Question

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 27th. (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

SALES

As due to outbreak of covid 19 people are in home quarantine for safety.As of shops will not have customers to buy their product. There is increase for demand in food services.As sales for home delivery wold be increasing due to lockdown.Althugh there would be decrease in sales than before.

Operating expense

Operating expense would be increasing as they have to compensate with the delivery charges and home delivery will be more than before.Employees has to pay more due to risk they are taking.There would be chance of more wastage , as bakery foods are more perisable and cant store for a long time.

Cash reciepts

Cash reciepts would be lower than before.Daily wager people would be facing cash problems , as they cant do their job, There would be increase in credit sales.Even though if it is cash payment there will be more chance of online payment than liquid cash.

Cash disbursement

All types of bussiness are facing cash flow problem.Expense paid in cash would be decreasing .All the bussiness would maximise their credit facilities.Banks and other financial insttution are placing moratorium for 3 months for interest payments.

2

A

Paycheck protection program will be most helpfull for small business like erin s bakery.It is a loan designed to provide direct incentive for small business 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 that would help kick start of the company.This can save the bussiness and also support employees and keep the wheels of commercial turning.

B

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

C

This scheme could be very help ervins bussiness.This program allows small bussiness who currently has relationship with sba can access up to $25000.This will support to overcome temperory loss of revenue they are experiancing and they can continue their business.

3

With these programs Erin McKenna s bakery can overcome temperory fianancial disruption caused by the virus.So the loss revenue can be filled wih these fundings.This would also help the employees of the bakery, so they can work without any hesitation.Paycheck protection program will cover their wages, so that they can make more supplies of food.As demand for food is increasing,They can carry their bussiness without any hesitation.This time shall pass .There future would not have any problem , they can avail funding for their need from schemes