On that strange March morning, Larry Lagattuta stuck to his routine: Around 6:30 a.m., he carried his cappuccino out the door of Enrico Biscotti, sipped, and listened for the Strip District’s rising bustle.
But … nothing.
“I remember standing out on the street and just hearing silence, hearing my blood pulse in my ears, and thinking: This is crazy,” Lagattuta recounted, a year after that first pandemic spring. “What’s going to happen?” he wondered then. “I was afraid. I’ve been here 30 years doing this! And this is scary stuff.”
Did you have one of those moments, in early 2020, in which — snap! — you knew that things had changed, it wouldn’t blow over in a week or two, and you had no choice but to adapt? Many small business owners did.
Entrepreneurs, and those who cater to them, are uniquely sensitive to the economy’s winds. Their life’s work, and their employees’ livelihoods, depend on quick adjustments.
Over the coming weeks, we’ll tell their stories of adaptation, in which pandemic-driven changes opened up new opportunities.
“I think it really taught people that they had to think outside the box and step outside of their boundaries,” said Karen Post, treasurer and chief financial officer of The Progress Fund, a nonprofit community development financial institution that provides financing and business coaching to small businesses in Pennsylvania, West Virginia and Maryland. “I think it taught some of them that they had to pivot, they had to make it through.”
‘I don’t know how we’re going to survive’
At The Progress Fund‘s office in Greensburg, it wasn’t eerie silence, but rather a ringing phone that heralded a year of many pivots.
It was the first Monday morning after Gov. Tom Wolf ordered much of Pennsylvania’s economy shut down. “I started getting calls from the clients,” Post recounted. “‘How am I going to pay my bills?’ … The one was a restaurant, and she said to me: ‘I don’t know how we’re going to survive.’ I said, ‘You need to have confidence that you can get through this.'”
With many clients in the restaurant, hospitality and tourism industries, Post quickly extrapolated from those calls. “Our portfolio was going to be in trouble if we didn’t step up and help them immediately.”
From 1997 through March 2020, The Progress Fund‘s model was simple: Marshal philanthropic and governmental resources, and provide loans and coaching to new or expanding businesses that create jobs and enhance communities.
It was suddenly obvious that decades of work was in jeopardy.
Post promptly met with David Kahley, president and CEO of The Progress Fund.
“I said, ‘We need to be proactive on this,'” Post said. “So we right away said, no payments from any of our clients, from that point in time, if they were affected by the coronavirus shutdown.”
Deferring debt payments was just the first of many snap decisions by The Progress Fund, which morphed from a lender into an all-purpose service center for pandemic-hit small businesses. Over the months that followed, the staff of five:
- Navigated both rounds of the Paycheck Protection Program [PPP], advancing forgivable loans totaling $2,477,211 to 31 businesses amid frequently changing federal rules
- Helped seven businesses to access $547,794 from the state’s short-lived Working Capital Access Program
- Joined 16 other community development financial institutions, statewide, in distributing $195 million in grants to very small businesses
- Forgave $513,690 in debt owed by borrowers on loans made before the pandemic
- Provided more than 8,800 hours of technical assistance, often alerting entrepreneurs to applicable programs and helping businesses through intricate application processes.
“We were not covering our costs” on these efforts, Kahley said. “But we just had to do something. … We were trying to put much-needed cash into people’s hands.”
Lagattuta said he was hearing “horror stories on the local news about people not being able to get PPP funds.” But he applied through The Progress Fund and got the money quickly, which “was freaking instrumental and like a godsend.”
His wholesale sales had plunged by 95%, and retail sales were nonexistent. But he spied an opening.
“The silver lining for us was our grocery stores,” Lagattuta said. “They were like super busy.” Best of all, grocery shoppers were adopting the buy-local mantra. So he reconfigured Enrico Biscotti’s efforts, baking and marketing toward the grocery stores. “It turned out for us to be a really wonderful opportunity.”
He soon had a new problem: How to find enough packaging material.
Enrico Biscotti ended 2020 down 35% from 2019 sales. But by early 2021, sales were off just 12% from the same months pre-pandemic.
“We are poised to provide for our legacy customers as well as our new customers,” Lagattuta said. “I think 2021 is going to be a great year.”
When the lights went down on Broadway
Ben Peoples got an early warning.
He’s a provider of theatrical and architectural lighting, with suppliers in China. He closely watched that country’s winter shutdown. When COVID-19 reached the U.S., he wasn’t shocked that Broadway — the source of much of his business — closed for the spring.
He got PPP aid through The Progress Fund. But more important was Peoples’ mid-spring revelation: America’s experience would not mirror China’s, and The Great White Way would stay dark. “We should not be focusing at all on the theater market, because that’s going to be the last thing to come back,” he realized. The pandemic economy “was going to be the new economy.”
Everything from news shows to Hollywood premiers was happening via Zoom, mostly from ill-lit rooms. Ben Peoples Industries developed a lighting control system that could be installed in a home, then controlled remotely and precisely, so that the room’s illumination would match imagery on a green screen backdrop.
The product had a short run, but opened doors. “It got a whole lot more people to know about us as a company and established us with a fair amount of clout as a cloud-connected controls company,” he said.
He’s busier than he was pre-pandemic, with a larger employee roster, and plans to “grow the company dramatically in the next year of two.”
Small businesses are always vulnerable. Especially now.
“Whenever that program money all dries up, it’s going to be interesting to see if businesses can survive,” said Kahley. There’s no telling how quickly, and completely, consumers will transition back from takeout and online shopping to dining in and browsing little shops. “I’m fearful of the economic hiccough after this.”
But so far? “Everybody’s still afloat,” he said of The Progress Fund‘s clients. “Our goal, that Monday morning, was to make sure our borrowers survived and will get through this, and as of right now, we’ve made it happen. We helped people make it happen.”
This is part of a series sponsored by The Progress Fund. Read all stories here.