The Opening Dilemma

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Without a consistent national strategy and leadership, decisions on how to open are economy are left to state and local leaders.  While very few states have me the limited criteria published by the CDC, states are proceeding and are in various phases of re-opening. At the same time, we have failed to contain COVID-19 at the national level. We are not facing a second wave, as the first wave is not over. We see progress in former hot spots, while other areas are seeing record-setting spikes in cases and hospitalizations.

The challenge we face as business owners is how to adapt.

It is one thing to be closed or limited in operations and then re-open.  It is a whole different scenario if we continue to see slow downs, halts, and backtracking.  None of the CARES Act or other relief packages account for businesses need to scale back or close a second time (or third time, or more). Recalling employees only to furlough them again is a damaging cycle. It is hard to plan if you are unsure how you will be able to operate next month or next quarter.

When will this end?

COVID-19 will be behind us when we have a vaccine that is proven to be safe and effective. We will not know this until months after large percentages of the population have been vaccinated, possibly 12 to 24 months from now.  Until then, expect the need for remote work, extra safety precautions, changes to business conditions, and starts/stops with re-opening.

Near Term Flexibility / Long Term Plan

The best advice we have heard, and shared, is to be flexible in the short term while planning for your long term.  In the short term:

  • Understand the phases, guidance, and rules at the local and state level for your business. These may differ for each of your business locations.
  • Understand the phases, guidance, and rules facing your customers.  This is harder to track and manage, but possible if you ask your customers for this information when you engage with them. Doing so will identify issues and help you overcome obstacles.
  • Do not rely solely on local guidance and rules. Unfortunately, re-opening guidance and restrictions have become politicized.  While relying on local rules may provide legal cover, doing so may harm your business if employees or customers get sick.
  • Expect the uncertainty to continue. We scrambled to adjust to closing and continue to scramble as reopening rules come into play and change. Many of the adjustments we made were fine as stop-gap measures.  Now is the time to step back and formalize the changes.  Make sure that your policies and procedures are accurate and up to date. Make sure users are working on company systems and not “shadow IT” services. Make sure your data is on company systems and properly protected.
  • Consider making temporary changes permanent, at least in part.  Many of us realize that more jobs can be done remotely, and done well, than previously thought.  You can take advantage of this long-term in several ways, including reducing the size of your physical offices, recruiting outside of your immediate geographic locations, and offering staff more flexibility.  Doing so can strategically lower costs and improve productivity.

If you want to discuss your near-term or long-term plans, please contact us. We are offering free and discounted services to help you ensure your next steps carry you forward.

 

PPP Changes Ease Loan Forgiveness

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(Updated  June 24, 2020)

UPDATE:  The deadline to apply for a PPP loan is June 30, 2020. 

  • As of June 20th, approximately $100 Billion remains in the program and available for loans.
  • The modified forgiveness terms makes it much easier to ensure your loan is forgiven.

In an effort to address limitations of the Payroll Protection Program (PPP) loans, the Senate passed, and the President sigened, a House version of the legislation to update the program.

As a PPP borrower:

  • You can optionally extend the eight-week period to 24 weeks, making it easier to reach full forgiveness.
  • Your payroll expenditure requirement changes to 60% from 75%, but is now “all or nothing” instead of scaled based on percentages.
  • You can use the 24-week period to restore staffing and wages to the levels needed for full forgiveness. The deadline is also extended to December 31, 2020 from June 30, 2020.
  • You may be able to invoke one of three exceptions if unable to fully restore the workforce.
    1. You can exclude employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic.
    2. You can adjust calculations if you cannot find qualified employees
    3. You can adjust calculations if you are unable to restore business operations to Feb 15, 2020 levels due to on-going COVID-19 operating restrictions.
  • You now have five years to repay the loan instead of two years
  • Your interest rate remains at 1.00%
  • You are now eligible to defer payroll taxes under the CARES Act, even though you are a PPP borrower.

SBA Re-Opens Disaster Loan and Grant Program

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(Published 6/17/2020)

The Small Business Administration (sba.gov) announced earlier this week that small businesses can again apply for relief via the Economic Injury Disaster Loan (EIDL) program.  This includes applications for fee, up to 10,000 advances, regardless of the loan’s approval.

The interest rate is fixed at 3.75 percent and terms run from 2 to 30 years based on each borrower’s cash flow and ability to make payments. You can defer an EIDL for a year and can use the funds for “debts, payroll, accounts payable, and other bills that cannot be paid due to the impact of the disaster and that are not already covered by a Paycheck Protection Program loan,” the SBA wrote in a news release.

You can request an advance of $1,000 per employee, up to a combined $10,000. This advance will not have to be repaid, and small businesses may receive an advance even if they are not approved for a loan. If you have received a Paycheck Protection Program (PPP) loan, the amount that can be forgiven will be reduced by the amount of your EIDL advance.

Some agricultural businesses are now also eligible as a result of the latest round of funds appropriated by Congress in response to the COVID-19 pandemic.

Unlike PPP loans, you must apply directly through the SBA, and not through a lender. Click here to learn more or here to apply.