to what was once normal.”

 Smillie suggested that some businesses still don’t have enough information.

“For many clients, creditors and debtors, we are still in a wait-and-see mode,” he said. “I believe that many businesses that closed may be able to re-open once it is safe to do so. Both creditors and debtors are in the same situation: a shuttered business may not be able to pay rent, but in the current situation, a landlord is unlikely to find a viable replacement tenant. The old adage ‘you can’t get blood from a stone’ holds true.” 

He expects that there will be a number of disputes resolved short of court, unless there are too many debts coming from too many directions, such as vendors, utilities, landlords and lenders.

“Then bankruptcy may be the only option,” Smillie said. “Whether that bankruptcy takes the form of a reorganization or a liquidation will vary from company to company, business to business. “

Electronic operations

Because the federal court system moved to electronic filings years ago, access to the courts has been relatively open, so COVID-19 has not hampered that aspect of bankruptcies. In fact, a note on the website of the Middle District points out that it is proposing a rule change to enhance electronic filings by further promoting electronic signatures, and the rule change could take effect in September.

“My practice before the bankruptcy courts has been impacted, but not horribly,” Bisignani said .

Federal court filings have been done electronically for a number of years, and court hearings have continued through telephonic court appearances, he pointed out. Problems could arise as the number of COVID-19 cases increase and governments impose new restrictions. 

“In March, there was considerable disruption as many firms switched to remote work environments for their personnel,” he said. “However, overall, it has not been as disruptive as one would think given that many firms have invested heavily in technology over the past 10 years or so that makes remote working relatively easy. This would not have been the case 20 years ago when the state of technology was considerably less advanced.”

Overall, he isn’t optimistic about the year ahead. 

“The wreckage that has been created since February 2020 is extreme and unprecedented,” Bisignani said. “I have been a commercial bankruptcy practitioner for over 30 years, and I have never seen anything quite like this. It is across industries. It is not just nationwide, it is worldwide. Supply chains are disrupted. You have massive numbers of unemployed workers or underemployed workers.”

The cascading effect of people not working or working less, so therefore not spending, will continue to ripple through the economy, placing even more stress and layoffs at businesses that are interconnected, he added.

“The economy will come back into equilibrium, but it will take some time and, unfortunately, many people and many businesses will be hurt in the process,” he said. 

But for well capitalized businesses, there are opportunities, he also said. 

“And many more opportunities will arise over the next few years as the financial crisis winnows out the weak companies, those companies without adequate financial reserves, and those companies that cannot adapt,” Bisignani said. “Bankruptcy is designed, in part, to allow for the re-use of assets through bankruptcy sales and other transactions and certain companies will be able to take advantage of that and emerge stronger when this crisis passes.”

The pandemic and BLM are drawing white and Black business communities closer

Leland Nelson, president of the African American Chamber of Commerce of Central Pa. speaks to a group of local entrepreneurs about applying for Minority Businesses Enterprise certification at Temple University Harrisburg in late 2018. PHOTO PROVIDED

Soon after Black Lives Matter protests erupted across the country, requests for a directory of Black-owned businesses started flowing into the office of the Harrisburg-based African American Chamber of Commerce of Central Pennsylvania.

The protests sparked a greater conversation about systemic racism in the U.S., and in the business community. Locally, company leaders began to talk about how to support the region’s Black-owned businesses, which were hit particularly hard by the loss of customers after the statewide quarantine in March.

The African American Chamber has stepped up to the challenge left to them by the pandemic by focusing on getting loan and grant funding for its members.

The broader business community is looking to help where it can after gaining a greater understanding for the uphill battle their Black colleagues face. It was the mixture of both the BLM protests and the effects of the COVID-19 pandemic that led businesses to the African American Chamber’s door.

While the prospect of creating a path for its members to become part of the supply chain for much larger companies was an appealing one, Leland Nelson, the chamber’s president, said he has been wary of knee jerk reactions.

“We need to hold people accountable internally and see what gets measured,” Nelson said. “If they want a list, I will follow up to see what happened. I don’t want to go and just do the work and nothing comes out of it.”

The African American Chamber has a membership of about 60 and a potential membership list of another 100 microenterprises. In recent years, the chamber has focused its efforts on offering resources to startup and early-stage Black businesses with events like its annual “Build Your Business Boot Camp.”

The chamber’s success as a one-stop-shop for budding entrepreneurs has made it more of a community good than a members-only service.

“We try to sit down with anyone coming through our office and we ask them what will help you take the next step,” he said. “Number one is access to capital, number two is connecting them to decision makers.”

Aside from working with area businesses to expand their relationships with the region’s Black-owned businesses, the chamber started offering members assistance with state grants and loans after the pandemic closed operations for months.

David Dix, a member of the chamber’s Board of Directors and Chair of the Pennsylvania Commission on African American Affairs, said the chamber’s shift to helping established Black-owned businesses tap into programs such as the Paycheck Protection Program, marks a change in the kind of businesses the chamber can reach through its services.

“For the last two years, the chamber focused really on supporting a business framework for startup or new businesses,” said Dix, founder of Harrisburg-based consulting firm LuminousStrategies. “For businesses like my own, that are 10 years old, there was a call to say yes that’s important but what do we do for businesses sustaining by a thread and in need of support?”

At the end of June, the chamber partnered with the Harrisburg Regional Chamber to identify and support Black business owners as they applied for $100 million in grant funding through the state’s Historically Disadvantaged Business Revitalization program. The program was part of a $225 million COVID-19 Relief Statewide Small Business Grant program that Wolf announced in early June.

Together with the Harrisburg Regional Chamber, the African American Chamber walked businesses through the process and connected them with one of the state’s 17 Community Development Financial Institutions to apply.

Dix referred to the partnership as unprecedented, adding that the experience helped set best programmatic practices for the African American Chamber as it looks toward expanding into offering grant programming and loan programing in the future.

The Harrisburg Regional Chamber’s work with the African American Chamber, as well as other plans within the chamber to promote Black businesses and inclusive hiring practices, shows an intention to promote the African American community that Dix said felt different.

“I think David Black (Harrisburg Regional Chamber president and CEO) has done more in the last two months than any entity has done in the last two years,” he said. “It’s the ability for them to come out of their circles, reach across and say there is a problem and commit their institution to fix it.”

The Harrisburg Chamber recently created an internal task force as part of a long-term commitment to target systemic racism in the midstate and intends to use other chamber resources, such as its Business & Education Partnership Committee, to provide career opportunities for young Black people to combat systemic racial injustice in the education system.

The chamber’s recent focus on systemic racism is not just checking a box, according to Black, who said that recent events such as the death of George Floyd at the hands of a Minneapolis police officer, was a wakeup call for both the chamber and its members.

“In the past 20 years, our organization has done a lot in terms of inclusion and diversity, but we never focused, and I don’t think many organizations focused, on some of the root causes– the racism that’s baked into society,” he said. “This isn’t a simple problem and it’s something that will take a long while to get fixed but it doesn’t mean we shouldn’t work on it just because it’s tough.”

Support lacking

According to 2019 population estimates from the United States Census Bureau, Harrisburg’s population of more than 49,000 is nearly 52% Black or African American, 34% White, 22% Hispanic or Latino and 5.4% Asian.

Despite being a majority Black city, Dix argued that there hasn’t been a supportive environment for Black-owned businesses to prosper in the city. For a region as diverse as the Harrisburg area, it should be surprising that no bank, credit union or financial institution has an African American on its board of directors, he said.

“Working together, collaborating, getting some successes and getting capital into these businesses will lead into having the type of integrated relationships we need for banks to see that value.”

The African American Chamber has also felt that lack of support when it comes to donations from corporate partners. In the past, Nelson said, the chamber’s partners have donated $1,000 when they would donate upwards of $50,000 to other larger chambers.

“I had to tell some corporate partners that I don’t want their money,” he said, adding that he doesn’t want businesses to donate $1,000 for a photo opportunity with the chamber. For that reason, the chamber has put a minimum limit of $5,000 for a corporate partnership.

“If we bargain for a nickel, they won’t give us more,” Nelson said. “My board doesn’t like it but what are we telling people? That we are worth only $1,000?”

For Dix, expanding business opportunities for Black-owned businesses in the midstate isn’t about moving mountains. “Both of these sets of crises are an opportunity to check our biases at the door,” he said. “What is the community we want to get out of this and how do we build towards that?”

The chamber expects to continue to grow as a resource for businesses to find loan and grant opportunities and will be looking at expanding into offering Minority-Owned Business Enterprise Certifications in the future.