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Farmgirl Flowers CEO on how the PPP “failed” businesses like hers

Kai Ryssdal and Maria Hollenhorst Apr 27, 2020
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Farmgirl Flowers CEO Christina Stembel at one of the company's California distribution centers. Courtesy of Farmgirl Flowers
COVID-19

Farmgirl Flowers CEO on how the PPP “failed” businesses like hers

Kai Ryssdal and Maria Hollenhorst Apr 27, 2020
Farmgirl Flowers CEO Christina Stembel at one of the company's California distribution centers. Courtesy of Farmgirl Flowers
HTML EMBED:
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Amid public outcry and urging by the Small Business Administration, some companies that received funding in the first round of Paycheck Protection Program loans — including Shake Shack, Ruth’s Chris Steak House and Potbelly Sandwich Shop — have agreed to return the money. 

Meanwhile, a lot of smaller companies who missed out on loans in the first round are still seeking aid. 

Christina Stembel is CEO and founder of a direct-to-consumer flower company called Farmgirl Flowers. She told “Marketplace” host Kai Ryssdal that the Paycheck Protection Program “failed” companies like hers by not preventing companies that had other sources of funding from getting loans. 

“I think it’s failing all the way around,” she said. Not only did the government fail to prevent companies who may not have needed it from getting loans, “it also was a failing on the part of CEOs that didn’t have enough integrity to know that this was not set up for them,” she said.

Stembel told Ryssdal that Farmgirl Flowers only had eight weeks of runway when San Francisco (where the company fulfills 85% to 90% of its orders) issued a shelter-in-place order.

“With only 12 hours to shut down a whole facility, you know, we had to throw out $150,000 worth of flowers, we had to furlough almost 200 people, and then I had to figure out very quickly how to pivot,” she said. 

For Stembel, that’s meant scrambling to open new distribution and fulfillment centers outside of San Francisco to keep the company operating ahead of its most important holiday of the year — Mother’s Day.

“This holiday gets us through the very slow summer months,” she said. “Especially since we didn’t get the PPP loan, we don’t have any safety net whatsoever.”

In a video message posted to the company’s YouTube and Instagram accounts, Stembel detailed why bootstrapped e-commerce businesses like hers often don’t have close relationships with banks. That may have made it harder for them to get a PPP loan initially as banks prioritized current customers.  

If Farmgirl Flowers does not get funding from the Small Business Administration, Stembel told Ryssdal she’s hoping she’ll be creative enough to find another way through. 

But like so many businesses, her company’s success and survival also depends on the health of the broader economy.

“I’m probably on my 18th pivot by now,” she said. “But, you know, I don’t know what type of recession we may be going into, and there’s so much out of my control that I can’t plan for because I don’t know what it is.” 

Click the audio player above to hear the interview. 

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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