Food Venture Financing News - Weekly Issue No. 13
In This Issue:
- Main Street Lending Program
- PPP Loan Forgiveness: Key Metrics
- Food/Beverage Financing and Market Trends
- Links to Relevant Content
Main Street Lending Program
- Businesses with up to 15,000 employees and $5 billion in revenue may apply
- Minimum loan size has been reduced to $250,000
- Maximum loan size is tied to specific multiples (depending on loan size) of adjusted EBITDA
- MSLP loans are full-recourse and are not forgivable
- Loan term has been increased to five years
- Principal repayment is deferred for two years
- Repayment schedule is 15% in Year 3, 15% in Year 4, and 70% in Year 5
- Interest payments are deferred for one year
- Interest rate will be LIBOR + 3%
- FAQs on the MSLP can be found here
- Borrower certifications and covenants for MSLP loans can be found here
PPP Loan Forgiveness: Key Metrics
The Paycheck Protection Program Flexibility Act was signed into law on June 5. It provides more favorable repayment and forgiveness terms for PPP borrowers.
- Forgiveness Amount. Only the amount that a PPP borrower spends on eligible uses is able to be forgiven. Failure to spend at least 60 percent on payroll costs may disqualify the loan for forgiveness.
- Forgiveness Periods. The "covered period" and the "alternative covered period" have both been extended to 24 weeks. Each has a different start date and apply to different expenses.
- Forgiveness Reductions. Maximum forgiveness may be reduced by (a) a reduction in the number of full-time employees; and (b) a reduction in salary for employees who made less than $100,000 in 2019 and who hired in 2020.
- Forgiveness Process. The PPP borrower must apply for forgiveness using the SBA's forgiveness application or a lender equivalent. The loan forgiveness process can take up to 150 days. The SBA may issue additional guidance on the PPP loan forgiveness process.
- Borrower Certification. Many PPP borrowers are putting their PPP funds into a separate bank account to make it easier to document and track authorized use of funds.
Food/Beverage Financing and Market Trends
- Sales from frozen foods have increased since the beginning of the pandemic and continue to rise as consumers prefer food items with longer shelf lives.
- The outbreak in meat-packing plants have caused consumers to rethink their preferences for meat products. Sales of meat alternative have increased by 239.8% compared to last year.
- Due to increased demand and virus outbreaks at large food processing plants, consumers have turned to local and mid-size regional companies for purchasing foods. Regional food companies will continue to see increased demand during the COVID-19 era as consumers change their food purchasing habits.
- CPG companies are stocking up on raw materials and ingredients to avoid any delays or disruptions to supply lines due to uncertainty regarding COVID-19.
- Sampling will return to Costco in some form soon, reports The Dallas Morning News. This may pave the way for other retailers to begin sampling again (Full Story).
Links to Relevant Content
- $130 Billion in Small-Business Aid Still Hasn't Been Used
- COVID-19 Food & Beverage Retail Market Perspectives – June 2020
- Plant-Based Foods Sector Report: June 2020
- Utz to go public following deal with blank check firm Collier Creek
- Grubhub’s acquisition by Just Eat Takeaway.com creates global restaurant-delivery giant
- Nestlé to acquire majority stake in collagen maker Vital Proteins
- How Califia Farms is growing its funding and portfolio in a pandemic
- Amazon Creates Wait List for New Customers
- Instacart Raises $225 Million
- How coronavirus accelerated demand for plant-based food
- Half of Americans Want Meat-Free Options After Industry's Crisis
- How a break in the nation’s food supply caused regional food companies to soar
- Quarantine builds new fitness habits and sports nutrition opportunities
- Food Companies Adjust to Operating With Coronavirus Costs
- Danone partners with AI upstart Brightseed to uncover additional health benefits in plants
- U.S. food makers stock up on ingredients in case of another coronavirus surge
Naturally Bay Area Webinar:
Introducing QUICK BITES!
An all new Naturally Bay Area series featuring 30 minute bite-sized power chats to feed your appetite on key hot topics during our current pandemic climate.
Every Wednesday, 12:00 - 12:30 p.m. PT - June through August
Click HERE for full schedule. The first QUICK BITES! webinar will be tomorrow:
PRODUCT INNOVATION: Wednesday, June 17 - 12:00 - 12:30 p.m. PT
- Michelle Ferguson: Executive Vice-President Innovation, CLIF Bar
- Don Buder: Host, Naturally Bay Area & Partner, Davis Wright Tremaine
Naturally Bay Area Webinar: Thursday, July 9, 4:00 - 5:00 pm PT
Kirk Visola, Founder & Creative Director at MIND THE FONT® (a Black-owned and operated full-service design agency headquartered in the Bay Area) will lead the conversation on the below:
- Brand Design Process: Including considerations regarding justice, equity, diversity & inclusion, and benefits of creating authentic brand propositions.
- Stories from Three Company Founders: Chosen for the MIND THE FONT Empowered Initiative, including what inspired their brands' missions and products.
Submit your questions now to email@example.com so our panel can address your burning thoughts that keep you up at night.
About the MTF Empowered Initiative*
The MTF Empowered Initiative (a program sponsored by MIND THE FONT®) will award three minority-owned or minority community-focused brands a "Brand Design Package" including free brand design (or re-design) work consisting of concept development, logo design, commercial-ready packaging for up to three products, and up to five launch collateral pieces.
Applications: Through Thursday, June 25 - 9:00 pm PT. Apply HERE.
At Davis Wright Tremaine LLP (DWT), we are proud to have one of the largest Food & Beverage legal practices in the country, with over 40 attorneys representing food innovators, entrepreneurs, and investors at every level of the food chain, from Farm to Label.
Please contact our Food and Beverage team if we can assist you in any way in these unprecedented times.
The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.
DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.