Auxilio Services, a transportation company impacted by the school shutdowns caused by COVID-19, needed fast access to capital to retain its bus drivers, maintain delivery service for schools, and support thousands of students with meals, laptops and homework. Could a financing partner help the company keep paying its people through the crisis? Would flexible financing enable it to shoulder some of the pandemic burden alongside its school districts? And could strong business relationships further its mission to help its communities and stakeholders?
As the early weeks of the coronavirus pandemic unfolded and schools across the country closed to ensure the safety of their students and staff, Cincinnati-based Auxilio prepared for a two-to three-week operational pause.
“The school districts basically said, ‘Don’t worry, we’re going to fund everything. We have our budget set through the year, and this looks like it’s just a temporary interruption,’” said Ed Dollin, CEO of Auxilio, which services 18 K-12 school districts in Ohio, Indiana and Michigan.
But then, two weeks turned into six weeks, which turned into the remainder of the school year. In addition, Michigan’s governor advised its school districts not to pay their vendors, leaving Auxilio with a revenue loss. As Auxilio navigated a cascade of challenges to its budget and operations, the school districts needed it to provide an extensive program to deliver meals, technology devices and homework during the shutdown.
In addition, the program had to be executed following the latest COVID-19 health and safety protocols outlined by the Centers for Disease Control, including personal protective equipment for all employees and additional sanitation of buses.
“Most importantly, we needed to keep our employees,” Dollin says. “We did not want these people to go to the unemployment line.” Retaining its valued employees, however, would put major pressure on Auxilio’s budget, Dollin says. “We knew we’d take a hit in the neighborhood of $1 million in lost revenue.”
Faced with extreme budgetary pressures and rapidly changing needs of school districts, Auxilio turned to its banking and equipment finance partners, KeyBank and Key Equipment Finance, for counsel. Pre-pandemic, Auxilio had worked with Chad Owens and the Key Equipment Finance team to refinance the company’s entire bus fleet, simplify payments, and save a considerable amount of money through a lease structure that matched payments with the company’s school-year obligations.
With the coronavirus crisis deepening, Dollin was on the phone daily with Owens, vice president of Key Equipment Finance, and Joseph Wilson, relationship manager/banker for KeyBank. “Joe and I were on the phone together at midnight one night and again on a Sunday morning,” Dollin says. “I cannot say enough about these people.”
Wilson and the Cincinnati team led by Mike McCuen, market president, helped Auxilio develop a plan to complete and submit its application under the Paycheck Protection Program (PPP), which resulted in Auxilio receiving Small Business Administration (SBA) approval of more than $1 million, enabling the company to retain its 440 employees and shift their bus routes, schedules and tasks to deliver thousands of meals each week to children in need throughout the 18 districts.
“When I was first referred to Ed by a mutual friend, I explained how KeyBank would be able to build a relationship that understood the unique aspects of his business,” McCuen says. “This was critical to winning his relationship, so I was thrilled to see how the business banking team and Key Equipment Finance delivered on that promise.”
As with most businesses responding to the pandemic, Auxilio’s situation was more complex. Its contracts with school districts remained mostly intact, but while the PPP loan went a long way toward maintaining operations, the funds didn’t fully cover all payroll. Given the budget shortfall, Auxillio management (and some employees) accepted reduced pay to bridge the gap. The shared sacrifice is worth it for the Auxilio employees and school children, Dollin says. “We’ve reduced the costs to districts through the PPP loan and enabled our employees to stay fully paid.”
With its COVID-19 budgetary crisis averted, Auxilio’s bus drivers and staff—two to three people per bus—were making twice-weekly stops throughout the 18 districts, delivering several thousand meals a week.
To the families, Auxilio’s employees were heroes who, instead of wearing capes, were dressed in personal protective equipment costumes of masks, face shields and gloves.
In this and other ways, Auxilio’s employees played a larger role during the coronavirus outbreak, serving their communities as points of contact for the school districts. This has even included employees helping cafeteria staffs to pack meals so older workers can stay safe at home.
“This is about the people who work day in and day out,” Dollin says. “They are the ones that make this happen. Yes, it’s my company, but it’s these people, as I call them, ‘the boots on the ground.’ They are just phenomenal. I’m so proud of them.”
To Key, Auxilio is a business that exemplifies the power of partnership, Owens says. “Ed was able to hire back his drivers to deliver food to needy children throughout his school districts and has delivered over a million meals so far.”
Now, as a result of its exemplary response to the crisis, Auxilio is getting calls from other school districts for new business.
Dollin knows whatever comes his way requiring banking and financing expertise, he can turn to Key for answers. “Between Joe and Chad and Mike, this has been a great relationship—fantastic. It could not have happened at a better time. These people have stepped up. They are great to work with.”
It is difficult to know what will come next for the school districts as they seek solutions to continue educating students while keeping them safe from the virus, Dollin adds. “There are lots of waters to navigate here. We don’t know what the future will bring. Key also is looking ahead for better times, Wilson says. “We look forward to providing financing expertise to Auxilio again, and we hope that next time, it is a need driven by growth rather than a global pandemic.”
To get the most from your banking and financing relationships, KeyBank and Key Equipment Finance are here to help. Talk to one of our experts.