Getting a PPP loan: First-hand account from a Fairfax County small business
Located in Tysons, Falcon Lab is a full-service creative, digital and print agency that started as a print shop in 1988. The company has a diverse range of clients including WeWork, L’Oreal, Cisco and Reebok. Like many companies, Falcon Labs has seen business drop dramatically because of the COVID-19 pandemic.
Falcon Lab owner Borzou Azabdaftari grew up in Fairfax County. He attended Langley High School and James Madison University. He took over the family business from his parents in 2003 and has 10 employees. He took notice when he heard about the Paycheck Protection Program (PPP). Part of the CARES Act passed by Congress, the PPP offers loans that can be converted to grants if a business spends 75 percent of the funds to keep staff on the payroll.
Via Zoom, Azabdaftari talked about the process he went through to make Falcon Labs one of the 1.6 million businesses that got a loan in the first round of PPP funding.
E-Bird Extra: Tell us a little bit about what Falcon Lab does.
Borzou Azabdaftari: We’re a creative digital and print agency with five lines of business. We have a digital side which focuses on branding, marketing, websites; an in-house print shop for physical business cards, flyers, etc.; a promo division, which is apparel, tchotchkes, and so on; signs and events; and ongoing marketing services — everything from Google ads to campaign strategy. We are a one-stop shop for any marketing need.
Extra: What has happened to your business during the pandemic?
Azabdaftari: The first week our sales were down 90 percent. Even before the lockdown we had lost $60,000 in canceled projects. Where we have ended up now is about 50 percent down for sales. Every day is different. One day we’re down 90 percent and another day we’re down 10 percent. There’s no rhyme or reason to it. I don’t know if it’s going to slow down or speed up. Every client’s needs are different.
We are taking the downtime to focus on all of projects – for example, redoing our logo, our website and all our email communication.
We are focusing on inbound marketing. We know that no one’s really spending money right now, so we are just trying to give stuff away and be useful in the hopes that when things turn around then we will be top of mind for everyone.
We’re trying to help people out as much as we can during this process. One thing we did we started a website called OpeninTysons.com to showcase any businesses that are open. We also launched a free Local Tool Kit, which consists of 5 pieces of DIY software to help a company grow its online presence.
Extra: What made you decide to get a PPP loan?
Azabdaftari: I wanted to keep my staff paid and on the books. Revenue was down so like everyone else we needed all the help we could get.
Extra: What was the application process like?
Azabdaftari: The application process was difficult. There wasn’t a lot of guidance from the SBA. So even as things were getting announced, they were changing on an almost daily basis. And the banks were vague about what they needed, but they also weren’t getting guidance on what they needed. Essentially the whole process was constantly in flux.
Even today we don’t really understand the rules on forgiveness. Banks have little guidance from the SBA and they don’t want to get saddled with the loans. And every bank is doing it differently so navigating the process has been difficult.
Fortunately, our bookkeeping is good and our numbers are pretty high so generating the reports and content we needed wasn’t very difficult. I did it all myself but I know many people who hired accountants or lawyers to navigate the process.
Small banks obviously ruled the day here. We used a small bank, Atlantic Union Bank, and that‘s why we got funded. We did have a prior relationship with them but they were not my main bank at the time.
Extra: When did you apply and how long did it take to get the money?
Azabdaftari: Atlantic Union Bank opened its application process on Friday, April 3rd around 7 p.m. and I applied immediately. As soon as I saw the e-mail come in I decided to start, and I put the application in an hour later. I think I received approval by the 7th and was funded by the 9th – cash in hand.
We breezed through. Part of it was because all my stuff was right. I think one of the places that people are running into problems is that some of their math isn’t right. So then the bank kicks it back and asks for more information. I think when that happens, you lose your place in line because the banks are giving everything to the SBA as quickly as they can.
Extra: So it is a two-step process, first the bank and then the SBA.
Azabdaftari: So you apply to your bank. The banks do all the due diligence on this because they’re taking all the risk, which is why a lot of banks sat out. The bank submits it to the SBA. When they submit, they are like basically saying that you’ve already been validated. So the SBA just says yes and gives you your approval number. But a lot of banks are only taking existing customers because they’re afraid of fraud, which is super legitimate concern.
Extra: To get the funding converted to a grant, you have to keep your employees on your payroll, right?
Azabdaftari: Yes, you have to spend 75 percent at least on payroll. And the other 25 percent has to go to rent and utilities.
We had to cut hours for some employees so we were able to boost them back to full time.
Extra: So this is a bridge for you, really?
Azabdaftari: Oh yeah. It’s been a lifesaver. I mean that. Without it we really would have at least had to consider laying off more people, if not everyone.
Extra: So how do the next seven or eight weeks look now?
Azabdaftari: We are trying to “hope for the best, be ready for the worst thing.”
I know that some of the Southern states are opening up and while I don’t necessarily think it’s a good idea, I hope they prove me wrong. If everything goes really well then maybe we can do that here, too.
I don’t know what’s going to happen when we do open up. Are people going start spending money again? Are people going to be very reticent because they’re afraid of everything? Will there be a second wave? I don’t know. We’re trying to do enough to keep our name out there and hopefully keep our pipeline full.
That’s the scariest thing — the uncertainty. Even in ’08 [the last recession], which was a nightmare for us, too, the situation happened slower with that “new normal” and we could plan from there. Now, there’s none of that.
Extra: Do you have any lessons for companies that want to take advantage of phase 2 of the PPP program, what would they be?
Azabdaftari: If you can get an SBA preferred lender to take your application, you should. They have more experience with the SBA and are just doing a better job. Atlantic Union Bank did ours and it couldn’t have gotten better. Also apply anywhere that will take your application, including online sources. You want as many irons in the fire as possible.
April 30, 2020