Coronavirus Federal and State Resources for Small Business Owners
It goes without saying that we are in unprecedented times as a country, and depending on the industry you operate in, very difficult decisions are going to need to be made by business owners. As businesses grapple with trying to determine whether to keep employees on payroll, institute a furlough, or lay off individuals, these decisions need to be weighed carefully. A lot of the businesses that we are in discussions with have had their businesses crippled because of the inability to generate revenue coupled with significant fixed costs that are not going away. My goal is to provide you resources from various local and national sources to give you a better understanding of what is available and the process to apply for state and federal assistance. Some of the decisions you are contemplating could play a role in whether you are eligible for aid and whether there is any loan forgiveness available if certain terms are met. At times like these I highly encourage a dialogue with your team of professional advisors (CPA, Financial Planner, business attorney and banking professional).
It is important to also understand how certain decisions can affect your business. For example, suspending or terminating a retirement plan could result in the inability to reinstitute a plan for at least a full tax year after the tax year a plan is terminated. Depending on your retirement plan document, terminating employees could result in benefits being paid out to participants, which is an unintended consequence that may create additional taxation and accelerated vesting of benefits. I feel strongly that a lot of the legislation is still to come and there will be guidance in areas such as this, so it is best to weigh all options and let the legislation continue to be interpreted and expanded on. At an absolute minimum I would encourage you to communicate with your suppliers and work to lengthen terms on accounts payable. It is very likely that your accounts receivable personnel are having a lot of these discussions with those who owe you money as a lot of businesses are in the same place. This could at least buy you time and allow you to improve cash flow temporarily. Get in contact with your lenders and see what they are willing to ease the burden of business loans and lines of credit. Lastly, talk with your landlords about rent forgiveness or reprieve if your business is not currently operational.
As a small business owner myself, I have started the process through the SBA to seek assistance. I figure if I am going to maintain staff with an undetermined loss of revenue, why not see what is available to me. Please feel free to reach out with questions as we all navigate these unchartered waters together.
State of CT resources:
https://www.cbia.com/news/small-business/small-businesses-sba-disaster-relief-loans/
-Information about the tax deadlines being extended for most business returns
-SBA loan provisions and how to apply
https://www.sba.gov/funding-programs/disaster-assistance
US Chamber of Commerce information on the CARES ACT for small businesses:
https://www.uschamber.com/co/start/strategy/cares-act-small-business-guide
All 880 pages of the CARES ACT signed into Legislation:
https://assets.documentcloud.org/documents/20059055/final-final-cares-act.pdf
Thanks for the trust you place in us to guide you and your business through this difficult period. This stimulus is nearly four times the prior stimulus of 2009 so there is a lot of money available for those in need. Let’s all work together for the sustainability of our businesses!
Best regards,
Matthew Carbray
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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual or business. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.