Business Survival Amid Covid-19
By Cynthia Alloway, Partner/Managing Member – Accountability Team
The past month has brought about a roller coaster of emotions as the Coronavirus pandemic threaten the health of those we care about and love. The emotions range from worry about health, concerns about job security, financial fallout, supply chain for much needed goods and services, and total interruption of our normal routines. Amid this crisis there are also heartwarming stories of family, friends, and neighbors reconnecting in ways that had nearly disappeared from our modern lives. Many parents are recognizing the powerful impact that educators and child care workers have in their children's lives. Many families are coming up with new and creative ways to interact and working hard not to drive each other crazy.
As a service provider to the small business community I have been encouraged as my clients have reached out to me to learn how they can help their employees while maintaining solvency so that the employees actually have a place of business to return to once the crisis comes to an end.
For those of you located in the State of Florida there is a small business loan program called the Florida Bridge Loan which is briefly covered below with links to the website for this assistance.
As many of you know, the government passed a huge stimulus bills late last evening. Details are still coming out and this is a very fast moving and changing situation. This is an evolving situation called the Paycheck Protection Program. Brief details (as known at the time of this writing) are covered below with links to the website for this assistance.
I want to be clear that I am not advocating that my clients apply for loans. As always, I encourage my clients to establish and utilize emergency funds as much as possible to avoid taking on debt. However, with this extreme situation I am receiving dozens of calls, texts, and emails requesting information about these relief programs. If you are seeking relief through one of these programs, please use the links provided in the articles below. Be careful for any "offers" that don't go through the established processes for filing for these loans to avoid being the victim of a scam or fraud.
I also want to encourage business owners to "think outside the box" as we work our way through this crisis. There are many creative ideas that are being freely shared between businesses. Look for forums where you can tap into some of those ideas and maybe share some of your own. Also, if your business is currently shut down, take this opportunity to work "on" instead of "in" the business. Come up with a long term plan for rebuilding or boosting sales in the 2nd, 3rd, and 4th quarters; write some blogs or newsletters that can be sent out over the next several months. Volunteer some time to help out those in crisis in your community. You have built a business on specific skills – how can you use that right now to show good will to your friends, neighbors, and customers?
It is my hope and expectation that business owners who have run successful businesses for years will continue to enjoy success as you employ wisdom, caring, and support to your colleagues and staff during this challenge.
FLORIDA BRIDGE LOAN
- Must be a For-Profit Business established prior to March 9,2020 with 2-100 employees (does not include subcontractors)
- Applicant must demonstrate that the business has suffered a significant economic injury and is unable to meet its obligations to pay ordinary and necessary operating expenses
- Loan proceeds must be used only for the purpose of maintaining or restarting business operations; borrower must certify and may be required to prove same.
- Loan must be approved: Approval and loan amount is not automatic. Loan is underwritten through Florida First Capital Finance Corporation.
- The borrower must personally guarantee the loan. I.e. if your business does not pay back the loan, you are personally responsible for paying it back.
- Loan is interest free for one year. After that period, any remaining balance must be paid back at 12% interest.
- Website for more information is: https://floridadisaster.biz
PAYCHECK PROTECTION PROGRAM
- Federal Program intended to help small businesses (fewer than 500 employees) to cover payroll costs between February 15-June 30.
- Self Employed and Sole Proprietors may qualify under certain circumstances.
- Loans may be forgiven if the businesses uses the loan for payroll, interest payments on mortgages, rent, and utilities.
- Loan forgiveness will be reduced proportionately by any reduction in employees retained compared to the prior year and a 25% or greater reduction in employee compensation.
- Money cannot be used for stock buybacks or executive bonuses.
- Repayments can be deferred for 6 months to 1 year.
- Every loan document will be public. Your customers and peers will be able to see what you borrowed and how you utilized that loan.
- Loans will carry an interest rate of 4%. If a loan is eligible to be forgiven, the principle of the loan will be forgiven but the borrower will be required to pay back the interest on the loan.
- Visit SBA.gov/disaster for more information.