Are we going back to the normal course of business? [EXCLUSIVE INTERVIEW]

Saint Hung, CEO of Universal Processing, an Inc. 500 Firm Serving Small Businesses

The financial markets have determined that the Coronavirus crisis is over and done with. The majority of public companies have regained the trust of funds and retail investors to return to all-time-highs in spite of uncertainty – it has not yet been fully determined whether the second wave of the pandemic, if there was to be one, will cripple the economy in the same manner the first wave did. Additionally the markets are months away from understanding whether “main street” businesses have come back to the same level of profitability, and whether they could repay debt. While Wall Street is not Main Street, the two coincide, and the current rally taking place in the markets now demonstrates a fair amount of optimism about getting back to the normal course of business, and soon.

It was my honor to interview my Mr. Saint Hung, Chief Executive Officer for Universal Processing, an Inc. 500 featured payment processing company serving SME clients across the USA. Very few people have greater insights than Mr Hung, as Universal Processing boasts over 20,000 businesses served and over $2B in Annual Processing Volume.  The company has recognized in industry’s Forty Under 40 for 3 consecutive years, and are the largest licensed ISO/MSP with a focus on the underserved business sectors, focusing on minority/immigrant/LGBTQ/women-owned businesses in the United States.

Are we back in business yet? Is everything back to normal for U.S businesses, or soon enough?

S.H: In NYC, and pulling information nationwide, the US small business/retail economy went from a 60-70% decline between March to April, followed by a recovery in May, pacing for a 35% decline from normalcy.  Having real-time data over a 50-State diversified portfolio of over 10,000 small businesses, it is looking like the recent protests, riots and looting are causing additional stress and detriment to the small business sector.  “Back to business” is going to take some time, as the United States of America is in the midst of airing some dirty laundry, which will take more time to recover from.

Are there any small business sectors which are getting closer to the “back in business” status?

S.H: It should come as no surprise that supermarkets, liquor stores, pharmacies and web-based businesses/many SaaS businesses have surged in volumes, but I would say that the rest of the SMB (small to medium sized businesses) market, especially the hospitality and travel sector, are far from being considered “back in business” in any healthy capacity.

What are your estimations in regards to how this will unfold in the future and when will main street be back on track?

S.H: As a New Yorker, I’ll never dismiss a moment to mention the resilience of the American spirit.  We’re in a rough patch, but I believe our citizens are the most adaptable of any on the planet.  That said, a realistic estimate of the US recovering as “one nation under COVID-19” will still take 3-6 months, as a sober estimate.

As you mention NYC – do you think it will struggle more than other regions in the USA because it’s been the hardest, and has been subject to recent curfews and looting?

S.H: NYC became the global epicenter of COVID-19 due to lack of accountability and action from the Federal government.  The high rate of spread and infections impacted NYC disproportionately to the rest of the US and the world, but I believe that this experience has taught us New Yorkers how to respond for future waves, while we await a meaningful solution not named hydroxychloroquine.  As of June 8th, 2020, we are in our 12th day of George Floyd protests, which are also the most rampant and serious in the country.  Many small businesses are being frightened by the recent looting and rioting, so I am already seeing consumer spending at a strong decline, much like in March/April.

Where does the disconnect between Wall Street and Main Street come from? Is it that Wall St is just more “forward looking” than smaller businesses who survive on a month to month basis?

S.H: After the recent quarterly earnings releases, US equities are at their highest valuations of all time.  I don’t think it’s an exaggeration to say that the wealthiest individuals in the country want to see these bloated valuations preserved, and that would be best achieved by re-electing the incumbent president, if history is any indicator.  I don’t think that Wall Street is “forward looking” at all, and actually believe that we’ve been in a bubble for some time.  Market manipulation has been rampant for decades and is as American as apple pie; it will again be the retail investor caught in the crosshairs of an extreme collapse.

Could the turbulent economy actually drive in a new stream of prosperity in which tech-oriented companies will end up on the upper hand?

S.H: This economy has impacted most tech companies not named Netflix or Zoom, but I believe that innovation and fierce competition for market share and survival will lead to the ascension of new and successful tech companies.

In your line of business, do you predict growth as a result of small businesses (particularly restaurants and bars) reopening and going more techie and/or under new ownership?

S.H: In the FinTech/Payments space, we are already seeing ourselves and our competitors scramble to provide e-commerce solutions for SMB’s, but this is just short term triage, and will not lead to an immediate expansion or growth beyond what we saw in 2019 or Q1 2020.  I strongly believe that the SMB space has a very tough 3 to 6 month period ahead of it, and the businesses that can dig out of these current crises will then be able to capture more market share than before.

Which economic indicators would you look into to determine how close are we to normality?

S.H: As a current small business owner, I’d say that we need to see a resolution to the current racial and political tension pervading our nation, a full re-opening of all cities, then a stabilization period for businesses to adapt and operate in the new societal paradigm of COVID-19 and social distancing, before we can say that we’ve attained a “new normal.”

To recap, the experts who are overseeing small businesses across the USA think that there could take some more time for recovery, and that current financial markets are bloated and askew, and as such – are not a good indicator of the actual economic recovery.

This interview was exclusively set for Times of Israel. We would like to thank Mr Saint Hung for his cooperation and willingness to share from his insights. 

About the Author
Alon Rajic is the Managing Director of Fintech firm Finofin LTD. Before that, he worked for XLMedia PLC as the Head of SEO, and helped the company grow from seed stage to a market cap of $200m.
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