‘There were so many failures, all the way around’

Before the coronavirus-induced lockdowns, Farmgirl Flowers was on track to post a record $50 million in sales this year. But founder and CEO Christina Stembel says “everything changed” March 16 when San Francisco County was ordered to shelter-in-place.

“Supply chain and distribution channels and transportation – everything just halted,” Stembel told Yahoo Finance’s “The First Trade.”

Stembel says she was forced to immediately furlough 90% of her staff.

“We had 197 employees the morning of March 16, and then the evening of March 16 we had 6 people working,” she said.

“Unfortunately, there was no notice given to any business owners, which is something that is very disappointing to me. We had 12 and a half hours to shut down our facility in San Francisco, which meant we had to furlough.”

It’s a familiar story for many small companies that have had to quickly shift their business models during the COVID-19 pandemic just to stay alive. 

Stembel started Farmgirl Flowers in 2010 with her own savings and a cash-back credit card to cover business expenses. The e-commerce startup, which focuses on in-season floral bouquets wrapped in rustic burlap, has since established a loyal customer base and is giving long-time floral companies a run for their money.

‘CEOs should have know better’

When the U.S. government rolled out the first stimulus package for small businesses in early April, Stembel was encouraged, but that quickly turned to disappointment and frustration. 

“I think there were so many failures all the way around on the first tranche and the second tranche,” she said. “I don’t think much has changed. I’ve applied at 18 banks, so I have cast my net as far and wide as I can to see if we can get this round [of funding]. I don’t know if we will.”

Stembel said it’s been “disheartening to see how the program was rolled out without any safeguards in place to make sure that it went to the companies that actually needed it.” 

Stembel is referring to how large chunks of the Paycheck Protection Program money was taken by large publicly traded hoteliers and restaurant chains, like Shake Shack (SHAK), which has since returned a $10 million loan it received under the emergency program. 

“I feel very honored to be the voice for the taqueria down the street and the hair salon and the gym and the coffee shop because they didn’t get the loans,” said Stembel.

FILE – In this April 28, 2020 file photo, a closed sign is posted at a restaurant along the River Walk in San Antonio. Banks are reporting a little more success in getting small business owners’ applications for coronavirus relief loans into government processing systems. Bank industry groups says changes the Small Business Administration made in its procedures apparently are helping lenders trying to submit thousands of applications for $310 billion in loans. (AP Photo/Eric Gay, File)

“It’s been disappointing that the banks put the priority first with the companies that had the most money in the bank,” Stembel said, “which are the ones they have the best relationships with, and then it was also disappointing to see CEOs that should have known better than to go for a loan that wasn’t intended for them.”

Stembel has been able to bring back about 40 workers so far and with the PPP loan, she was anticipating being able to bring back about 45 more. That hasn’t happened yet, but she’s holding out hope.

Banking on Mother’s Day

Immediately following the shelter-in-place orders, Stembel said sales at Farmgirl Flowers dropped 60%, but quickly rebounded. 

“Now our biggest challenge is, how can we supply the demand because we had 5 weeks to completely change our distribution channel.”

Stembel’s company has since returned to its roots and is sourcing a lot closer to home. She found flower farms within 25 miles of her business and is hopeful she can meet demand for her industry’s biggest holiday, Mother’s Day, which is May 10.

“[Mother’s Day] is what takes us through the summer months, and that’s why we’re doing everything in our power to pivot as quickly as possible to get enough supply for the demand.”

Alexis Christoforous is co-anchor of Yahoo Finance’s “The First Trade.” Follow her on Twitter @AlexisTVNews.

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