Mass confusion for marine dealers

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This month’s Pulse Report showed dealers have high fixed expenses and relatively short supplies of cash on hand.

This month’s Pulse Report showed dealers have high fixed expenses and relatively short supplies of cash on hand.

The Marine Retailers Association of the Americas is urging marine dealers to keep discussions open with local legislators to help make sense of distancing guidelines and shutdowns in states that have imposed them.

“Nobody in our industry has an accurate tally of where boating is and isn’t possible, and it changes so frequently,” MRAA government relations manager Adam Fortier-Browntold Trade Only Today. “It’s just crazy.”

Not only that, they are confused about whether they can remain operational even while showrooms are closed and scrambling to figure out how to get relief from programs like the CARES Act. (MRAA has put together a FAQ page in their COVID-19 resources for this reason.)

“It’s all still being interpreted,” said Fortier-Brown, whose parents own Clark Marine in Maine. “That’s the crazy part right now. It’s getting more and more complex as the Small Business Administration is still working through everything.”

The group is working to help dealers access relief via its COVID-19 resource page, providing important links such as to the Payroll Protection Plan application — dealers can find that here and then bring it to an eligible lender — and posting webinars it has been holding with experts that help dealers free up cash flow.

MRAA is also helping them find alternative ways to free up cash in a critical time. Inventories were ramped up for what had all but promised to be a busy season. For many, fixed expenses are high, while cash reserves are tight.

For example, several are unaware that as long as 75 percent of the PPP relief funds — which most companies are still awaiting — are dedicated to payroll, businesses can use the other 25 percent for other business expenses. The industry is awaiting clarification from SBA on how this would pertain to floorplan payments. 

The group issued a CARES Act guide that it updates regularly to help businesses navigate other parts of the legislation, particularly areas that haven’t received as much attention as PPP.

“I would pay close attention to the tax portion of the one-pager,” said Fortier-Brown.

Check out the one-pager here.

There’s a part of the CARES Act that allows businesses to deduct more of their business interest by now allowing them to deduct 50 percent of earnings before interest, taxes, depreciation and amortization for tax years beginning in 2019 and 2020, and by permitting businesses to use their 2019 EBITDA to determine their 2020 business interest deduction.

Previously, this was only at 30 percent, said Fortier-Brown.

Under the tax base benefits portion of the act, businesses can deduct 50 percent of taxable income, can carry back losses and can delay payments of payroll taxes, he said.

For dealers that have been in states that prohibited boating, it has been useful for companies to stay in touch with local legislators, said Fortier-Brown. MRAA has issued documents — 29 Tips to Sell and Service Boats Safely and Communicate Safe Boating to your Customers — to help educate lawmakers on best industry practices for keeping workers safe while at work.

“A lot of the pushback is, we’ve had lawmakers asking, ‘Fine, you’re repairing boats, but how are you going to get back to work and do it safely? How are you going to make the problem better?’ We have that, we have for the industry right now,” said Fortier-Brown.

Minnesota had specifically included fishing into essential business, but not boating, said Fortier-Brown, who sent the documents here to the governor yesterday.

“The governor’s staffers said, ‘This is exactly what we want from every industry that’s requesting to be essential,’” said Fortier-Brown.

“For dealers, if the governor is coming to you saying we might close down, and you can show, ‘Hey, I can actually do this safely,’ we’re actually seeing it turn around executive orders,” said Fortier-Brown.

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