COVID-19: Stimulus & Small Business Update with Top Franchise Association Lobbyist

United States Capitol Building at sunset - Washington, DC, USA

Chris Krueger, Washington policy analyst at Cowen’s Washington Research Group speaks with Matthew Haller, Senior VP, Government Relations & Public Affairs at the International Franchise Association. They discuss the implication of the CARES Act for small businesses focusing on franchises including restaurants and hotels. They also examine implementation of Paycheck Protection Program (PPP) loans.

They are joined by Andrew Charles, Cowen’s Restaurants Analyst; Kevin Kopelman, Cowen’s Hotels & Online Travel Analyst; and Jaret Seiberg, Cowen Washington Research Group’s Financials Policy Analyst.

Press play below to listen to their discussion.

Cowen Hosts:

Chris Krueger, Managing Director, Washington Research Group – Macro Trade, Fiscal & Tax Policy
Andrew Charles, CFA, Director, Consumer – Restaurants
Kevin Kopelman, CFA, Managing Director, TMT – Online Travel & Hotels
Jaret Seiberg, Managing Director, Washington Research Group – Financial Services


Matthew Haller, Senior Vice President, Government Relations and Public Affairs, International Franchise Association.

Matthew Haller is Senior Vice President, Government Relations and Public Affairs for the International Franchise Association. He develops the strategic direction for IFA communications to ensure information about franchising, including policy initiatives, the economic impact of franchising, emerging trends and best management practices, is disseminated to IFA members and external audiences such as key policy makers, reporters and other opinion leaders in the most compelling and effective manner. 

Mr. Haller received a bachelor’s degree in Political Science from North Carolina State University in Raleigh, NC. He resides in Washington, D.C.


Speaker 1:                       Welcome to Cowen Insights, a special look at the coronavirus and its effects on sectors across the economy, as well as the policy arena. You will hear the latest insights from leading experts about where things stand and what’s around the corner.

Chris:                                [00:00:30] Well, thanks everybody for dialing in. This is the second call in a series. My colleague, Jared Seaberg and I are hosting getting down into the weeds of the phase three legislation. We’re delighted to have with us as well our Cowen colleagues Andrew Charles restaurants analyst, and Kevin Kopelman hotels and online travel analyst. Our special featured speaker today having back from last week the great Matt Haller, senior VP of government relations and public affairs at the International [00:01:00] Franchise Association to drill down on some of those phase three components, specifically the small business components. In terms of the call today Matt’s going to open it up with some framing comments on what the franchise association thinks about the stimulus bill and some of those details. We’ll then go to Q and A. Once again, Matt really appreciate your time. I know it’s a hot commodity right now and just delighted that you can spend [00:01:30] some time with us. So the floor is yours.

Matt Haller:                     Thanks a lot, Chris. Good to be with you guys again. So the IFA, International Franchise Association is a trade association based in DC. We have 1400 brands who are members of our organization and tens of thousands of franchise owners, big and small across a range of industries. On the restaurant side everybody from McDonald’s, to RBI, to Inspire Brands [00:02:00] Duncan and on down the line of a hotel side, Choice Hotels, Hilton, Marriott, et cetera, et cetera. And then that’s about 60% of our membership. And then we have personal services, businesses, commercial services, real estate, et cetera. So franchising, huge economic driver about 3.5% of private sector GDP. 733,000 franchise businesses in the country, 7.5 million workers, [00:02:30] at least as of January one, 2020.

                                         Obviously, as we talked about last week, we’re taking a significant hit right now due to the coronavirus. And I think, talk a little bit about what the CARES Act means for our sector. We view it as an important start to relief necessary to keep businesses afloat and inject some liquidity where [00:03:00] as you all know, cash flow is a real challenge for restaurant tours and hotel operators on a week-to-week, a month-to-month basis. There’s not a lot of cash reserves at the operator level and even at the franchiser level. And so these programs are incredibly, incredibly vital for them to be successful, for these businesses to survive. And I think an important part of that is keeping the employees connected to the businesses for [00:03:30] the duration of the crisis to the extent possible.

                                         And then one of the components of the CARES Act that we have been incredibly supportive of is this payroll protection program that is going to be jointly stood up by the small business administration and the treasury department. But importantly, the program itself is not going to be administered by any government agency and it’s all going to be done through small business administration [00:04:00] lenders. So these are your traditional large financial institutions that have an SBA branch community banks, credit unions and one or two other types of organizations that will get qualified or FinTech companies. So the payroll processors and even other lending institutions that are, or financial transactions institutions that are out there and such Square and others [00:04:30] are looking at potentially being involved in this program.

                                         And so just in terms of the nuts and bolts of what the law says a franchisee or any other eligible business is eligible to take a loan to the maximum size of two and a half times, the average monthly payroll. There are some special provisions in terms of increased eligibility for restaurant companies [00:05:00] and hospitality companies as well as franchises. And I know some of the questions that Andrew and [Presa 00:05:08] have provided me get into that. It’s still a little bit unclear exactly how big a restaurant company, whether you’re a franchise or franchisee, we’re going to be able to go on loans. There was there’s language in the law [00:05:30] that allows a franchise or a restaurant or hospitality company with more than 500, excuse me, with less than 500 employees per physical location to take advantage of the loan program.

                                         And that’s important because there’s not a lot of restaurants or hotels out there that do have that many employees. So the question then becomes if you own 100 [00:06:00] restaurants and, or even 1000 restaurants and you roll up to different holding companies and IRS control groups. Exactly where is that determination going to be made? Our belief is that the congressional intent of the law is to number one, capture as many employees as possible. And there are 540,000 [00:06:30] employees working at franchise locations who are owned and operated by franchisees with more than 500 employees. And these are your mega franchisees and your large multiunit franchisees. And so we believe that the intent of the law is to allow all of those employees to be able to continue to remain connected to their employer or brought back if they’ve been furloughed or laid off now and for the full extent of the loan program [00:07:00] to apply to them.

                                         So that is our belief. That is what we’re pushing for. And that is what we’re hopeful that the guidance would make clear. But as of 208 Eastern I don’t have a definitive answer on that. And attorneys are on both sides of this right now in terms of their strict reading of the law or slightly more liberal interpretation of it. But we believe the [00:07:30] congressional intent is there and we’re hopeful that the guidance from treasury and SBA will make that clear when it comes out, which as Chris mentioned, we expect shortly here this afternoon. Just a couple of other items that I think are incredibly important for your clients and for that you will look at and for our members that were included in the CARES Act, there is another fund created, the exchange stabilization [00:08:00] fund that at the treasury department that a lot of larger businesses and medium-sized businesses are going to look to.

                                         And certainly more franchisees will have to look to if they ultimately are not eligible for the payroll protection program. And that’s something that can be leveraged significantly. It does not appear as though the SBA single protection program will be able to be leveraged beyond that $347 billion that’s [00:08:30] there. But the $450 billion for other distress industries can be leveraged. And we believe that a lot of our members will ultimately be looking there for loans as well. On the pale of protection side the incentive there is to, like I said, keep as many employees connected to their employers as possible. And on the back end [00:09:00] of this, which hopefully is June 30th and we’re not having to continue to be in the current state that we’re in beyond then. The franchisee or the loan recipient would be eligible for full forgiveness of that loan.

                                         So essentially it converts into a grant if they maintain the same level of workforce as they had prior to COVID-19 impact. And so that’s why that program is so incredibly attractive. And we’re trying to [00:09:30] bake in as many of our members on the eligibility side as possible. One of the shortcomings of the PPP, however is that the loan size, irrespective of who is ultimately deemed eligible, the loan size is only two and a half times payroll. That’s only going to be about 30% of a lot of franchisees operating expenses and we were hopeful and we were [00:10:00] pushing for the loan size to be more like four times operating expenses. So as we think about phase four and coronavirus relief packages that Congress returns in the coming weeks or months pushing to extend the life of PPP depending on its efficacy and possibly expand both eligibility and loan sizes to include things like rent utilities, [00:10:30] cost of goods particularly in the food service sector and other operating expenses.

                                         So with that, maybe I’ll pause and happy to run through some questions. I know there were a few that came in between the last time I was with you all and today, and I’m sure there are many more that you all have. So first one that came in here was regarding qualification for the loan [00:11:00] under 500 employees, per physical location, where virtually all restaurants that we know and the question is franchisees get the lesser of the 10 million per location or two and a half times it was monthly payroll, plus one month rent utilities, interest on mortgage. That’s the one that we’re pushing for the intent to be for the guidance to make clear that you could go either or, but not [00:11:30] the capped out on total per entity basis at 10 million. But it would be 10 million per location.

                                         Now, nobody would presumably get to 10 million per location, but in theory you could. So let’s say you had 200 locations and each location had called $50,000. And $50,000 equaled your two and a half times [00:12:00] payroll, you could multiply that by the number of locations that you have. And even if that exceeded the 10 million, you would still be eligible. At worst, we hope that it doesn’t cap you out and make you completely disqualified from the program. Because again, we think that the intent here was to make all these 540,000 employees [00:12:30] eligible for staying connected to their employers. And there’s just going to be a huge chunk of people who are not eligible if those larger multiunit, multi-brand franchisees are completely left on the outside looking in. Next one here is, do you think the package is enough to cover restaurants or hotels needs in light of the current sales environment?

                                         Do you get that sense based on your conversations with operators? [00:13:00] And I think I answered this a little bit in my opening remarks. I think people feel like it’s a good start but because it’s limited that payroll expenses and not overall operating expenses I don’t believe that it’s enough. And phase four I think is going to be incredibly important, but also just the speed to market issue is going to really be telling here. I mean, if it’s going to take another couple of weeks for money to be an operators pocketbooks and ultimately getting passed [00:13:30] through to employees, I just think we’re going to see a lot of carnage and blood in the streets between now and then, because people are desperate for this yesterday. And I know you’ve heard similar feedback from the lending folks that you spoke to I believe yesterday.

                                         Another question here. Multinational QSR franchiser warned us last week, that bad debt expense is likely to tick up in 2020. Does that surprise [00:14:00] you in the context of the stimulus packages’ intent and your conversations with restaurant franchisees? I don’t think so. I think the industry was already pretty heavily leveraged and there’s been some news this week from some chains taking out additional credit and providing their own relief to franchisees. I think that’s something that’s going to continue. I think [00:14:30] every day there’s another layer of the onion that gets peeled back here. And I think that the biggest uncertainty that we all have is what does the economy actually look like when this virus passes? Are we quickly rebounding back or are we going be stuck in a recession or even worse for an extended period of time?

                                         And are people going feel confident to go out and travel [00:15:00] and spend money at restaurants and stay in hotels? Or are people going to be petrified because of the virus itself or just because of their own financial situation in terms of layoffs and furloughs and inability to pay mortgages and things like that. So I think that it’s hard to say with any degree of conviction, from my perspective, where this goes even after the virus passes. [00:15:30] Next question here is can royalty and ad fund payments to the franchise all to be considered a debt under the package? The answer is no. Next question is what happens to the loan if a restaurant closes before June 30th? I don’t know the answer to that question. I don’t believe it was addressed in the law, but my sense would be if you take out alone [00:16:00] and then you close the business, you’re certainly not going to get full forgiveness, but you’re going to be on the hook at a minimum for the interest there.

                                         Next question here, restaurants have to keep employees on payroll through June 30th to get forgiveness. Are restaurant allowed to scale back employees hours in light of the current sales environment. So the way the test is going [00:16:30] to work is it’s a full-time equivalency test. So our read it out right now is no. But that maybe something that will get clarified in guidance as well. Next question here. What options are available to a publicly traded franchise or for their company operated stores? Some of these franchise owners are looking at the PPP. [00:17:00] There’s nothing in the law that explicitly excludes them from being able to take advantage of that program. But at least in my conversations most are primarily focused on eligibility for their franchisees.

                                         We have had some members come to us and ask, “Are there going to be ways for us as a franchiser to leverage [00:17:30] the treasury fund, to potentially provide a credit facility to our franchisees that we aren’t able to take out now?” It’s a really interesting idea and something we’ve put into the conversation with treasury from the IFA presents some I think operational challenges and potentially some challenges around the perception [00:18:00] of double-dipping and the issues around labor, where a franchiser is not going to have direct control insight into the labor relations of his franchisee’s employees and their pay rates and those types of things. But there may be some ways to use a third party as part of that to leverage the treasury flowing to franchisees that we are certainly kicking the tires on.

                                         Next one here is [00:18:30] what options are available for relief to a 100% company on restaurants? So chains like Shake Shack, Darden and AAA. I give the same answer as the previous question from a franchise award for it’s corporate stores. That there’s nothing other than the potential of having 500 or more employees at a corporate headquarters that would theoretically kick them out of the PPP. But again, that may be addressed [00:19:00] in the guidance here that’s coming. And then last one I have on the list, and then we can open it up for a larger system like Carol’s and plan. Is there a way they could structure the loan such that it’s an excess of $10 million based on the fact that they have so many locations? I think I answered that a little bit ago.

                                         That’s what we are pushing for. Members of Congress and their staffs that put some of these franchise language into the law [00:19:30] and also struck out the $500 million revenue cap. I think their belief is the only reason that language is in there. So one these large operators who have tens of thousands of employees can take advantage of these programs. And I can tell you if the guidance doesn’t make that clear I don’t think these guys are gonna want to be lining up with the treasury fund and competing with IBM and Walmart and other large [00:20:00] companies with lots of cash reserves for loans. So we’re going to be lining up back at Congress, looking for more statutory clarification, if this isn’t the case.So maybe with that, I’ll pause and throw it back to you, Chris.

Chris:                                Yeah, Matt. Thanks so much. I just have one question then I’ll turn it over to Jared, Kevin and Andrew, but could you just clarify the loan amount is relative to your monthly [00:20:30] operating expenses, and then it’s just to drill down on that a little and ballparks are fine, or if you don’t know that’s also totally fine, but how much of the op-ex is fixed versus variable between equipment rental and kitchen staff utilities, et cetera.

Matt Haller:                     Well, right now there’s a lot of variable costs around labor. But then that goes away if you’re going to try to [00:21:00] go into the PPP and get full forbearance on the loan in terms of rent, it’s really case by case. I mean, we’re hearing all over the map, different feedback from our members in terms of getting rent relief from their landlords right now. That’s something else that I didn’t mention that IFA and the Retail Federation and the Restaurant Association are all pushing for is some rent abatement programs and really pushing [00:21:30] hard with governors to issue that type of relief on behalf of our members who are 90 plus percent not their own landlord. In terms of loyalties, there’s been some announcements of franchisers providing royalty relief.

                                         So that becomes more of a variable cost. Utilities and food costs, those [00:22:00] can be adjusted based upon the amount of use of the restaurant. So obviously, if you’re only open for lunch and dinner, if you’re only operating half the restaurant, that can be slightly reduced both in terms of costs. But there’s still some level of fixed cost here and it depends on the individual situation. A lot of these city locations with no drive-throughs and no lunch crowd from office workers are just completely shuttered. [00:22:30] I have heard that locations in rural America are in some cases actually up in terms of same-store sales. So it really depends on location and the build out of the physical location of the restaurant.

Chris:                                Fair enough. Let me turn it over to the guys.

Andrew:                           Hey, Matt. This is Andrew Charles. Super helpful, just I’m reading off the questions from the get go because I know that was on the minds [00:23:00] of a lot of investors based in the imbalance that we’ve been getting on this. One clarification on the company, operative models, like AAA and Darden and Shake Shack. And I realized the term sheets can be released here momentarily, which would clarify, but your best guess heading into this is that these businesses, I think you mentioned this they’re able to apply on a per location basis for the small business loan. The only stipulation is one is 10 million, these models all have less than 500 [00:23:30] employees per location. Really the only stipulation here is that they’re going to have to submit a loan for every location that needs it. And the only thing that could get in the way of that as well, just so I’m clear about that, is that if they have over 500 employees at their headquarters, then maybe that’s what potentially void them from flying for this.

Matt Haller:                     It could be that. They couldn’t put in a no publicly traded company aspects which would kick out the non-franchise businesses [00:24:00] from being eligible for the PPP. I haven’t heard that I’m just speculating about ways that those companies could be totally excluded here. But you’re right, Andrew. Those are the questions that we have, we know that those companies some of which are involved in IFA because they’re franchise outside of the U.S. but are all corporate operated [00:24:30] within the U.S. have been asking over the last couple of days.

Andrew:                           Got it. That’s helpful.

Kevin:                               Hi, Matt. It’s Kevin. I cover the hotels and all only travel for the listeners. So just a clarification on the intent of the bill. So if the employers are, you think they’re going to actually have to, if the intent is to keep them not only connected, it sounds like, [00:25:00] but actually have them paying people’s salaries for the eight weeks or however it is in order to qualify for loan forgiveness. Did I understand that correctly? Because we had heard you mentioned, I think the idea of you just keep them connected, you’re paying benefits, and they have to be hired back by or brought back on they’re actually paid by June. [crosstalk 00:25:29]

Matt Haller:                     [00:25:30] For hotels it’s probably even tougher because you’re in a situation where you may not have any bookings by June 30th. And so you have no need for employees by the time that this program theoretically sunsets. And so the operations of that I think are still a little bit challenging in terms of, is it even gonna work?

Kevin:                               Yeah. Well, [00:26:00] and that was my question. So it sounds like that’s still TBD and we’ll just see where the guidance comes out on that and if I understood correctly on whether you’re actually required to have been paying payroll in order to qualify for forgiveness.

Matt Haller:                     Exactly. And by June 30th, I think we’ll have some element of congressional action again and we may have greater insight into what’s a realistic timeframe for [00:26:30] certain types of businesses to come back into operation. And we may have the opportunity to push for additional clarification for situations like that, because a hotel is dealing with similar challenges to the restaurants, but obviously you can’t run 30% of your business from a hotel delivery.

Kevin:                               And then to clarify your comment on, you said 30% of operating expenses on average is [00:27:00] the payroll for your clients.

Matt Haller:                     So what we’ve been told. 30 to 40% is probably the range.

Kevin:                               Okay. Got it. And do you think that excludes cost of goods, costs of food and things like that?

Matt Haller:                     Cost of goods is another probably 10%.

Kevin:                               Okay. Thank you.

Andrew:                           Hey, Matt. This is Andrew again. You called up the $450 billion fund for the distress industries. [00:27:30] Are you having this conversation, I guess, for the purpose of this call, mostly restaurant and hotel investors, are you having those conversations with the restaurant hotel franchise owners at this point? I mean, are there a lot of conversations around that? Can you help contextualize that a little bit more because not something I had really thought too much about. It crossed my mind, but hadn’t thought too much about it. Just curious what you’re seeing play out in the field on an anonymous basis, obviously.

Matt Haller:                     Yeah, we have heard from a couple of multi- [00:28:00] brand franchise [inaudible 00:28:02] who are interested in the possibility of using the exchange stabilization fund to leverage capital that they can take out and in turn leverage that to their franchisees. And so we have had some conversations with the treasury department about that along with some of our members.

Andrew:                           [00:28:30] Yeah. Got you. And then one just came in [crosstalk 00:28:34], Chris. Yeah, sure. So this one just came in. Can restaurants and hotels obviously as well, can they furlough employees or do they have to pay them the full amount of pay through June 30th, recognizing that the business just isn’t having the same level of sales. So obviously there’s going to be some hours cut, if these guys will stay on the payroll and stay employed within the franchise.

Matt Haller:                     Yeah. You [00:29:00] can furlough and no penalty for furloughing, but my understanding of where the way the forgiveness will work is you’ll have to make them whole on the backend in order to get the loan essentially converted into a grant. You can reduce the workforce and use the money to pay all other expenses, operating expenses, not associated with payroll, but then it’s just a loan. It’s not it’s not a grant.

Andrew:                           And that’s through June 30th?

Matt Haller:                     [00:29:30] Correct.

Andrew:                           Got it. Thanks.

Chris:                                Hey Matt, it’s Chris again. I know we’re running tight on your time. I also just want to… When Matt leaves, my colleague, Jared Seaberg has a couple of final comments. The treasury guidance is just about to hit. So Jared can give you a couple of high level comments on that. But just my final question here, and I know you’ve covered it, but I think there is still some confusion as to whether hotels and restaurants get the $10 million [00:30:00] or the two and a half average monthly payroll per location, or per corporate entity. I think just maybe walking through that one more time. Just there’s so many moving parts.

Matt Haller:                     Yeah. So the first calculation you’ll need to do is what is two and a half times my average monthly payroll. And you want to do that across all of the assets that you have. [00:30:30] The question then is if that total loan size would need to be above $10 million, then we have some uncertainty that’s created for you because it’s unclear if the $10 million is applied on a per entity basis or a per location basis. So it’s all these subsections within the law [00:31:00] don’t necessarily point back to some of the limitations that are also in a separate section of the law. And the interplay between all of those things is creating the uncertainty for the increased eligibility that’s made clear by the NAICS code 72 restaurant hospitality companies and the franchise affiliation standard waivers. And we believe the intent of the law was to put in those [00:31:30] waivers of affiliations for franchises and waivers of size standards for NAICS code 72 restaurant and hospitality, so that the law would cover the largest pool of employees as possible.

Chris:                                Got it. I know we’re right up on time, guys. Let me go through the queue one more time for you, and then we’ll let Matt go and we’ll let Jared conclude with a couple of closing comments. [00:32:00] All right. Well with that, Matt, thanks again so much. I enjoy the treasury guidance. [crosstalk 00:32:08]. Really appreciate it. And hopefully, we’ll have you back soon. And with that, let me turn it over to Jared to try to level-set where we’re going from here. Matt, thanks again.

Matt Haller:                     Thanks guys.

Jared:                               Matt, you were great. Thank you so much for being on the call. Thank you for everybody for joining us [00:32:30] today. We can get during the call the release of some details from treasury. It’s going to take a while to understand what treasury and SBA are doing here. But I did want to go through a few of the details. The program is going to open for business on April 3rd, which if I check my calendar would be Friday, that is in line [00:33:00] with expectations. If you’re an independent contractor or self-employed, you will not be able to apply until April 10th. It is going to be first in and first out. So the sooner you apply, the more likely you are to get funding. Once the $349 billion is fully committed they are not going to go beyond that unless Congress provides them additional funds.

                                         [00:33:30] A few other details that we’ve gotten is that it’s going to be a two year loan. If you do not get full forgiveness, the legislation had talked about 10 years and they are reducing that to two. The interest rate would be 50 basis points, which is the same as the cost of using the discount window. So this is Uber cheap funding. [00:34:00] They are defining your maximum loan amount, a little bit different as well from what is in the legislation. It’s going to be two months payroll costs plus 25% and they’re also warning that loan forgiveness that the non-payroll portion is likely to be capped at 25% of the loan amount, because of expected [00:34:30] high demand. There is a application that has been sent around also as part of this. The application itself is pretty short.

                                         It’s really only, prints out is four pages, but there’s only two pages that you actually have to complete. Most of it are, yes/no questions that you checked off. Things like is the business [00:35:00] owner suspended, disbarred, proposed for disbarment, ineligible, stuff like that? Are you subject to indictment? It’s not issues that would really impede anyone from getting one of these loans. The certifications that have been in that area of concern that we’ve heard a lot about it says that things that you have to initial to certify [00:35:30] are that current economic uncertainty make the loan necessary, that you’re going to the funds to retain workers and maintain payroll or make mortgage lease utility payments that you’re going to have documentation verifying the number of full-time employees that are on the payroll, as well as how much you pay them, as well as your mortgage interest covered rent or covered utility payments.

                                         [00:36:00] It’s pretty much everything that we’re expecting. The underwriting, however, is going to be slightly more complicated. The lender is not just going to have to determine that you were in business prior to February 15th, and that you had employees prior to February 15th, but they are actually going to have to do the calculation. And basically to determine what your maximum loan size is. That [00:36:30] means they’re going to need proof of what your payroll looked like prior to February 15th so they can calculate that loan amount. I know everybody is very interested in the question on private equity that is not addressed at least in my very quick read.

                                         And five minutes before I got on here on on what’s been released. The only reference is back to the FDA’s broad page [00:37:00] on affiliation. If there is no clarifying guidance, then I think the presumption is going to be that if you have a private equity investment, that you are not going to be able to use this program. With that, that is my very quick read on what we just saw out of a treasury in SBA. I will certainly have a note with some more detailed thoughts on as soon as [00:37:30] practical and with that, let me turn everything back over to Chris.

Chris:                                Jared, tremendous as always. Let me just see Andrew and Kevin, if you have any additional questions or comments.

Andrew:                           So I can play traffic cop here. So Jared, I did get a couple of questions that I think are helpful or applicable. May not relate it to the term sheet, but just more broadly. This one is directly in the term sheet, where did you find these treasury guidelines? What’s the best place for listeners [00:38:00] to go look that up?

Jared:                               Sure. So go to, C-A-R-E-S and you’ll find it there. To be clear there isn’t a debate among the lobbyists and lawyers looking at this stuff as to whether this is all there is going to be which reflects a little bit of the disappointment on the lack of precision and clarity that we were [00:38:30] expecting.

Andrew:                           Got it. And then one question just on the broader SBA program. Does this just apply to LLC NTDs? Is there anyone that’s excluded from this? When we think about restaurant franchisees, there are sole proprietorships, there are different structures of this. Are there any structures LLC or anything else that you’re aware of that it could potentially be excluded?

Jared:                               I have not seen anything that suggests that a particular ownership structure would be excluded from [00:39:00] this. That includes something that came up in the broader conversation of the call about whether publicly traded companies would be excluded from this. That does not appear to be discussed. And perhaps if we get further guidance that that can get answered. But for right now, if you had been eligible for an SBA loan prior, they are using the same eligibility criteria [00:39:30] and that criteria is on website.

Andrew:                           Yeah. And then another question. Just again, in full disclosure, I haven’t looked at the term sheet, but one of the listeners had. The tertiary reads as an entire entity is capped $10 million. So we’re talking about if I think about the restaurant publicly traded models like a Darden or a Shake Shack or AAA, they would get $10 million at best. Is that the right way to think about it?

Jared:                               [00:40:00] I don’t know if we can include that for certain. It talks about per applicant. It talks in here about businesses. And it makes clear that the loan terms are the same for everyone. [00:40:30] But I don’t think that we have enough certainty here to be able to answer that based on at least my initial read of what just came out.

Andrew:                           Got it. Okay. That’s all the in-bounds I have related to that.

Speaker 1:                       Gentlemen, thanks again for participating and we’re around folks, if there are follow up.

Chris:                                Thank you to my colleagues and thank you to all the listeners. We appreciate [00:41:00] your time.

Jared:                               Have a great day folks.

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