As nonessential retail continues to struggle, the federal funding picture remains cloudy. Companies that could apply for loans or relief from the series of provisions in last week’s COVID-19 relief package are awaiting final guidelines, due by the end of this week. In the meantime, some other companies are providing relief packages of their own.
Companies that should logically be able to apply for funding include mall developers Simon Property Group and Taubman, as well as iconic retailers like Macy’s, Neiman Marcus and the Gap. Yet these companies have laid off staff as they wait for potential help. The key problem, according to Politico, is a Catch-22 regarding “investment-grade.” If a company doesn’t rate investment from Wall Street, apparently it won’t rate investment from the Feds.
“The two iconic retailers and other companies running out of cash can’t tap into the new loan program backed by the Federal Reserve because it’s only available to corporations whose debt is considered safe by credit rating firms,” Politico reported. “Retailers, casinos and other industries are now lobbying the Treasury Department and the Fed to get access to hundreds of billions of dollars in loans included in the massive relief bill that President Donald Trump signed into law last week. They warn that the central bank will need to cast a wider net to avoid a shockwave of defaults as private funding has begun drying up for all but the most stable companies. Already, more than half of companies that borrow through corporate bond markets aren’t eligible to get help from the Fed under its current rules because they aren’t classified as ‘investment-grade.’ The central bank’s efforts aren’t designed to bail out companies that might go under, but instead to offer a reassuring backstop to private lending markets.”
Analysts continue to be sour on the prospects for nonessential retail as well. “I’m becoming increasingly fixated on the fact that the coronavirus could have long-term impacts on consumers, retailers and retail landlords alike,” noted SeekingAlpha’s Brad Thomas. “I’ve examined the CARES Act closely. And while there are provisions that will help many struggling businesses across the U.S., it’s hardly a lottery ticket. The bailout money serves as a Band-Aid, helping to pay for employees and some overhead costs. There are many, many retailers that are already hanging on by a thread. So this black-swan event will likely accelerate store closures and put added pressure on mall occupancies.”
As retailers wait, eBay has launched Up & Running, an accelerator program designed to help retailers who lack an eCommerce capacity to be able to sell online. The company has pledged up to $100 million in support for small businesses across North America. The program will give new sellers a free eBay store for three months to sell up to 500 items. eBay will also offer such benefits as individualized seller support, educational webinars and mentor opportunities from seasoned sellers.
“For the last 25 years, eBay has helped launch and grow hundreds of thousands of small businesses, and now we’ve created Up & Running to accelerate the startup timeframe for retailers opening online stores during these unprecedented times,” said Jordan Sweetnam, SVP of eBay North America. “eBay was built on the simple premise that connecting buyers and sellers around the world creates economic opportunity, and this is exactly what we need to be doing – now more than ever.”
The effort is part of eBay’s retail revival task force to help the 70 percent of small businesses who lack any online presence.
Omniconvert, a Belgian marketing technology company that specializes in eCommerce conversion, is not offering cash support, but is extending its technology to all SMBs in the eCommerce sector. The financing credits will include five million euros and will support SMBs in nine international sectors.
“Omniconvert has the purpose of helping small and medium-sized eCommerce companies to not only survive, but to thrive,” the company said. “Since 2013, Omniconvert has been helping hundreds of eCommerce companies improve their conversion rates. The company’s technology empowers marketers to understand and nurture their customers better through surveys, to segment them automatically by using RFM analysis, to run A/B testing and to personalize their websites, all so that they can generate more revenue from their existing traffic and emails.”
