If you’re not one of the many marine industry disciples who actually wore their life jacket to work last Friday — affectionately known as Wear Your Life Jacket to Work Day — you should be aware that the week prior to Memorial Day here in the States is always honored as National Safe Boating Week.

Safe Boating Week was designed to bring awareness to the importance of safety on the water, prior to what is normally the kickoff to the summer boating season — Memorial Day weekend. Wear your life jacket. Boat sober. Navigate responsibly. Respect other boaters. And so forth.

With many dealers and marinas reporting that boater activity levels have been at all-time highs throughout the month of May, the boating season is already in full swing, and it is expected that this Memorial Day Weekend could be the busiest holiday weekend ever for boating across the United States.

This year, more than any other year, safe boating takes on a higher level of importance — and not just because of the increased boating activity. Safe Boating week was designed to help mitigate the risks of boating accidents and fatalities, two key metrics that our industry has been successful at improving over time. With greater numbers of boaters on the waterways, a focus on safe boating will be more important than ever.

I would argue, however, that our industry’s focus shouldn’t be limited to reducing the risk of just accidents and fatalities. It should also be focused on limiting the risk that our industry faces with regard to the health concerns in our society today.

Download this and the other resources below to communicate with customers on how to boat
safely in today’s social-distancing-focused environment and help mitigate risks to boating.

You may recall that Miami-Dade County in Florida closed down its boat ramps and forbid boaters from using popular boating destinations due to the appearance that boaters were not practicing safe social distancing measures. With increased boating-related website traffic, with an increase in boat loan applications, and positive reports from our dealers, it’s clear that a whole lot of new people and seasoned boaters alike will be taking to our waterways this weekend and enjoying our great outdoors. What are you doing to keep them safe and protect both boaters and boating for the days, weeks and months to come?

Without a good reminder from our industry and our many businesses and their employees, if boating participation isn’t conducted safely and responsibly, it could damage the reputation of boating and once again cause the closure of ramps and/or waterways. Let’s make sure that we’re communicating, as an industry, all of the ways we should be boating safely.

Here are a few resources you can use to do that:

MRAA: Communicate Safe Boating With Your Customers

MRAA’s Boating Do’s and Do Not’s 

Boat Ramp Do’s and Do Not’s

Discover Boating Article: Tips for Safe Social Distancing

With the memory of the significant toll that the Great Recession had on our industry still somewhat fresh in our minds, I think it’s important to note that this downturn is different in a number of ways.

Between the crash in 2008 and the middle of 2010, nearly 2,000 boat dealerships were forced out of business. Buying programs with volume-focused discounts, coupled with loose inventory management practices put many businesses in a no-win situation when the economy came to a screeching halt.

It’s estimated that as much as 60 percent of the inventory on dealership lots during the Great Recession was more than a year old. And, notably, very little if any of that product had been curtailed, meaning the dealerships hadn’t paid down the value as it aged.

The financial crunch it placed on the dealers also hit the floor plan lenders hard, and all of them, aside from GE Commercial Distribution Finance, vacated the market place, leaving dealers and the industry to fend for themselves. Today, the former GE team operates under the Wells Fargo Commercial Distribution Finance banner, and two other lenders — Northpoint Commercial Finance and TCF Inventory Finance — are supporting manufacturers and dealers through this crisis, and there’s some relatively good news to report, in comparison to the last downturn.

Based on MRAA’s industry conversations, non-current inventory at dealerships in April, sat on average, at around 20 percent of the total inventory in the field. That’s a major shift from the precarious position dealers found themselves in during the Great Recession days. 2019 model year boats made up about 19 percent of that and only 1 percent of the non-current, new inventory in the field was 2018.

What’s more is that today’s inventory has also been curtailed. What that means is that as consumers look for more value and choose to pay less and buy a non-current model, there’s more cash injected into our dealerships.

One of the major concerns with any downturn like we’ve seen with the Great Recession and in today’s environment, is that consumers or dealers will default on their loans, have boats repossessed and then re-sold in the market place in a manner that deteriorates inventory value and further hurts our businesses. If the inventory levels are any indicator on the likelihood of that scenario, and I believe they are, then we should be in much better shape today than we were in 2008, 2009, and 2010.

As a socially-safe activity, boating is growing in demand 

New data from Boats Group showing Boat Trader and YachtWorld marketplace activity soaring in recent weeks prove water lovers have grown tired of “streaming” their way through today’s remote lifestyle. Boaters began to crave this year’s boating season more than ever after the declared global pandemic in March and were quick to turn their attention to browsing for boats and dreaming of better days on the water in April. Similarly, people who were previously on the fence about owning a boat are now showing strong interest as summer concerts, sporting events and travel plans have been canceled. 

In fact, more people are actively looking for boats now than a year ago, and current traffic (+26% YoY) more closely resembles midsummer volume than spring. As water access and marinas across the country are reopening, leads across all regions and classes are increasing. 

A closer look at that demand shows boats under 30 feet are currently receiving the heftiest volume of leads. Pontoon (+149% YoY), ski/ wake (+100% YoY) and freshwater fishing boats (+94% YoY) are generating the most interest. A view regionally shows that the Southwest, Plains and Gulf Coast areas are among the strongest in lead conversion, which, combined with the category data, suggests that river and lake lovers are the first to make boating their go-to social distancing activity.

Given the strong lead growth across the entire U.S. (+76% YoY), it is clear that many people will turn to boating for their social distancing activity. As pent-up demand continues to grow in the coming months, dealers and brokers should focus on nurturing prospects and building their pipeline.

To provide additional support to its industry partners as demand accelerates, Boat Trader and YachtWorld added new features to their marketplaces to help dealers and brokers merchandise their virtual and delivery services to make way for more sales. 

Boating appears to offer people a silver lining to an unprecedented reality. More and more people are eager to get outside, enjoy time with family and friends (at a safe distance) and get on the water. What better way to do that than with a boat?

If you’re a marine dealer based in the United States, you’re likely one of the 90 percent of dealerships that have applied for a Paycheck Protection Program (PPP) loan offered by the U.S. Small Business Administration (SBA).  

The question on many dealers’ minds is: So, what now?

Many of you who have applied and received these funds may be wondering how your business can use them in a way that helps your business stay afloat, and gets as much of the amount forgiven as possible.

That’s no surprise. The SBA had provided limited answers to those questions up until now, but has been promising more guidance would be coming.

Well, today we received some of that promised guidance from the U.S. Treasury Department’s release of some frequently asked questions around the Paycheck Protection Program. You can find the SBA document here.

The PPP is one of several Coronavirus Relief Options offered by the U.S. Small
Business Administration that many marine dealers have applied for and are now
putting to use; however, several questions remain about how to apply for
forgiveness of these loans.

This week, MRAA also received some guidance from Eric Craig of USA Specialty Lending, which is approved by SBA to originate and process PPP loans.

As a longtime friend of MRAA and someone who has spent much of his career in the marine industry, we asked Eric some questions to help dealers navigate these difficult times and PPP loans in particular.

_____________________________________________________________________________

QUESTION: Eric, you said that there are still a lot of funds available through the PPP, and recommended dealerships that have not yet taken advantage of the program consider it. Can you explain why you recommend that? I know a lot of dealers have concerns about applying for the loans because there have been so many unanswered questions about the program – and specifically about loan forgiveness.  

ANSWER: I’m sure every dealership has been affected by this pandemic. The funds are meant to give temporary relief for specifically these types of small businesses. The ability to have the loan forgiven, should the funds be used appropriately, offers very little downside. If a dealership can apply, and hasn’t already, they should do so soon. The second round of funds are estimated at over $100 Billion, giving qualified businesses and business owners the ability to obtain some relief.

QUESTION: For those dealers who have already applied for the PPP and received their funds, what advice do you have?

ANSWER: First, try to be patient. Lenders, just like dealerships, are awaiting further guidance from the SBA as to what documentation to collect and how the process for forgiveness will be implemented. Second, if you haven’t started already, collect payroll documentation, utility bills, lease payments or mortgage statements and bank statements for the 8-week period following the initial disbursements of funds. More detailed information from the SBA and your lender will follow, but it’s helpful if you start putting some of this together now.

QUESTION: We have heard that you have eight weeks from the date the PPP funds are deposited that it can be forgiven, if you use the funds to pay for approved costs. Is that right? Does that mean you have eight weeks to use any funds you want forgiven or eight weeks to apply for forgiveness for the funds you plan to use for approved costs?

ANSWER: Based on guidance thus far, the funds utilized during the eight weeks following initial disbursement are eligible for forgiveness. Keep in mind, 75% of the funds eligible for forgiveness must be utilized toward payroll costs.

QUESTION: After the eight weeks, you can either return what you didn’t use or any amount that has not been forgiven by the SBA (either because you used the funds on unapproved costs or because you didn’t apply for forgiveness in time) becomes a loan at 1% interest. Do we understand that correctly? Is that the same interest rate no matter what bank you went through?

ANSWER: This is a loan that happens to have the ability to be forgiven. If funds aren’t utilized appropriately or in their entirety, the borrower will have a six-month deferment and then a repayment period of 18 months. The interest rate, no matter the lender, is 1%. The funds can be repaid at any time, in full, if you so choose. However, I would read your loan agreement thoroughly as to the lender’s guidelines on prepayment.

QUESTION: What do you need to do within the eight weeks to get the PPP money forgiven? Do you send in something that shows how you have spent that money? Is that done on a portal or hard copy? Through your bank or directly with SBA?

ANSWER: As previously mentioned, start collecting payroll, rent, mortgage and/or utility documentation. While the documents vary per entity type. I’d like to think every lender will send instructions on what documentations is needed and how to submit. This documentation will go directly to your lender. It is your lender’s responsibility to apply for forgiveness. It seems there will also be a final certification the borrower’s representative must make regarding the documents provided and how the funds were utilized. This might be an SBA form or something your lender may provide. Further guidance has yet to be relayed on this topic.

QUESTION: If I understand correctly, an IRS rule published late last month suggests that companies that use PPP dollars toward their payroll and other covered expenses can’t then deduct those amounts from their taxes. Is that right? I think it’s important dealers understand this and plan for it, as it could potentially offset some of the loan’s benefits.

ANSWER: While this detail is important, I am not a tax advisor and any discussion of tax implications should be had with the dealership’s accountant.

QUESTION: What else should dealers know about participating in this program?

ANSWER: It’s a very simple application process if you already have a commercial banking relationship and they offer the SBA Paycheck Protection Program. There is also a finite window to apply. Once funds run out the program is over. There doesn’t seem to be any more funding going before Congress at this time.

Got more questions? Here are four places to turn:

• How to Apply for Paycheck Protection Program (PPP) loans
  
• Coronavirus Aid, Relief and Economic Security (CARES) Act One-Pager
  
• Webinar from MRAA Benefit Provider Bukaty Companies: How the Paycheck Protection Program Can Help Your Business
  
• Contact Eric Craig

As businesses across our industry fight to navigate the landscape of federal stimulus packages, there’s an untold story you should be aware of.

That is that the organizations the government designates to support their respective industries — which in this case means almost every single one of the marine trade associations you know today — are NOT eligible for the federal stimulus program.

As a 501(c)(6) non-profit trade association, the MRAA was created for the sole purpose of supporting and fostering the success of the marine industry. Our founding documents call it the “welfare of marine retailers” … or in other words the health, happiness and fortunes of those businesses. But 501(c)(6) organizations were left off of the list of organizations eligible for the PPP.

Despite this decision, over the last 45 days or so your MRAA team has worked tirelessly to support your business. They’ve produced more webinars in 45 days than they had planned for the entire calendar year. They’ve written and designed more pages of educational content than any single quarter in the history of this organization. They’ve flipped the switch on years (and more than $100,000) of online educational course investments to give every dealer – members or non-members — free access. They’ve had more conversations with decision makers in Congressional offices and at the state-level than any previous two-month period. They’ve battled for the “essential” status of retailers in almost every state. They’ve conducted and shared more research and best-practice-related blogs than any entire year previous. It’s been a herculean effort in support of our dealers and all despite the payroll reductions that we, too, have had to incorporate.

The MRAA is a non-profit entity and as such is focused on providing support much more than collecting revenue. Yet, in times like these, it’s so easy for businesses to think that their membership dues don’t mean a lot and are easy to trim out of their expenses. The exact opposite of that is true. Your membership dues are what make MRAA’s work possible.

I don’t know who had the authority to designate today #GivingTuesdayNow, a day designed to raise awareness of non-profits in these difficult times, but regardless, our team here at MRAA is pausing (after yet another great webinar, mind you) to recognize this movement and to ask for your support. Let me be clear, we’re not asking for a donation … we’re asking for you to support the MRAA in ways that will give you incredible return on investment and amplify our ability to advocate for you.

·       Renew your membership or join the MRAA for as little as $395.

·       Upgrade to Silver Membership for $995 and give your team access to 140 courses at MRAATraining.com.

·       Or Get Certified and gain access to a proven business template for your dealership.

Even though the MRAA is a non-profit, it is a business just like yours. Except we are unique in that without support from our industry, from the businesses and individuals we work so hard to support, we don’t exist. While we continue to fight hard to help create more opportunities for your business, we are also fighting to gain access to some of the same stimulus package opportunities for ours and other 501(c)(6) organizations.

We’ve heard plenty of experts tell us to be direct when making an “ask,” so that’s what I’ll do. We ask that if you find MRAA’s programs or services or any of the COVID-19 related webinars, documents, data, best practices, publications, communications or other resources of value, please support the MRAA and this incredible team by becoming a member.