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Small Businesses Will Get Help Paying Workers, if They Can Wait

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Every day counts for Glynis Donnelly, who owns a jewelry store in Tampa, Fla. Ever since the coronavirus outbreak decimated foot traffic to her store, she has been using her savings to pay her eight part-time employees.

“It may not be the most business-smart thing to do,” Ms. Donnelly said, “but I know my employees very well, and I know that they need me as much as I need them.”

The $2 trillion stimulus package passed by Congress late Wednesday, which includes more than $370 billion for small businesses such as Ms. Donnelly’s, could bring much-needed help. The bill will allow banks to lend directly to businesses, and those loans will be backed by the Small Business Administration. And although there are restrictions, some of the terms are less onerous than other programs administered by the S.B.A.

But it could take at least two weeks after the bill is signed into law for the money to begin flowing, and for small business owners — many of whom operate on thin margins — delays could mean the difference between surviving and shuttering their businesses permanently.

Federal authorities know time is tight. Regulators on Thursday released a statement encouraging banks and credit unions to start making small loans to individuals and small businesses immediately, independent of the stimulus.

Ms. Donnelly said she intended to make quick use of the stimulus program to try to supplement her personal expenses. She has $60,000 in savings and plans to dip into her 401(k) plan after that if no other funds are available. Her husband, who works as an ear, nose and throat doctor at a small practice in Tampa, has not received a paycheck in six weeks. The practice stopped paying its doctors to shore up its finances in preparation for the coronavirus’s economic shock, she said, adding that it too could qualify for a loan under Wednesday’s bill.

The stimulus package is offering small businesses S.B.A.-backed loans to pay for basic expenses. They would not have to repay portions that were spent on paying employees, a mortgage, rent or utilities. The banks lending the money would be reimbursed for those portions by the Treasury Department, which is receiving $377 billion to fund the program.

The bill is the latest effort by the federal government to prevent the widespread decimation of small businesses as the virus, which is still spreading, forces people indoors. An earlier stimulus package offered special loans to cover employees’ benefits along with utilities and other necessities while businesses were closed. Modeled after a disaster relief function inside the S.B.A., it requires applicants to deal directly with the small agency.

But the S.B.A.’s website has been so jammed that many users have been unable to complete loan applications, and those who did are told that they will take at least three weeks to process.

Jerry Akers, who with his family owns and runs 27 Great Clips hair salons in Iowa and Nebraska, said his wife spent four hours in the middle of the night this week trying to apply for a $2.7 million S.B.A. disaster-relief loan, to cover 12 weeks of health benefits for 220 furloughed employees. The S.B.A.’s website was so overloaded that she could not send the application until 4 a.m.

Mr. Akers said he hoped the new program would be easier to use. He is also hoping the bank he has relied upon for years can participate.

“We have a banker that we’ve got a great relationship with, but I met with him three or four days ago and he said ‘We’d lend to you hand over fist in normal times, but everything is shutting down and we don’t know what that means for you yet.’”

Under the new program, individual lenders will be able to use their own paperwork to process loans and can expect S.B.A. approval within two weeks. Banks will not disburse the loans until the S.B.A. assures them that each is fully guaranteed against default.

Unlike other S.B.A.-backed loans, business owners won’t have to provide personal guarantees or use all their available assets — from real estate to equipment — as collateral. There are no fees, and interest rates are capped at 4 percent.

“Because of the scale of this effort, it really has to work,” said Paul Merski, a lobbyist for the Independent Community Bankers of America, a trade group.

Lending conditions are complicated by the fact that normal paperwork is harder to complete. Social distancing makes it difficult to get forms notarized, and appraisers are not visiting properties to inspect them. Lenders and state officials are finding workarounds; for instance, New York now allows notaries to complete their work through a video connection.

That’s another waiting period that could cripple small-margin operations like restaurants, many of which only have cash to sustain themselves for two weeks, said Karen Harned, executive director of the National Federation of Independent Business’s small business legal center.

The program comes with restrictions: Loans are limited to $10 million, to businesses with 500 employees or less. Loans to cover salaries of over $100,000 a year wouldn’t qualify for forgiveness, and businesses must demonstrate that they had not recently laid off employees, or a smaller amount of the loan would be subject to forgiveness.

Businesses would not have to repay loans covering up to eight weeks worth of payroll expenses. That means that once businesses receive their loans, a new clock will begin to tick: They’ll have to use the money within two months to avoid repaying it.

Michael Muscarella, who runs Dog Services, a kennel in Richmond, Va., plans to apply to fund his payroll. In late January, he and his partners met to prepare for the coronavirus outbreak and decided to pay employees through the end of April.

One of its three kennels is still open and caring for the pets of those fighting the virus, such as health care workers and emergency responders. But many of its employees have stopped showing up to work.

The business employs as many as 60 people and pays $14 an hour. Mr. Muscarella said he would use a loan to give low-wage employees an incentive not to abandon their jobs, as home delivery services like Amazon and GrubHub begin to lure workers away.

“I’ve got to find a way to keep them loyal to me,” he said.

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British American Tobacco working on plant-based coronavirus vaccine | Business

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British American Tobacco, the maker of brands including Lucky Strike, Dunhill, Rothmans and Benson & Hedges, has said it has a potential coronavirus vaccine in development using tobacco plants.

BAT has turned the vast resources usually focused on creating products that pose health risks to millions of smokers worldwide to battling the global pandemic.

Income subsidies

Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.

Loan guarantees for business

Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.

Business rates

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Cash grants

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

Benefits

Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.

Sick pay

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.

Other

Local authorities to get a £500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

“If testing goes well, BAT is hopeful that, with the right partners and support from government agencies, between 1m and 3m doses of the vaccine could be manufactured per week, beginning in June,” the company said.

The London-listed company used the announcement to trump the positive aspects of its tobacco empire, saying that “new, fast-growing tobacco plant technology” put it ahead of others trying to develop a vaccine.

“Tobacco plants offer the potential for faster and safer vaccine development compared with conventional methods,” the company said.

BAT said its US biotech subsidiary, Kentucky BioProcessing (KBP), has moved to pre-clinical testing and that it will work on the vaccine on a not-for-profit basis.

In 2014, the tobacco firm bought KBP, which has previously worked on a treatment for Ebola. BAT said its work was “potentially safer [than conventional vaccine technology], given that tobacco plants cannot host pathogens which cause human disease”.


BAT said it had engaged with the Food and Drug Administration in the US and the Department for Health and Social Care in the UK to “offer our support and access to our research with the aim of trying to expedite the development of a vaccine for Covid-19”.

Dr David O’Reilly, the director of scientific research at BAT, said: “Vaccine development is challenging and complex work but we believe we have made a significant breakthrough with our tobacco plant technology platform, and we stand ready to work with governments and all stakeholders to help win the war against Covid-19.

“KBP has been exploring alternative uses of the tobacco plant for some time. One such alternative use is the development of plant-based vaccines.”


BAT said it had cloned a portion of the genetic sequence of the coronavirus and developed a potential antigen. The antigen was then inserted into tobacco plants for reproduction and, once the plants were harvested, the antigen was purified. It is now undergoing pre-clinical testing.

The tobacco firm is more typically on the receiving end of criticism from campaigning groups, including the use young and attractive models to entice younger demographics to try e-cigarettes and vaping technology.

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Almost a fifth of small businesses ‘at risk of collapse within month’ | Business

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Almost a fifth of small businesses are at risk of collapsing within the next month as they struggle to secure emergency cash meant to support them through the coronavirus lockdown, according to research by an accountancy network.

The chancellor, Rishi Sunak, has pledged unprecedented aid to companies to try to cushion the blow from much of the economy shutting down but businesses and politicians have raised concerns that there are gaps in the schemes.

Some 18% of small and medium-sized enterprises (SMEs) either probably or definitely will not be able to obtain additional cash from the government to survive for a four-week period, according to the Corporate Finance Network.

Its accountancy firm members estimated that almost a third of their 13,000 small-company clients from around the UK would be unable to acquire the cash needed to ride out an extended, three-month lockdown.

Rachel Reeves, the Labour MP who heads the business select committee, wrote to the chancellor on Tuesday outlining concerns with the schemes to support companies.

Income subsidies

Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.

Loan guarantees for business

Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.

Business rates

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Cash grants

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

Benefits

Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.

Sick pay

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.

Other

Local authorities to get a £500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

Those concerns included some banks’ use of personal guarantees in the form of savings and mortgages to secure lending to small businesses under the government’s hastily formulated business interruption loans scheme. She also said that some of the banks offering the government-backed loans were putting in place “punitive” interest rates that made it impossible for companies to borrow money.

“The challenge now is getting the money out of the door to support businesses before it’s too late,” she told BBC radio on Wednesday. “There are many businesses who if they don’t quickly access this cash they are going to go under.

“That will have huge consequences for employment and also our ability to grow the economy when this pandemic has passed. If businesses collapse they won’t be able to ensure our economy can recover. They will be lost for ever.”

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The banking industry body, UK Finance, has said it is running the schemes in line with the government’s design.

In her letter to Sunak, Reeves said the history of support to the banking sector meant they had to step up. The industry and regulators at the Bank of England have said that banks are well positioned to support the economy through the crisis. The banks on Tuesday night agreed to scrap dividend payouts to shareholders after Bank of England pressure.

“Banks were kept afloat by government and taxpayers during the financial crisis,” Reeves wrote. “I would urge them to play their part in helping small and medium-sized businesses through this crisis.”

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Texas ‘mom and pop’ business flooded with orders for helmet ventilators amid coronavirus crisis

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One month ago, Chris Austin was running a little-known mom-and-pop business in Texas that fielded a few dozen orders a week for his helmet-style ventilation devices.

He had five employees and a handful of volunteers from the family’s church who would pitch in at the workshop behind their home in the small town of Waxahachie.

Then the coronavirus epidemic hit.

Austin’s company, Sea-Long Medical Systems Inc., is getting thousands of orders every day, from America’s top hospitals to countries as far flung as the United Arab Emirates. Researchers say the device, which costs less than $200, could help hospitals free up ventilators for only the most critically ill coronavirus patients.

“‘Overwhelmed’ doesn’t scratch the surface,” Austin told NBC News.

Sea-Long Medical Systems helmets resemble crude spacesuit helmets, with transparent hoods sealed at the neck and two tubes extending from the base.Sea-Long Medical Systems

The demand for the Sea-Long helmet underscores the dire shortage of ventilators in the U.S. and around the globe fueled by a surge in hospital patients suffering from COVID-19.

In the last few weeks, hospitals have been flooded with patients experiencing respiratory problems so severe they need the help of a machine to help them breathe.

Governors have made impassioned pleas for more equipment. Companies like General Motors and Ford have redesigned their assembly lines to produce the lifesaving devices. And hospital executives are scrambling to snap up any equipment that might help ease the escalating crisis playing out inside their facilities.

The Sea-Long device doesn’t look the part of a lifesaving medical device. It resembles a crude spacesuit helmet, with a transparent hood sealed at the neck and two tubes extending from its base. The helmet was originally designed to supply oxygen to patients receiving treatment in hyperbaric chambers.

But doctors in Italy, where a version of the helmet has long been used to treat people experiencing breathing problems, found it to be effective in helping some COVID-19 patients.

Dr. Bhakti Patel, who has been studying the devices for four years, said they hold promise as an early intervention that could spare respiratory patients the need to be put on the more traditional — and costly and invasive — ventilators.

“I would love for there to be a silver bullet for this pandemic,” said Patel, a pulmonologist at the University of Chicago. “My best hope is that the way it changes the game is that maybe it shaves off the number of patients who need a ventilator — even if it’s 1 out of 3 or 1 out of 5.”

“If that is the case,” Patel added, “that would be a game changer when we’re seeing this tidal wave of patients who need a ventilator.”

Full coverage of the coronavirus outbreak

Patel led a first-of-its-kind study in 2016 that tested the Sea-Long helmet against an oxygen mask for a group of 83 intensive care patients suffering from acute respiratory distress. The researchers found that the helmet led to superior outcomes: Patients using them required ventilation 18.2 percent of the time, compared to 61.5 percent for the masks, and had a better 90-day survival rate, according to the study, published in the Journal of the American Medical Association.

The trial was stopped early because the helmets proved more effective than the masks, resulting in a smaller sample size than originally intended. But Patel believes the device could lead to a sea change in intensive care units that have long relied on traditional ventilators. Those devices require doctors to fully sedate patients and insert a tube into their windpipes, a process that can cause pneumonia and other problems when used for extended periods of time.

“If we take away the ventilator — which comes with this package of sedating people, making them not move, making them sort of not have memory of what’s happening — perhaps we could spare some patients some long-term complications,” Patel said.

At $162 apiece, the Sea-Long helmet costs a tiny fraction of the five-figure ventilators.

The original devices were made to run through ventilators. But working with Patel and her mentor, Dr. John Kress, Sea-Long has modified the helmets so they can be hooked up to a hospital’s regular oxygen supply, keeping the ventilators free for those who need them most. They have also made another significant modification, adding a viral filter to prevent possible COVID-19 exposure to others.

This week, the team at the University of Chicago Medical Center used the helmet on one coronavirus patient and has gotten encouraging results, Kress said. The facility has received 20 of an expected 100 helmets and is planning to use them on additional patients, the doctors said.

Chris Austin, fourth left, says his team has been working around the clock for the past several weeks.NBC News

Other companies make similar ventilator helmets, but Sea-Long’s is the only helmet available in the U.S. that meets requirements of the Food and Drug Administration and has been validated in a clinical study for acute respiratory syndrome. No studies have yet been done, however, examining the effectiveness of the devices in treating COVID-19 patients.

Austin’s team has been working around the clock for the past several weeks. The workforce has at least doubled to more than 10 people, Austin said, and volunteers have been showing up in droves.

“We have people showing up that we don’t even know that say: ‘We’re here to help. What can we do?'” Austin said. “They don’t ask for anything. They don’t expect anything. They just say, ‘Whatever you want me to do, we’ll do it.'”

“It just about brings tears to my eyes,” Austin added.

The attention has led to some other acts of extraordinary generosity.

Austin said he recently got a surprised call from Virgin Galactic CEO George Whitesides offering to help him produce more devices.

“Chris, I saw what you do, and we want to help,” Whitesides said, according to Austin. “Whatever it takes.”

Austin told him he needed more machines to manufacture the devices but didn’t have the cash to pay for them. Later that day, Austin got a call from his New Jersey-based supplier.

“Somebody just paid your bill,” Austin said he was told. “They’ll be shipping tomorrow.”

With the four additional machines, Sea-Long expects to produce thousands of helmets a week. The goal is to produce 50,000 per week.

“This is the classic sort of American story,” Patel said. “It’s the little engine that could.”

Download the NBC News app for full coverage and alerts about the coronavirus outbreak

James Vanderploeg, Virgin Galactic’s chief medical officer, said the company is working with Sea-Long “to help them expand their capacity, helping with recruiting additional people and getting equipment in place and helping with the logistics and so forth — anything we can do to help them expand their throughput.” Virgin Galactic is also modeling potential prototypes for its own design of helmets used for ventilation, Vanderploeg said.

Major U.S. medical centers are now stocking up on the helmets, including Massachusetts General Hospital and the Hospital of the University of Pennsylvania. Austin said he’s also received orders from Canada, Mexico and several countries in Europe, including hard-hit Italy.

A Mass General spokesperson said the hospital has ordered five Sea-Long helmets but has not yet received them.

A Penn Health spokesperson confirmed that the hospital has ordered the devices.

With so much of the world in need and so many orders coming in at once, Austin has faced a difficult question: Whom to prioritize?

“We really look at where is the need,” Austin said. “We know New York has a stronger need. We know Boston. We know Chicago. … But we also know that we have to get what we can to Italy.”

For now, the company is shipping only a limited number helmets per order, “because we still can’t afford the volume of a huge order,” he said.

Amid the worsening pandemic, Sea-Long isn’t planning to raise the price in part because it doesn’t want to limit who has access to the devices.

“This probably sounds sappy,” Austin said, “but we think of what if that was our son or daughter or grandfather sitting there in that bed gasping for air and we have to explain to him: ‘I’m sorry. We don’t have anything for you.'”

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