Engage:BDR receives approval for US small business stimulus funds
Engage:BDR expects to shortly receive US$435,000 under the US paycheck protection program created in response to COVID-19.
Programmatic ad company engage:BDR (ASX: EN1) has received approval from the United States Small Business Administration for stimulus funds to protect employees during the COVID-19 crisis.
The funding will come from the Paycheck Protection Program (PPP), which is part of a US$2 trillion (A$3.1 trillion) financial stimulus rescue package officially known as the Coronavirus Aid, Relief and Economic Security (CARES) Act recently introduced by US Congress.
PPP is similar to Australia’s recently announced Job Keeper wage subsidy and is designed to provide a direct incentive for small businesses to keep their workers on the payroll.
engage:BDR confirmed the initial funding is expected to be US$435,000 (A$675,000) with disbursement anticipated within 48 hours.
According to the company, management expects the funding to continue and increase if the US continues to be under ‘stay in place’ orders after 15 May.
While the PPP is set up as a loan, the US Small Business Administration has said the loans are forgivable if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.
engage:BDR confirmed its approved stimulus funds will be 100% forgivable – meaning the company will not be required to make any repayments – as the funds will be used entirely for the payroll of US employees.
Earlier this month, the company mentioned it had applied for small business loans under the CARES Act via UMB Bank at an annual percentage rate of 2-3%.
Other funding prospects
engage:BDR said it has also applied for the US Small Business Administration disaster relief funding and management expects feedback on this application “within the next week”.
The company is also in the late stages of the application process for an A$8 million term loan with a top-tier Australian bank at a quoted annual percentage rate of 3-4%. Application submission and feedback is also anticipated within the next week.
engage:BDR said it has also filed a business interruption claim with its business income insurance policy. The company is currently in the process of assessing impact and is working with the insurer to quantify the amount of the claim.
engage:BDR’s hunt for funds come after the company reported healthy operations for the month of March with revenue more than doubling to more than $2 million.
However, the company noted that ad spend has recently reduced due to about 85% of the US population currently in lockdown as a result of COVID-19.
It said many brands, not specific to engage:BDR, have “temporarily reduced their marketing budgets, as consumers cannot transact with them at the moment”.
Yet, the company said in its March 2020 trading update that as the advertising traditionally eanrs about 65-70% of its revenues in the second half of the year, management “expects 2020 to produce similar revenue seasonality as experienced in 2019 and all prior years”.