These strategies apply to our current COVID-19 Crisis, or any economic downturn.
If you are a Small Business owner, you are getting conflicting messages. You can’t open without providing protection for yourself and your customers. But, you should pay your workers, open, and get going soon, once the State lifts the restrictions. And, you’ve got store rent payments, utilities, and other loan payments. Not to mention your food and housing payments at home! You may be able to weather the storm, or not. Here’s how to figure it out.
What to do now?
1.Conserve and prioritize your cash! Decide what’s essential! Utilities and rent for your business, and whatever employees you’ll need. Do contact your landlord and see if they will work with you. Same with any lenders, and credit card companies. Do what you can to reduce expenses now, but with an eye towards seeing what it will take to re-open or continue. If you got a Payroll Protection Program Loan, remember, you need to use 75% of the money for payroll for you and your employees in order to have it forgiven. The rules are here. And, here’s a link to the new forgiveness application so you can see what’s needed.
- Assess your debt level. Can you continue to service any personal or business debt? Write or type a list of how much the business owes—for credit cards, loans, etc. Totals, and monthly payments. Will the lenders work with you? How much are the rest of your expenses? Payroll, rent, utilities, etc. How much are your personal debts or credit cards? Are you able to keep up? Are you up to date with your income taxes, payroll and sales taxes?
- Project how much the business will gross when it reopens. Be brutally honest with yourself. Then do the math. Can you pay all of the expenses? What is left at the end of the month? If the answers to these questions are really that you don’t know if you’ll be able to keep up with your expenses, consider your options—should you open or close?
- Check your books, and organize your records. Use Quickbooks or other electronic programs to hook directly to your business bank account if you haven’t done so already. You’ll need to have good records to show payment of the expenses to apply for the PPP loan forgiveness anyway! You’ll also need a good accountant!
- Contact a Bankruptcy Attorney to see what your options are BEFORE using any retirement money or savings, to decide what your best options are if you don’t have the money to keep going! You still may be able to protect yourself, and save certain things, but only if you take the right steps!
We can help if you have more questions. We’ve been helping business owners and individuals for almost 30 years. We’re here to help you decide what’s best for you and your business. You might be able to file Chapter 7 Bankruptcy, close up shop and move on, or you could reorganize your business debt in a Chapter 11 or Chapter 13 if you are not incorporated.
And, we offer the new “Touchless Bankruptcy” so you don’t have to leave your house to get help!
Daniel J. Winter