Protecting Your Business During the Coronavirus Pandemic
Treasury Announces 90 day delay in payment of 2019 tax bills for individuals owing less than $1 million and corporations owing less than $10 million
The impact on local businesses of the COVID-19 virus is just beginning. There is more uncertainty than answers as to how long it will last and what the ultimate extent of disruption will be. We encourage you to take immediate measures to safeguard your business.
Maintaining adequate cash flow is always essential to business owners, and now preservation of cash is even more vital than usual. To help you through this crisis, we suggest taking the following actions to reduce your expenses and maintain your cash flow.
If you have any questions, please feel free to call us. We’re here to help you succeed.
Actions You Can Take Today
Below is a list of suggestions for your consideration in addition to what you may be doing already to preserve cash.
- Your 2019 federal personal income tax returns will not be due until July 15th. Additionally any payment which may be due with your 2019 tax return will be due on July 15th as well.
- Ask your bank to allow for interest only payment on any business loans until business returns to normal.
- Utilize your line of credit. If you do not have a business line of credit in place, ask for the availability of an emergency line of credit.
- Consider taking out loans from your 401(k) plan. Depending on your plan’s provisions you may be eligible to take a loan of up to $50,000 to help fund your emergency cash needs.
- Discontinue any automated retirement plan contributions until business returns to normal.
- Consider owner/officer draw instead of taking a weekly paycheck to minimize payroll taxes.
- Minimize any cash outlay to only those expenses which are essential for you to continue doing business.
- Suspend any payroll to household relatives such as spouses and children who may be on the payroll.
- Negotiate with vendors.
- Depending on your history with your current credit card providers, ask to skip a payment with no penalty or interest.
- Request a delay or modification of rent payments.
- Ask for longer terms from major suppliers.
- If needed, consider home equity as a potential source of cash.
- Consider Massachusetts and SBA disaster relief loans (see below).
Disaster Relief Fund Information
You may be aware that the state of Massachusetts is providing a $10 million Small Business Recovery Loan Fund to Massachusetts-based businesses impacted by COVID-19, and the U.S. Small Business Administration is providing low-interest federal disaster loans to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19) crisis.
We would like to caution you on relying on these loan resources as these loans may take several weeks to provide relief, assuming your business is eligible and accepted into the loan program.
While the Massachusetts loan fund is available today, the fund is limited and approval for the funds will be competitive. The SBA loans are currently being developed, however these loans are eligible to only a subset of small businesses in areas hardest hit by the impacts of COVID-19. In Massachusetts, these eligible areas are Berkshire, Hampden, and Worcester counties.
We are working with limited information on the process of applying for disaster relief loans, the criteria for determining loan eligibility, loan acceptance, and loan funds disbursement. As information becomes available, we will update our information on our website and our clients by email.
In the absence of federal funding, we encourage you to take more immediate measures to safeguard your business.
Massachusetts Small Business Recovery Loan Fund
Massachusetts is providing a $10 million Small Business Recovery Loan Fund to Massachusetts-based businesses impacted by COVID-19. These funds are available as of March 12, 2020.
Loan Fund Details:
- Open to Massachusetts-based businesses impacted by COVID-19 with under 50 full and part-time employees, including nonprofits (a negative financial impact must be verifiable).
- Loans are available immediately and with no payments due for the first 6 months, then 30-months of principal and interest payments and no prepayment penalties
- Businesses can apply for loans up to $75,000.
The recovery loan fund program will be administered by Massachusetts Growth Capital Corporation (MGCC). Your application will be made with MGCC. To submit an application for the MGCC fund, please complete the 2020 Small Business Recovery Loan Fund Application (Word Document)form.
- Website: Massachusetts Emergency Management Agency
- Website: Massachusetts Growth Captial Corporation COVID-19 Loan Fund
- Twitter: @MassEMA
- Press release: Baker-Polito Administration Announces $10 Million Small Business Recovery Loan Fund
The U.S. Small Business Administration (SBA) is offering designated states and territories federal disaster Economic Injury Disaster Loans of up to $2 million for small businesses suffering substantial economic injury as a result of COVID-19. (SBA, 2020). SBA funds will be made available to eligible small businesses as determined by SBA lenders.
As of March 16, 2020, SBA relief funds are eligible for the following counties in Massachusetts:
If your business residence is not in these counties, you are ineligible for relief funds. As additional counties are included in fund eligibility, we will update you by email and through our website.
- Federal disaster relief funds are being released only to states most impacted by the Coronavirus (COVID-19) pandemic, and upon a request received from a state Governor.
- Once a declaration is made for designated areas within a state, information on the application process for a relief loan will be made available to the affected community.
- Loans are available for small businesses, private, and non-profit organizations in designated areas of a state or territory.
- Loan interest rates for small businesses without credit available elsewhere is 3.75%, for non-profits the interest rate is 2.75%. Businesses with credit available elsewhere are not eligible for the federal disaster relief funds.
- Loans will have long-term repayments to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis and upon each borrower’s ability to repay.
- Website: U.S. Small Business Administration
- Twitter: @SBAgov
- Press release: SBA to Provide Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)