COVID-19 Small Business Relief May Keep You Out of Bankruptcy

In unprecedented times, everything is changing from moment to moment. Gov. DeSantis first decreed a shutdown of South Florida, only to take that shutdown statewide the next day. Businesses that thought they might be able to stay open have seen their income plummet and then stop, customers slowed to a trickle or disappeared completely, and in the middle of this many businesses are trying to repurpose and repackage their services and products. Only essential businesses can stay open, but even essential businesses are going to have cash flow problems in this kind of atmosphere.

COVID-19 Small Business Relief May Be a Lifesaver

The Small Business Administration has numerous resources for small businesses to help them stay afloat in a difficult time as we face challenges that none have experienced in our lifetimes. I will break down the COVID-19 small business relief offerings down here, with links in each entry that will direct you to the appropriate page. While small businesses are eligible, certain nonprofit organizations, veterans’ organizations, tribal businesses, and the self-employed/independent contractors may also apply for COVID-19 small business relief.

• Paycheck Protection Program: Using eight weeks of prior average payroll as a benchmark, plus an additional 25%, small businesses may be eligible for up to $10 million with loan payments deferred for six months. If the business maintains its workforce, the portion of the loan used to cover the first eight weeks of payroll and other expenses will be forgiven.
• Economic Injury Disaster Loans and Loan Advance: Florida businesses understand disasters. Now the same types of loans are being made available for COVID-19 affected businesses. The loan advance can be up to $10,000, but the economic injury disaster loan program can make loans of up to $2 million in the loan advance does not require repayment.
• Small Business Administration Debt Relief: The SBA will provide debt relief to small businesses by paying the principal and interest of new 7(a) loans made before September 27, 2020, and will pay the principal and interest of current loans over the term of six months.
• Small Business Administration Express Bridge Loans: These are loans designed for those who have a current SBA Express Lender. The loans provide access to as much as $25,000 with less paperwork and are meant to tide you over until your SBA Economic Injury Disaster Loan comes through. The bridge loan will be covered in full or in part by proceeds from the economic injury loan.

Other Measures

Even with COVID-19 small business relief, there may be other measures you need to take in order to remain afloat. We are not talking about having a cash cushion or maintaining one’s financial health, we are talking about extreme measures to come out the other side of this crisis intact. Here is a quick thumb guide to increasing cash flow in the short term. Determine your absolute expenses – the “must” expenses – and what you need to simply make ends meet.

• Talk to your employees. Be open about the efforts you’re making to keep the business going and protecting their jobs. Don’t be afraid to ask for input, they may come up with some really good ideas.
• Determine which expenses are unnecessary or even detrimental. Look at the value they provide before you make the cut. If it is not absolutely vital, trim it out. You can put it back later.
• Go over your leases, outstanding loans, and current contracts. Negotiate for lower monthly payments even on your biggest expenses such as space and equipment rentals.
• Talk with your vendors about renegotiating your terms on accounts payable. In turn, try to be understanding when your clients are struggling to pay you. Remember, people always remember those who stuck with them through the hard times.
• What can you sell? Offload dispensable assets as much as possible. Remember, people are not going to have a lot of cash so you may not get the best price for what you’re selling, so retain the truly valuable assets.
• Contact your creditors and be honest about your financial situation. Discuss peering down interest and waiving late fees. Tackle the highest interest accounts first, and try to negotiate for forbearance. Some banks such as Chase are offering a 90-day grace period, but only if you sign up.

Finally, look at ways you can retool and revise. If you are in retail, you may be able to ship from your location even if your doors are not open. Sometimes it only takes adding a service to become an essential business. Think creatively and figure out what you can do in the face of so many things that you can no longer do.

The Road Ahead

COVID-19 small business relief is just one small step on our road out of the crisis. While most current stay at home orders run to the end of April, it may be much longer before we are anywhere near our now fondly-remembered normal. We are now speaking in terms of life and death and must all do our part to slow the spread of the virus so that our hospitals are not overwhelmed, and our scientists have enough time to find effective therapies and vaccines. We must all think of our neighbors, coworkers, customers, family, and employees and how to protect them from this terrible disease. We must more than ever be a community.

We’re Here

At Van Horn Law Group, we know that life doesn’t stop for a crisis or even two or three of them. That is why we are offering our free initial consultations by telephone and videoconferencing. We are essential to the people who need us the most, and we understand that. We will be here for you when the going gets tough, and we will see you out on the other side. Whether you need to renegotiate debt, file for personal or business bankruptcy, or simply get sound advice on how to move forward, we invite you to get in touch with us so that we can help.