by Wayne Titus, author of “The Entrepreneur’s Guide to Financial Well-Being“
Entrepreneurs and small business leaders are trying to figure out how to navigate COVID-19, from how to apply for loans and assistance to FMLA regulations. There’s so much information that it can feel like an endless maze.
To help, I’ve consolidated the many questions I’m getting from my small-business clients into these five essential tips. They should help you cover the essentials to navigate COVID-19 and set you on a course for what comes next.
How can businesses understand their options and develop a cash flow timeline?
As individuals, we instinctively keep a running check in our heads about when our bills are due and when we have money coming in. Now it’s time to consider your small business in the same light. Make a list of bills you owe each month — it could be rent, payroll, utilities, inventory, software subscriptions, etc. Next, look at who owes you money and when you can expect to see that money come in. Then, compare the dollars going out to the dollars coming in — are you ok, or will you be in the red?
If it looks like you’re going to be in trouble, it’s time to come up with a plan. Under the recently passed CARES Act, funds are available for small businesses that need help with things like payroll and economic injury disaster loans. The Small Business Paycheck Protection Program provides small businesses with funds to pay up to eight weeks of payroll costs including benefits. Businesses can also use the money to pay interest on mortgages, rent and utilities. The great news about this program is that the loan will be forgiven if it’s used in this manner, so if you’ve already let your employees go, you can bring them back and pay them using this money. The US Treasury website has more information on how to apply.
In addition to these options you may qualify for unemployment if you are self-employed or are a contractor and have lost income as a result of the coronavirus outbreak, if you are unable to work due to a risk of exposure to coronavirus, or if you can’t work because you’re caring for a family member due to coronavirus. This new provision covers freelancers and gig workers as well as self-employed individuals.
How can businesses gather the right information for any loan applications?
Again, the US Treasury website has downloadable applications. But I would also recommend working with your Small Business Administration (SBA) lender, if you have one, to ensure that you have the right information needed to apply. One problem we’ve seen is that if your business banker is not an SBA lender, it may be difficult to gain access to funds because all of the SBA lenders are overwhelmed. Many are prioritizing their customers over random applicants. If this is your situation, all I can say is just keep trying. In addition, you can look for state-level programs through your economic development corporation or your state government. Facebook is also offering grants to small businesses that have experienced disruptions from COVID-19, and that information is available at facebook.com/business.
How can businesses understand the impact of FMLA modifications on small business?
The US Department of Labor has created fact sheets for both employers and employees related to paid leave requirements You can find that information at dol.gov. In a nutshell, certain employers must provide up to 80 hours of paid sick leave at the employee’s regular rate of pay if the employee can’t work because either he or she has the COVID-19 virus symptoms, or is quarantined. The employer also must pay up to 80 hours of paid sick leave at two-thirds the employee’s pay rate if that employee can’t work because he or she needs to care for an individual who is subject to quarantine, or a child whose school or daycare provider is unavailable because of COVID-19-related issues, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Treasury and Labor.
Covered employers must also offer (to employees who have been with the company for at least 30 days) up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s pay rate, if the employee can’t work because of a bona fide need to care for a child whose school or daycare is closed because of COVID-19.
How can entrepreneurs work their plan and consult their advisers for assistance?
Assuming you’re an entrepreneur that already has an adviser you work with, now is the time to be in communication. Call and make a virtual appointment to discuss how to manage your cash flow and investments in the context of your tax situation. If your adviser doesn’t deal with your taxes, you may need to call in additional advisers. If you don’t have an adviser you work with, now would be a great time to find one. On my website, you’ll find an article I wrote on the 10 key questions to ask a financial adviser.
How can businesses take the right steps to ride out volatility and rebalance portfolios?
This is an area where a good adviser can really add value. The important thing is that you consider your situation holistically — including your business and your personal situation. Rebalancing is one tactic that is important to do to maintain your investment strategy, but there may be other things you can do, such as tax-loss harvesting, accelerating your retirement contributions or making Roth conversions. If you work with an adviser but aren’t sure you’re happy with how that adviser is helping you, now might be a good time to get a second opinion so you can begin to build a team you trust.
Wayne B. Titus III, CPA/PFS, AIFA is the founder of AMDG Financial and AMDG Business Advisory Services in 2002. Before that, he worked in two large accounting firms and had Fortune 50 clients. As a fee-only fiduciary adviser, Wayne’s loyalty is to his clients. AMDG Financial has assets of more than $150 million, and integrates tax, financial and investment strategies. Wayne’s latest book is “The Entrepreneur’s Guide to Financial Well-Being“.