In March, as the United States was just starting to feel the widespread economic effects of the novel coronavirus, distillery founder Mike Reppucci knew his business was in danger.
Reppucci quit a job in finance in 2011 to open Sons of Liberty Spirits, a distillery, brewery, and canned cocktail maker in Rhode Island. Sons of Liberty had big expansion plans for this calendar year and beyond, but those plans were halted by the COVID-19 pandemic, which would take Sons of’s highest-margin line of business away. Liberty: the tasting room on the south coast of Kingstown.
A pivot to the production of another type of alcohol as well as a successful application for a Paycheck Protection Program (P3) loan meant that Sons of Liberty could continue to pay its staff and gave them time. to reinvent its business model. June and July are times when business resumes in the region, he said, but not if state regulations limit occupancy and not if guests are reluctant to stay indoors.
To provide an immediate lifeline for the community and the distillery’s roughly 20 full-time employees, Sons of Liberty began making hand sanitizer – selling some but giving most away. Production has not been as efficient as other lines of business – for example, the growing cocktail business reached almost 2 million cans sold in 2019.
So there, the employees were in mid-March, filling 4-ounce pump bottles with hand sanitizer – by hand, as they didn’t have a production line set up for this type of operation.
Reppucci said he read an article about a Seattle distillery switching from production to hand sanitizer. He believed Sons of Liberty could do the same, but the hurdles the company faced were unexpected.
First, because Sons of Liberty was making a new product, it needed new liability insurance, which cost almost $ 20,000, Reppucci said. Then we had to acquire containers – quickly. “I was told, ‘Let me know in five minutes or they’ll be gone,'” he said. “I put them on my personal Amex.”
Sons of Liberty also believed he needed to obtain a new industrial license from the Office of Alcohol and Tobacco Tax and Commerce. The office ended up giving blanket approval to streamline the process.
Shortly after Sons of Liberty announced it would produce a disinfectant, it was besieged by inquiries, including from the commissioner of the Boston Police Department. Reppucci estimates that Sons of Liberty distributed nearly 3,000 gallons of disinfectant, in gallon containers and 4-ounce hand-pump containers, to the public, including law enforcement, medical facilities and others. Sons of Liberty also sells gallon-sized containers for industrial use. The new venture allowed the company to continue recruiting employees for the tasting rooms on the payroll.
Advised by Rhode Island-based CPA DiSanto, Priest & Co., Sons of Liberty quickly applied for a PPP loan, soliciting a portion of the initial $ 349 billion made available in the first round as aid, relief and economic security of $ 2 trillion) Act, PL 116-136. Reppucci, who declined to disclose the amount received by Sons of Liberty, also credited the Bank of Rhode Island for the loan assistance, saying the bank was “on top of everything and one of the top banks in the world. State to process these loans “.
He is convinced that Sons of Liberty will be able to obtain most if not all of the loan, thanks to the advice of DiSanto, the priest. Reppucci said he was on track in May for more than 75% of P3 funds to be used for salary expenses, and he was also able to pay rent with the money. The guidelines for PPP loans have since changed to allow businesses to obtain loan forgiveness if at least 60% of funds are used for payroll. And partial forgiveness is allowed if companies do not meet the 60% threshold.
“We used all the profits and followed very closely the 75% [guidance] for the payroll, “Reppucci said.” We hope that the entire loan will be forgiven. “
Reppucci said the loan helped his employees with the necessary income and the company with the donation of time.
“I said, ‘Look, our business model has changed,” Reppucci said. “We are fortunate to have a job. You are lucky to be here. PPP helps me keep you here. We realize that the business model has changed now, and if we use this time to move forward, we’re going to come out so strong. ‘”
Online orders and takeout sales were strong in the spring, Reppucci said. And while the demand for hand sanitizer has declined, he said it’s important to have this product available, for profit or for freebies.
“First, when you hire someone, as an employer, you make a commitment to them and you don’t want to have to let them go,” he said. “You don’t want to back down. Two, I like how our staff has stepped up. I said, ‘We’re doing this for Boston PD. We give that. We do that, “and they went out.”
The first day Sons of Liberty handed out sanitizer, it was a dreary day in New England. It’s a Reppucci won’t soon be forgotten.
“It was 42 degrees and it was raining and our staff showed up to give out stuff for free. I didn’t want to let them go because they were totally invested in everything we do.
“So I think they go hand in hand. Giving back to the community not only made me feel good, but everyone here was excited. They felt so good we could add more. value. And then see them do that, go on and on and stand in the rain for six hours handing out disinfectant, I didn’t mean to say, “OK, now you’re out of work. . “”
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– Neil amato ([email protected]) is a JofA senior editor.