Question

Erin McKenna’s Bakery’s Florida location is at Disney Springs. Please review the web page about her bakery. As a result of COVID-19, Disney Springs has closed indefinitely. Locations in New York City and Los Angeles are also impacted. Like so many businesses, sadly 2020 is not going as planned for Erin.

Erin’s budget plans for 2020 were most likely set before January 1^{st ,} way before the current situation unfolded.

Here are the three initial questions for this discussion. Each student should post the answers to these questions individually (due date is Friday April 10th at Midnight). Then, once students have done their initial post, you are required to post at least four comments as you discuss everyone's responses as a group (due date is Tuesday April 14th at Midnight). No final group response is required on this assignment - just the posts conversing back and forth with the group will be enough.

Question 1: Erin McKenna’s Bakery will definitely have significant budget variances due to the COVID-19 virus business closure, especially if she receives no assistance financially from an outside source. After reviewing the web page, discuss the potential impact of COVID-19 on sales, operating expenses, cash receipts and cash disbursements. Be detailed in your answers - please mention specific impacts within those four categories. (10 points)

Question 2: Erin McKenna’s Bakery has less than 500 employees, therefore her business could qualify for some of the Small Business Administration programs (Links to an external site.) that are included in the CARES Act (Links to an external site.) that was signed into law by President Trump on Friday March 27^th. (10 points)

A. How can the Paycheck Protection Program (Links to an external site.) help Erin’s business?

B. How can the EIDL Loan Advance (Links to an external site.) help Erin’s business?

C. How can the SBA Express Bridge Loans (Links to an external site.) help Erin’s business?

Question 3: How do you feel about the outlook for Erin McKenna's Bakery's future, if she pursues some of these options with the Small Business Administration? Your answer should be a full paragraph, not just a single sentence. (10 points)

Answer 1

Question 1

Sales

As due to outbreak of covid 19 ,people are in home quarantine for safety Therefore there would be decrease in buyers for the Erin s bakery.There is increase in sales for home delivery ,so its more adquete to provide delivery facilities.Although there would be decrease in sales.

Operating expense

Operating expense would be increasing as they have to compensate with the delivery charges and home home delivery will be more than before .Labour has to pay more as there would be shortage of labour supply.As there is reduction in sales there would be chance of more wastage, as bakery products are more perishable and can t store for a long time.

Cash reciepts

Cash reciepts would be lower than before. Daily wagers people would facing problems , as they can t do their job due to covid 19 outbreak.Most of the population is daily wagers, so there is increase in credit sales.Even though if it is payment there will be more chance of online payment.

Cash disbursement

All type of bussiness is facing cash flow problems.Expense paid in cash could be decreasing .A ll the bussiness will maximise their credit facilities.Bank and other financial instituition is giving moratotium for three months.

2 A. Paycheck protection program will be most helpful for small bussiness like erins bakery.It is the loan designed to provide direct incentive for small bussiness to keep their workers on payroll.Loan amount will be deffered for six months without any collateral or personal guarantees.This could be excellent program taht could help kickstart of the bussiness.This can save bussiness and also help employees and keep the wheel of commercial turning.

B. EIDL could be very helpful for small bussiness like erin s bakery. EIDL is a low interest fixed rate loan that can provide upto $2million in assistance for small bussiness.This helps to kick start and back to bussiness.Thiis can solve current cash flow problems of the bussiness.They can continue provide their service without any stoppage.

C. SBA express bridge loan could be very helpful for ervin s bakery.This program scheme allow small bussiness who currently has relationship with SBA can access upto $ 25000 immediately.This help to overcome temperory loss of revenue they are experiancing and they can continue their bussiness.

3

W ith these schemes Ervins bakery can overcome temperory financial misruption caused by the virus . So the loss revenue can be filled with these fundings. This could be also helpfull for the employees of the bakery .Pay check program will cover their wages.As demand for food is increasing due to shortage of international supplies these types of food suppliers has to provide food to avoid situation worse.There future would not have any problems, they are provided with funds for their bussiness needs.