​Inflation is top-of-mind for many Americans, including business owners. Small or privately-held businesses currently make up more than 99% of companies in the U.S. and inflation can have a large impact on these organizations if not properly planned for and addressed. Getting ahead of inflation is even more challenging for smaller businesses because they don’t usually have a dedicated, in-house finance and accounting team constantly reviewing financial statements, monitoring expenses and calculating profitability.

When inflation occurs, each dollar spent doesn’t go as far as it did before which ultimately decreases buying power. For example, consider a construction business. We’ve seen lumber, steel and copper all skyrocket in price during the last 18 months. As the business is forced to pay more for materials, its margins are decreased, and profitability is negatively impacted.

With many small businesses only “closing the books” quarterly, they could be three to four months behind needing to increase pricing to account for inflation. Unknowingly, a business could be selling at a loss. Business could be booming, but if prices are not adjusted accordingly, financial hardships could still be on the horizon. Small business owners must be vigilant about working with a team of professionals including their accountant and banker to ensure they are aware of inflation’s impact on their margins.

Another reason inflation can be especially challenging for small businesses is because they operate on lower margins than their big-box counterparts. Many times, these businesses are financed by the owner’s savings. This puts small businesses owners at a significant financial risk. Small business owners often have a majority of their financial security riding on the success of their company so it’s imperative they take steps to ride out periods of higher inflation.

Some of the inflation we are currently facing is expected to be transitory. We have an imbalance of supply and demand largely due to supply chain complications caused by the pandemic. This should temper over time. While the Federal Reserve (Fed) expects increased inflation for the remainder of 2021, it sees inflation diminishing into 2022.

While some inflation will dissipate, businesses need to consider what increased expenses are going to stick. One that stands out is wage inflation. As businesses struggle to fill open positions, many are offering increased compensation and improved benefits to attract and retain talent. As inflation settles and some pricing returns to normal, the increased payroll and benefits costs will not. Businesses need to consider how they will carry these increased expenses for the long term.

Inflation poses significant challenges, especially to smaller businesses. It is vital to work with a team of professionals to help your business navigate inflation and create a plan for long-term success and stability. To learn more about how the Univest Commercial Banking team can assist, contact us at 877-723-5571.

Univest Bank and Trust Co. is Member FDIC, SBA Preferred and an Equal Opportunity Lender.

Gina Loiacono, Community Engagement & Grants Manager
Habitat for Humanity of the Lehigh Valley
gina@habitatlv.org

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“Re” is such an interesting little prefix, isn’t it? Just two little letters completely alter the meaning of words. Throw that prefix on a word, and you can instantly start reading, writing, and talking about doing things again, or going back to a previous state of being, or arranging something in a different way. At the Habitat Lehigh Valley ReStore, those two letters are incredibly impactful. Yes, it is a retail store location, but it is so much more thanks to an R and an E. 

The Habitat for Humanity of the Lehigh Valley ReStore, located at 1053 Grape Street in Whitehall, is a treasure trove contained within the walls of the old Circuit City space. Once a shopper enters the storefront, they can be transported back in time surrounded by antique pieces and bric-a-brac of years gone by. Other shoppers, knowing it’s time to retire their outdated interior design and renovate their living space, may enter the storefront and be thrilled to find brand new, unopened, top-of-the-line, trending furniture, homegoods, and decor. Contractors, landlords, and home repair specialists alike can enter and find materials, supplies, reusable furnishings, new shipments of tile, flooring, and so much more! There’s lumber, windows, doors, cabinets, and plumbing supplies to be had. See, no day is the same as the day before or the day after at the ReStore...it is an ever-changing retail space of gently used and brand new items. 

Opened in 2013, the ReStore is a hidden gem perfect for the DIYer and home decorator on a budget. With products sold at a fraction of the regular retail price, shoppers will leave the ReStore with the knowledge that not only did they score a great deal, but they also supported the mission of Habitat Lehigh Valley- building strength, stability, and self-reliance through shelter in a world where everyone deserves a decent place to live. 

All revenue generated at the ReStore funnels directly back into the Habitat Lehigh Valley homeownership program and its endeavors. When you shop at the ReStore, you are helping low-income, hardworking families in the Lehigh Valley achieve their dream of homeownership. You are helping a young child have access to a secure and stable living environment. You are helping mothers and fathers establish financial success and develop goals for themselves and their children. You are helping families in need invest in healthcare and education. You are supporting something bigger than yourself...you are a member of the local community that may be shopping small, but impacting something huge. 

The ReStore’s services don’t begin and end at retail operations. Donations to the ReStore not only contribute to Habitat Lehigh Valley’s mission, but they also support and maintain a better, eco-friendly environment for everyone. As one of the most environmentally sound shopping and donation options in the Lehigh Valley, the ReStore has diverted over 8.2 million pounds of reusable goods from local landfills since opening in 2013. Additionally, the Habitat Lehigh Valley ReStore has recycled over 10,000 gallons of latex paint due to the remarkable efforts of staff, volunteers, and community support at monthly latex paint recycling drives held at the ReStore. Paints are recycled, remixed, and resold in a plethora of new colors, including exterior, interior, and chalk finishes. 

At the ReStore, staff, volunteers, and shoppers are part of the Habitat Lehigh Valley family. Their efforts are part of the blueprint for a thriving community which supports its homeowners and small business owners. There, reducing, reusing, and recycling are all actions taking place to make sure that no one goes without a safe, affordable place to live. The Habitat Lehigh Valley ReStore experience is a pivotal cog in the revitalization of a local community. Now is the time to reimagine how you shop, donate, and volunteer...reinforce your personal commitment to giving back to others, and rekindle a family’s dream of owning a home in the Lehigh Valley. ​

Twelve years ago, Bryan Shumway faced a major life change. He was losing his sight, his career as a welding inspector, and his way of life as he knew it. A routine eye exam revealed a serious problem. He underwent a lens transplant, and the diagnosis came later: retinitis pigmentosa. He now uses a cane to walk, relies on friends and family for rides, enrolled in online courses, and embarked on a whole new career in energy healing, public speaking, and life coaching.

But, the 55-year-old Whitehall, Pa., man did not get there alone. He did so with the sage counsel and support of others facing life-altering vision changes at Sights for Hope in Lehigh Valley and Monroe County. “It’s scary when you are losing your sight. You feel like your life is ending. I would highly encourage anyone to help seek the proper support. You’re not going to do this alone especially if you are losing your vision. You are going to need help and guidance,” Shumway said.

That is why we are raising the alarm about so many people putting off routine eye exams – as well as preventive overall health checkups – during the pandemic. It’s time to make those appointments – especially for young children whose healthy vision is critical to learning success.

With in-person kindergarten registrations canceled for the second straight spring and fewer people pursuing routine and preventative care, at least 15,000 children in the Lehigh Valley and Monroe County started school without receiving a vision screening or eye exam. Through data collected from our screenings, we know that approximately 10 percent of children have an undetected vision problem. So, with pandemic-related cancellations, we expect about 1,500 children in the Lehigh Valley and Monroe County to have unidentified vision problems. By starting these important years of early education without eye screenings, they are at a great disadvantage. About 80 percent of learning happens with vision.

To make matters worse, a recent study published in JAMA Ophthalmology shows an apparent link between extra at-home screen time during the pandemic with increases of myopia in children. That is why it is more important than ever for parents of children ages 3-5 to schedule an eye exam and for schools and daycare centers to offer them. According a 2019 brief from the CDC, on average of only 6 out of 10 preschoolers had their vision checked before the pandemic.

Adults should also pay attention to their eyesight and use the 20-20-20 rule to minimize eye strain given the increased amount of screen time during the pandemic. The 20-20-20 vision rule is a great tool to combat eye strain when looking at screens too much. The rule entails looking at something 20 feet away from your screen every 20 mins for a total of 20 seconds. With less time commuting to the office, adults are spending more time working and looking at screens for longer periods of time. According to Eyesafe Nielsen, in March of 2020, the first month of the pandemic, it is estimated that screen time per person 18 and up increased to about 13 hours a day.

Our health is paramount, and vision is part of that. There are several resources to help people maintain healthy eyesight. In the Lehigh Valley and Monroe County area, Sights for Hope, formerly Center for Vision Loss, empowers people with visual impairments to seize their independence and opportunity, and champions healthy eyesight throughout its communities. We combine a service of tradition motivated by Helen Keller in 1928 with contemporary practices and advanced technologies to offer vocational training, rehabilitation services, transportation to medical appointments and grocery stores, and social programs that enhance the quality of life for clients who face life with visual impairments.
 
For children, we offer free vision screenings that could potentially flag issues now that might impede learning later. In a typical year, we screen 8,000 or more children, most of whom are of preschool age. Our trained professionals use advanced hand-held screening devices that are highly accurate and especially effective with kids who are autistic, have other physical challenges, or have language problems.

While we are in a time in history when we are singularly focused on our health, we must remember that caring for ourselves also means we need to prevent illness. One major way to do that is to keep our regular medical checkup appointments and ensure that our eyes are every bit as important as other parts of our health.
 
Dennis Zehner is Executive Director and CEO of Sights for Hope serving the Lehigh Valley and Monroe County PA.

Gina Loiacono
Community Engagement Manager, Habitat for Humanity of the Lehigh Valley
gina@habitatlv.org

Like many people, I listen to music...a lot. All kinds...all genres… and my family would say that my music tastes are pretty eclectic. My favorite part of listening to popular music is when the lyrics + the music + real life relatability all come together to create a perfect human experience. Well, imagine my surprise when a song from a dated Broadway musical hit me over the head one day with that awesome combination on the way to work in the morning.

When Stephen Schwartz sat down to write the lyrics for “Beautiful City,” I’m absolutely certain he had no idea it would become a piece of music that would withstand the test of time. And there’s no way he could possibly have predicted that, later, it would go on to be used and rewritten in various ways to honor the victims of such significant events as the 1993 race riots in Los Angeles or the 2001 attack on the World Trade Center on that fated September day.

However, I’d really like to let Mr. Schwartz in on a little secret: his original 1973 lyrics speak very clearly to the heart and mission of Habitat for Humanity of the Lehigh Valley...and the beauty that is our very own Lehigh Valley area. Thanks, Stephen.

Take a look at this excerpt:

Come sing me sweet rejoicing
Come sing me love
We're not afraid of voicing
All the things
We're dreaming of
Oh, high and low,
And everywhere we go

We can build
A beautiful city
Yes we can
Oh yes we can
We can build
A beautiful city
Call it out
And call it the city of man

We don't need alabaster
We don't need chrome
We've got our special plaster
Take my hand (Take my hand)
I'll take you home (I'll take you home!)
We see nations rise
In each other's eyes (in each other's eyes!)

We can build (we can build)
A beautiful city (a beautiful city)
Yes we can
Oh yes we can
We can build (we can build)
A beautiful city (a beautiful city)
Call it out
And call it the city of man
· “Beautiful City,” music & lyrics by Stephen Schwartz, 1973

Read those lyrics again. Seriously. When carefully examined, these lyrics absolutely illuminate our community’s call to action in the Lehigh Valley to build affordable, safe, reliable housing for hardworking local families. At Habitat Lehigh Valley, we partner with local families to build strength, stability, and self-reliance...we build sturdy, safe, new construction style homes that allow new homeowners to build dreams and futures. (“We’re not afraid of voicing all the things we’re dreaming of…”) Building dreams and futures sure does sound like building beautiful cities, doesn’t it?

But, do you know what else we do at Habitat Lehigh Valley? We repair that currently existing beautiful city, too. In conjunction with Allentown homeowners under the 80% area median income and our newly invigorated Repair Program, Habitat Lehigh Valley is able to extend the call to build dreams and futures by repairing home exterior issues such as security, safety, and weatherization in the Jordan Heights area of Allentown surrounding St. Luke’s Hospital Sacred Heart Campus. Together, we address critical repair needs, ensure the ability to age in place in the comfort of a loved living environment, and afford current Allentown homeowners the opportunity to have their home shine once again. We don’t only build homes, but we also make sure that families can stay in their homes for many years to come. Habitat for Humanity of the Lehigh Valley knows that with homeownership comes great joy and stability. However, we also know that it also comes with great responsibility, long-term maintenance needs, and financial demand.

The Habitat Lehigh Valley Repair Program seeks to partner with local organizations, corporations, businesses, and the homeowners themselves to remove the blight that often burdens residents with costly repair bills. When every member of the local community comes together to shine a light on the needs of others and instantly jumps in to help, we will see “nations rise.” We won’t be “afraid of voicing all the things we’re dreaming of” as community residents and homeowners, because we are supporting each other surrounded by the very heart of our beloved Allentown. And while we “don’t need alabaster or chrome,” we do need vital support from donors and advocates for this tremendous program. With your help, we “can - indeed - build a beautiful city.” Help Habitat for Humanity of the Lehigh Valley today…”take our hand, and we’ll take you home”...where you are safe, secure, and settled in the comfort of your home for a bright and promising future.

If you or someone you know within the Jordan Heights area contained in the map below would benefit from this program, please contact Brenda Strockyj, Program Director, at brenda@habitatlv.org or 610 776 7737, ext. 300.

However, that is not the case for everyone. Hardworking, local families in the Lehigh Valley whose dreams of homeownership have escaped them time and time again would do anything for a little placard with one of those simple quotes...and more importantly, a place of their own in which they can hang it.

It is not news to anyone that the importance of our homes - our dwelling place - has been taken to extreme levels over the course of the last twelve months. Articles have been written about it...news reports have illuminated it...and it's right in front of us when we scroll through our social media. We spent time in our homes...A LOT of time. We worked, we learned, we played, we slept, we paced, we stressed, we laughed, we cried, we attempted to make banana bread, we ordered pizza, we binged “The Office” for the 400th time, and we isolated in our homes to keep our families and our communities safe and healthy. At this point, we’ll do anything to get out of said home and not spend every waking hour confined to those same four walls day in and day out. We can only watch so much Netflix before we really start to lose it and defy time as a construct.

On the other hand, when so many of us are longing to escape our homes and the monotony of quarantining, there are just as many of us who long to experience the security and comfort of reliable, affordable housing. They long for nights spent in the home...in the space that is comforting, safe, and necessary for all.

At Habitat for Humanity of the Lehigh Valley, we know that a house is more than simply a roof over our heads. A house provides shelter, safety, security, and the knowledge that there is a place to rest our heads at night, free from the burden of unreliable and unsafe housing. Renters in the Lehigh Valley are spending two-thirds of their income in monthly rent...how is that conducive to stable living in a time when financial demands continue to increase?

By: Tom Jordan, Central PA Market President, Univest Bank and Trust Co.

Interest rates are currently at record lows due to the Federal Reserve’s response to COVID-19 and will likely stay low until the U.S. has recovered economically from the pandemic. With such low rates, business owner borrowers may want to consider an interest rate swap if they are looking for a low, long-term fixed interest rate.

Fixed rate vs. floating rate
A fixed rate is an interest rate that will not change for the duration of a loan agreement. With this type of loan, businesses are immune to changing interest rates by settling on a long-term, fixed interest rate. For example, individuals who take out a loan with a 4% interest rate will pay this rate for the entire loan period and their payments will stay the same for the duration of the loan.

A floating rate is based on an index such as the London Inter Bank Offered Rate (LIBOR), or the Prime rate which is set by the Federal Reserve. One of the potentially attractive qualities about floating rates is that it’s a market-traded rate. This means the rate can float up or down depending on inflation and index movements which in turn impacts monthly payments on loans.

A floating rate will adapt to economic changes like we have seen in the past few years with the pandemic and economic turmoil, where a fixed rate will not. If a business owner with a fixed rate looks back over the last 10 years, they may find he or she could have potentially saved money in the long-term by utilizing a floating interest rate.

What is a rate swap?
Interest rate swaps allow businesses to exchange a floating rate for a fixed rate. Swaps might be ideal for borrowers with loan opportunities over $1,000,000 who are planning on holding the asset for the loan term and who are looking for construction-to-permanent financing, refinances or purchases financing. Some business owners might complete a rate swap with the goal of reducing exposure to fluctuating interest rates.

Is your business eligible?
Businesses must be Eligible Contract Participants to swap rates. There are multiple criteria to become an Eligible Contract Participant, such as having total assets that exceed $10,000,000, or multiple business owners with a combined net worth of $1,000,000. It’s important for business owners considering a swap to work closely with their lender to both ensure they meet one of the criteria to become an Eligible Contract Participant and decide if a rate swap is right for them. Understanding fixed vs. floating interest rates can help business owners ultimately maximize financial security and minimize potential costs.

In the current economic environment and with Federal interest rates at an all-time low, now may be a time to consider an interest rate swap. It’s important for business owners to understand how it works and how they could benefit the business and potentially save money in the long-
term. Interested in learning more about how interest rate swaps could work for you and your business? Univest is here to help. Contact us to begin a conversation.

Univest Bank and Trust Co. is Member FDIC, Equal Opportunity and SBA Preferred Lender.

By: Matt Gubicza, SVP and Team Leader, Commercial Banking, Univest Bank and Trust Co.
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During challenging times, it’s especially important to reflect on the lessons learned to help prepare for the future. 2020 was a year like no other and as we look back at how we navigated the unexpected, what comes to light is how we were able to support our customers in new ways. This ability to adapt to the needs of our customers highlighted what matters most to our team – trusted relationships. Relationships were the foundation on which the bank was built in 1876 and our commitment was, is, and always will be building connections in the communities we serve. One of the best things about Univest is that we are local which gives our customers access to local decision makers who live, work and play in the same communities they serve. This allows us to build sincere relationships with business owners – who are truly the heart of the community.


Supporting businesses in need
During the height of the pandemic, we were able to participate in the Paycheck Protection Program. More than 175 employees from across the company worked tirelessly to secure funding for 93% of our applicants. Thanks to the team’s hard work and dedication, we successfully originated 2,550 loans totaling approximately $510 million. This funded an estimated 46,700 jobs in our local communities.


While these loans were a much-needed lifeline, the businesses hit hardest by the pandemic continue to feel it today. In many cases, those businesses – mainly in the hospitality, travel, small retail, and experiential retail industries – are still seeing revenue down 50-80%. We’ve been able to support the customers who have been severely impacted by deferring principal and interest payments, assisting with securing funding through the PPP and EIDL programs and providing business advice based on our experience.


Helping businesses grow
Amid all of this, we’ve continued to lend and serve customers’ needs. After the initial shock and impact of the pandemic, many businesses were able to pivot and succeed in the work-from-home economy. These businesses have been able to maintain staff as well as strong cash flow. For those companies, 2020 has been a time of investment. They’ve been afforded the opportunity to make strategic investments and/or push their intended 2020 growth strategy despite the challenges presented by the pandemic. We have also seen businesses using their resources and connections to assist with PPE development and other necessary materials to operate on the front lines of the pandemic. In many cases, Univest has provided creative financial solutions to make those investments happen, helping to boost our economy and protect our front lines at the same time.


For the commercial bank at Univest, our approach has been and continues to be focused on helping our clients, whatever that takes. During good times, businesses may not think much about their bank, but in times of crisis, it quickly becomes clear that they need a reliable partner to make it to the other side. The pandemic created unprecedented challenges, but our team
built customized solutions and uncovered opportunities for customers to keep their businesses moving forward. While the pandemic continues into 2021, we remain dedicated to maintaining great relationships and building new ones as we help our customers achieve success.

Univest Bank and Trust Co. is Member FDIC, Equal Opportunity and SBA Preferred Lender.

By: Tim Chubb, Chief Investment Officer at Girard, a Univest Wealth Division

Many of our clients have been voicing concerns about the upcoming election. The common question is if they should pull out of the stock market until after the election. Does it make sense to sacrifice potential gains in favor of protecting current assets? To answer this, there two things worth addressing – the first is the election and the second is market timing.

With regard to the election, prediction markets are suggesting a Democratic sweep to control the White House, Senate, and House of Representatives. It is important to keep in mind that the market is forward-looking and I believe investors are generally aware of how Democrats have performed in polling recently, therefore, election results may not come as a surprise to investors and cause nearly as much volatility as some are concerned.

That being said, the Senate is very much up for grabs. If the Republicans are able to retain control, it could lead to more ‘status quo’ despite who ends up in the White House for the next four years. The Republicans currently have a 53-47 Senate majority but have 23 seats up for re-election in November while Democrats have just 12 seats up for re-election. The latest polls and prediction markets indicate the Democrats are likely to capture six seats and lose one seat for a net gain of five seats which is enough to gain majority control of the Senate for the first time since 2014. However, as is the case of the presidential election, the winners of close Senate races may not be known until well after Election Day when all the mail-in votes have been counted – a unique characteristic for the election this year due to COVID-19. Meaning, it could be some time before the market reacts, if at all, since the results may not be clearly known immediately.

Although Presidents can implement executive orders, legislation requires Congressional approval hence the importance of unified control under a single party of both legislative and executive branches. This makes the Senate the race to watch.

So far, the performance of stocks that are sensitive to a potential increase in corporate tax rates has not reflected the changing probabilities of the election outcome while healthcare stocks have underperformed of late. This leads us to believe that the market is still digesting this potential outcome and is more worried about the economic rebound than the election.

The major consequence of a Democratic sweep is the proposed tax policy which has garnered the most focus from investors thus far. While higher corporate taxes will reduce corporate earnings, there could be other policy measures that offset some of these losses such as a softer stance on trade policy, greater government spending, and other policy measures. With the economy on shaky footing, it is possible the Democrats will wait a few years before attempting to push through policy that would hit corporate earnings.
With regard to market timing, our mantra has always been to stay invested, stay disciplined, and take advantage of volatility in the market. Market timing, while tempting, involves getting two nearly impossible decisions right – when to sell and when to get back in.

As a long-term investor, trying to time market tops and bottoms is a fool’s errand and the evidence is overwhelming that most investors diminish their long-term returns trying to do so. Investors become more likely to chase the market up and down, getting whipsawed, buying high and selling low.

Through the end of last year, $100,000 invested in the S&P 500 from December 31, 2004 until December 31, 2019 has led to 9% per year in performance, growing that sum to $364,180. If an investor missed the best ten days, the return was only 4.13% per year – or $183,850 at the end of last year. In time, this problem has significant consequences as the next 50% move higher in the S&P 500 lengthens the gap between the person missing those ten best days and being fully invested by ~$271,000. We would recommend rebalancing into this weakness, hoping to take advantage of a volatile market environment and possibly catch some of the best prices in the market cycle.

The bottom line is the U.S. stock market has been resilient throughout its history and stocks routinely recover from short-term crisis, just as they have as recently as the March lows. By trying to predict the best time to buy and sell you may miss out on the market’s biggest gains, making the decision more costly than taking the speed bump in the first place. On Election Day, we’ll all wake up and trends like consumers buying more groceries online, companies spending more on cloud infrastructure, and folks going to the hardware store will still be relevant, making for exciting times to be an investor in our country.

We look forward to sharing more in the coming months as details become clearer on policy. While we’ll be watching the presidential and congressional elections, the economic recovery is a more important priority and focus for the market right now.

Given the ongoing changes due to the global pandemic and the significant investment implications, working with a financial advisor can help you navigate the market and create an investment strategy that matches your time horizon and risk tolerance. To have a conversation about your financial goals and how we can help, please reach out to a Girard advisor.
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This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. The information in this article, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.

Any index or indexes referenced are not managed and cannot be invested in directly. Past performance is no indication or guarantee of future results.