Dean's Blog: School of Business Administration

From the Desk of Dean J. Barry Dickinson, PhD

US Federal Government Fails to Support Real Small Business During Covid 19 Pandemic

The Covid 19 pandemic has left virtually no US citizen unaffected. At this moment, over 40,000 US lives have been lost and nearly 800,000 citizens have tested positive for the virus (https://www.worldometers.info/coronavirus/country/us/) . Over 22,000,000 workers have filed for initial unemployment benefits less than a month. The unemployment rate has increased to 20.2% (https://alexbick.weebly.com/uploads/1/0/1/3/101306056/bb_covid.pdf). The US Federal government has passed several bills to provide billions of dollars to aid US citizens and businesses. Of particular interest to me is the aid provided to small businesses. As a former entrepreneur who ran a company of about 65 employees, I am acutely aware of the precarious state most small businesses exist in. Any minor disruption to business as usual can throw a business into distress. I can only imagine how small business owners feel when they are mandated to close their doors without much notice. They can pretty quickly shed their businesses of variable costs such as payroll, travel, and inventory and supplies. However, fixed costs such as rent/mortgage payments, equipment leases and line of credit payments must still be paid. Weeks after most states mandated that all non-essential companies close their doors, the US federal government passed the CARE Act. This provided $377 Billion in aid to US small businesses in the form of forgivable loans, emergency grants, and relief for existing loans (https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package). The demand was high for this relief. Banks and the USSBA processing systems were overwhelmed with applications. Potential applicants found themselves locked out of systems or had sessions tmie out in the middle of a transaction. The demand was so high that the funding was exhausted in less than two weeks. 

What infuriates me, now that the Paycheck Protection Plan (forgivable loans) funding has been exhausted and the post mortem has begun, is the businesses who truly needed this money to survive did not get it. The program was intended to support firms with fewer than 500 employees. However, if you take a close look at the language in the bill, it limited the funding to firms with fewer than "500 employees per location." This loophole allowed large, multi-million dollar companies such as Shake Shack, Ruth's Chris Steakhouse, Potbelly Sandwich Shop, and others to secure millions of dollars in funding. Here are some examples (https://www.msn.com/en-us/news/us/shake-shack-ruths-chris-chain-restaurants-got-big-ppp-loans-when-small-business-couldnt/ar-BB12T2NJ):

Ruth's Chris Steakhouse: $20 million

Shake Shack and Potbelly Sandwich (which has over $100 million in cash on hand): 

J. Alexander's Restaurant Chains: $15.1 million

Hallador Energy: $10 million

Broadwind Energy: $10 million

Kura Sushi USA Inc. (largest sushi chain in the US): $9.5 million   

Fogo de Chao: $20 million 

This morning, Shake Shack announced it has returned its $10 million in emergency aid. This was, of course, in reaction to the uproar the announcement of the award caused. Is this just lack of judgement? Is it ethical for large, successful companies to take advantage of their smaller counterparts, especially in the middle of such a horrendous tragedy? You have to wonder where greed ends. Should it be up to our law makers to resist lobbying attempts and lock down legislation so that aid goes directly to the original intended parties or should we expect companies to "do the right thing?" What does this mean for the recent gains in organizational integrity?  

But the troubling news does not stop there. Michael Minnis, an accounting professor at the University of Chicago Booth School of Business, provided a wonderful summary of the bill's disbursements (https://docs.google.com/spreadsheets/d/1dM1zjbb_Wg6TbBm-cQeJo8z9xOS7XMR1/edit#gid=1757431029). The data show that only 17% of the $342B currently encumbered were in the form of loans in the amout of $150,000 or less. This would have been loans made to what most of us consider true small businesses. 45% of the loans were valued at $1.0M or more. True small businesses would not need loans of over $1.0M. 9% of loans exceeded $5.0M. 

As of April 16, 2020, the industry that received the most funding was the construction industry (13.1% of $342B). This is one of the few industries that were universally classified as essential. That is, while all small businesses have been completely shuttered, construction businesses have continued to work on projects, generate revenue, and pay employees from this revenue. And that industry secured the most funding!   

Are these small businesses? Do they need funding to survive like the small retail business that line our strip malls and shopping malls? Simply put, no. How did they secure funding? Because they have staff accountants and attorneys who were quick to navigate the legislation and apply for funding. Are they at fault for doing this? No, because the bill should have been written in a way that would have benefited genuine small businesses. 

The US Senate has announced it is close to approving an additional $250B in funding for small businesses. Will it actually help the intended recipients? Time will tell; check back for Part II....

Holy Family Ranked #11 in Philadelphia Region for Value

#11 in Philadelphia for Value - Business School

The Philadelphia Business Journal recently released a list of the top college values in the Philadelphia Metropolitan Region. The list was developed by a company called Niche (www.niche.com). It uses a variety of objective data to develop its ranking including net price, alumni earnings, graduation rates, and students debt. The data originates, primarily, from the US Department of Education. The company develops a Niche Value Grade for each institution. 

Niche ranked Holy Family University at #11 in the Philadelphia area. The ranking places HFU above all of its smaller, direct competitors. The only religious-based institutions that rank above HFU are Villanova University and Lasalle University.

We feel that this validates what we do for our students in the School of Business. We focus on ways in which students can put their degrees to work. Our emphasis on applying concepts to practice and career preparation, sets students up for successful careers. Our faculty all have professional backgrounds and they bring that background into the classrom. We think this translates into positive outcomes upon graduation.  

Importance of Professional School Accreditation

Accreditation is an important concept in higher education. Accreditation is defined as “the action or process of officially recognizing someone as havinɡ a particular status or beinɡ qualified to perform a particular activity.” For higher education institutions, the institutional accreditation process is performed by a peer review board of faculty from other institutions, who investigate the institution based on criteria that includes its requirements for admission, faculty reputation, and the quality of its educational programs, to name a few. It indicates that a college, university, or school has a system in place to measure performance, to identify areas for improvement, and to implement remediation. It is a process of continuous improvement.

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Welcome to My Blog

Dr. Barry DickinsonI am Dr. Barry Dickinson, Dean of the School of Business Administration here at Holy Family University. I started out here as a full-time faculty member in 2010 and took over as Dean in 2012. Prior to beginning my academic career at HFU, I was an entrepreneur, specializing in the mobile and wireless computer industry. I decided to start this blog to share the wonderful things that go on at HFU, as well as providing an alternative channel for me to share my thoughts about business and business research. I will be blogging about a variety of subjects here including: developments at the SBA, developments at HFU, business topics, and research that I or my colleagues have conducted. I welcome feedback to my blog entries and look forward to an open dialogue.