FSG updates for the week of April 20
We remain open for business, but our staff is working remotely and our office lobby is closed until further notice. Our phones are forwarded so please feel free to reach out to us as you normally would. Everyone at FSG and their families are well. We’re sending positive intentions to our clients and their families for peace and resilience during these challenging times.
Two weeks ago, upon first learning about the Payroll Protection Program (PPP) provision in the CARES Act, Justus, Justin and Mike took immediate steps to apply for the loan that the program was offering to small businesses so we could at least be in line to receive the limited money available in order to ensure our employees and their families would not experience interruption in the livelihood on which they depend. The intent of the forgivable loan is to help with payroll and other expenses during the COVID-19 shutdown.
We wanted to let you know that, upon learning more, we opted not to accept the loan money for which we applied. Here is the rationale for that decision.
We started to consider if we really needed the PPP money. We learned the program was running out of funding and, at the time, it appeared questionable if Congress would approve additional funds under this program. We started thinking about the many small businesses that really need this money to survive.
As a team, we discussed this matter and we collectively decided to withdraw our application for the PPP loan. Late last week Mike Haubrich formally, and with gratitude, withdrew our application so those funds would hopefully go to businesses who really need the money to help carry them through this crisis.
This process is a great demonstration of how we actively live and act on our values:
We do everything with heart: in this time of crisis, we’re not only thinking about ourselves, we’re thinking about our community and those who are suffering serious financial losses and/or threats to their ongoing enterprises.
We are transparent: We wanted you to be aware of the thoughtful approach the management at FSG took to arrive at this decision and we felt it was appropriate to share our rationale with you. FSG is on solid ground and we are financially prepared to weather this storm. We’ll take each day as it comes and continue to make business decisions based on the current situation. As your fiduciary, we always put your interests first and we made a responsible business decision weighing our needs against those of other businesses who are suffering tremendous losses right now.
We never stop learning: we investigated and, in fact, applied for the loan initially, but as we learned more about the strength of our business compared to others who are in desperate need of financial relief, we did a closer look at our needs and learned that we really can defer this to others in greater need. We continue to learn more everyday.
Our values are more than just words to us. We are proud of this decision and the process we undertook to arrive at it. We’re hopeful that other small businesses in our community will benefit from the program and be able to survive this incredible event in our world’s history.
From the headlines…
Oil Price Goes Negative
On April 20, oil futures fell below zero for the first time. Oil is a commodity like wheat, corn, gold, and timber. Commodity futures are agreements to buy or sell a predetermined amount of a commodity at a specific price on a specific date in the future.
Businesses that use commodities purchase futures contracts so they can buy the commodities they need and sell the commodities they harvest at predetermined prices, thus providing income stability and predictable cashflow (think about an airline purchasing a futures contract on fuel). Speculators also trade futures contracts. They do not intend to own or store the commodity; instead, they close out their position before the contract is due in an attempt to profit from price fluctuations.
The reason oil futures dipped into negative territory is because the supply of oil is currently much higher than the demand. Businesses and speculators who have futures contracts to purchase oil do not have the means of storing the oil nor the buyers to purchase their contracts. Now these businesses and speculators may actually pay to have someone else collect the oil on the futures contract they purchased.
