COVID-19 Small Business Resources
The challenges facing small business owners during the COVID-19 pandemic are growing every day. This page is meant to provide ideas and resources to small business owners to consider during this crisis. Nothing contained in the page is deemed to (i) provide legal advice or (ii) create an attorney-client relationship. If you have general questions, please email info@crow.legal to set up a free 30-minute consultation. This page and our City and Regional Resources page will be updated periodically as new information becomes available.
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Colorado and it's cities and counties are adding more COVID restrictions and cases increase? How does this affect… https://t.co/Klw9bTNyJN -
Colorado is rolling out an Equal Pay for Equal Work law starting the beginning of the year. How will these changes… https://t.co/jngMZRynPI
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The SBA simplified its rules on PPP loan forgiveness for some borrowers. How will this change affect you? #ppp… https://t.co/QhKS6o0VoH
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The SEC has changed its rules on finders. How will this affect you? #sec #businesslaw https://t.co/PPSjYu7x95
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What happens to your PPP Loan when you sell your business? Crow legal discusses the latest recommendations on th… https://t.co/veB5OvYZWH
Debt, Grants & Other Considerations
CARES Act Financing Resources
The Coronavirus Aid, Relief and Economic Security Act signed into law on March 27, 2020, establishes the “Paycheck Protection Loan Program” which offers loans to businesses who have been negatively impacted by COVID-19. Certain eligible businesses may obtain financing which may be forgiven. Additionally, the CARES Act makes available emergency EIDL grants. For more information click here.
Economic Injury Disaster Loans
The SBA makes available low interest, long term loans to organizations experiencing a disaster. With the entire United States currently declared a disaster area, your small business may benefit from obtaining one of these loans to pay current operational expenses during this time. For more information click here.
SBA EXPRESS BRIDGE LOANS
The SBA has a program for businesses organizations who already have a relationship with the SBA. These express bridge loans make available funds up to $25,000 for certain eligible businesses without the need to fill out all the paperwork necessary to obtain a traditional SBA loan or a Disaster Loan. These can help businesses temporarily overcome loss of revenue while waiting for an Economic Injury Disaster Loan to be approved. For more information click here.
Denver Small Business Emergency Relief Fund
The City of Denver has created an emergency relief fund, where small certain small businesses in the Denver area may receive a $7,500 grant to assist during this time of crisis. For more information click here.
Review Loan Covenants
Review existing loan documents and covenants to determine if lower revenues will cause default or violation of a loan covenant. If this contained in the terms of the loan, consider contacting your lender to request a waiver. Due to the circumstances, lenders may be willing to grant such a waiver.
Other Sources of Funds
Just because the country is in a crisis doesn’t mean the traditional methods of sourcing funds disappears.
Check with financial institutions who offer the following to see if there is a way to work together in a manner that makes sense for your business:
Credit Cards
Using existing credit cards may be the quickest source for additional funds. Contact your credit card company to increase your credit line or contact other credit card companies about new credit cards.
Lines of Credit
If you have an existing banking relationship, consider asking for a business line of credit or drawing down a current business line of credit. Another option is a home equity line of credit to inject cash into your business.
Investor Loans
If your business has investors that are in a stable cash position, consider contacting these investors to request a bridge loan to the company.
Capital Calls / Equity Issuances
An alternative to taking on debt, is to make a capital call to the current owners (if permitted by entity documents) or issuing new equity to raise funds.
Understanding and Projecting Your Cashflow
Cashflow Projections
Preservation of cashflow is key to surviving the COVID-19 economic storm. Create a cashflow projection of the estimated inflows and outflows of cash to determine if you will be in a cash crunch and how soon that will occur. When estimating future revenue, you may need to adjust historical amounts in anticipation of reductions in revenue. For example, you may need to reduce historical revenue by 50% if you anticipate collections will be down compared to normal.
Business Insurance
If you have a business insurance policy with disruption insurance, review your policy to determine if it provides coverage of a pandemic or a government mandated shutdown. Furthermore, you may be protected from failure to perform under other agreements pursuant to the language in your force majeure clauses.
Defer or Reduce Expenses
If cashflow projections show that you are heading for a cash crunch, start looking at the projected outflows for expenses that can be deferred or cancelled. Consider: (1) Asking vendors for extended terms for payment; (2) Asking lenders to defer business loan payments (some lenders have already implemented such policies to defer payments due to the COVID-19 crisis); (3) Asking landlords or mortgage lenders to reduce or defer rent or mortgage payments; (4) Canceling all non-essential expenses (look for subscriptions or memberships that can be paused or canceled); (5) Making only minimum payments owed on credit cards.
Employment Issues
The “Families First Coronavirus Response Act”
This act created a new sick-pay, family leave plan regime that requires employers with less than 500 employees to offer 80 hours (2 weeks) of sick pay and up to 8 additional weeks of family leave for qualifying employees. Employers with less than 50 employees may be exempted. The Department of Labor has clarified that all full time, part time, and temporary employees count as “employees.” Independent contractors are excluded. The federal government offers a 100% credit for the sick wages paid (up to certain limits) and a payroll tax credit for the family leave wages. Both credits are to be reimbursed to the employer through payroll taxes. As of April 1, the Act requires all businesses subject to its provisions to post a notice to employees informing them of their rights under the Act. Such notice can be downloaded here.
Colorado Work Share Program
Through the Colorado Work Share Program, the Colorado Department of Labor allows an employer to reduce the work schedule of 2 or more employees by 10-40% and allow the employees to seek unemployment benefits to supplement their income. This may be an alternative to mass lay-offs.
Negotiated salary deferrals or reduction of work
Another alternative to mass lay-offs, may be to ask employees if they will agree to reduce their hours or reduce (or defer) their salaries. Remember to document such decisions in writing.
Taxes
Filing Deadline for 2019
The April 15 filing deadline has been extended to July 15, 2020. In other words, you are no longer required to file your taxes, or even prepare an extension until July 15, 2020.
Tax Payments for 2019
Any balance due for 2019 taxes may be paid as late as July 15, 2020 (not April 15) without any penalties and interest being charged.
Estimated Tax Payments for Q1 2020
First Quarter Estimated tax payments for 2020, which are typically due on April 15, have been extended to July 15, 2020.
Modification of Net Operating Loss Rules
The CARES Act provides tax relief for both corporate and non-corporate taxpayers through the addition of a five-year carryback period and providing a temporary repeal of the 80% limitation for net operating losses. For certain organizations, this may lead to a significant tax refund to help increase cash flow and ease the negative impact felt by the COVID-19 pandemic. For more information click here.
Payroll Taxes
Several proposals have been made to either defer or allow for a “payroll tax holiday”. The “Family First Response Act” described above, includes a payroll tax credit for any family leave wages paid by an employer. In addition, the 100% wage reimbursement will reduce an employer’s payroll taxes, as the credit is claimed through payroll taxes. The CARES Act also allows for certain employers to defer certain parts of their employer portion of payroll taxes until 2022. For more information click here.
Employee Retention Credit
The CARES Act makes available tax credits for certain employers who retain their employees. Certain employers who have been forced to cease operations due to COVID-19 may be allowed a credit against applicable employment taxes. For more information click here.