Frequently Asked Questions When Navigating Through the COVID-19 Crisis

We’ve been getting lots of questions about how to navigate a business through the COVID-19 crisis we find ourselves in. We will begin to post the questions and answers here and update it frequently as we learn more about the impact this will have on us in the coming days and weeks.

  1. How do I apply for assistance?
    • The government has made various loan options available through the Small Business Administration (SBA). SBA approved banks will process all loans applications. We have provided more information about which loan might be right for your business (and assistance with preparing loan packages) here.
  2. Should we revise our budget in light of current events?
    • There is usually no need to revise the budget until or unless your business is directly impacted. In other words, don’t make changes based solely on speculation or fear, but be prepared to pivot based on actual changes to your business. That said, it’s never too early to begin analyzing and preparing so that you can take action decisively.
  3. Which vendors should I pay first? And how much should I pay?
    • This is more art than science, and depends greatly on your relationship with your individual vendors. For example, we have seen many clients prioritize local vendors in times of cash shortfalls. One might also prioritize the smaller balances to take advantage of the “waterfall effect.” In other words, if you have a handful of vendors that you could completely pay off this week, then there will be more of next week’s revenue available for your larger vendors. 
  4. What options do we have besides layoffs and furloughs? 
    • One option that we have seen work to great effect is to offer a shortened work week with a corresponding reduction in pay. For example, going from 5 workdays to 4 with a corresponding 20% reduction in pay. This would allow you to keep paying more of your employees by spreading out the cuts (rather than cutting folks altogether). This is a good option if you are trying to keep your entire team together in the immediate term. Make no mistake, though, that a 20% pay cut could cripple many in this country, so don’t make the decision to do so lightly. 
  5. How do we collect our receivables while maintaining human compassion?
    • Communicate relentlessly. And employ the help of your sales staff and think in terms of your customers’ needs. Open ended questions are a great place to start.  How are you doing? How has this lockdown affected your business? What can we do to help you? Then you can shift to more pointed questions, still keeping their needs at the forefront. Do you need more inventory? Which would help you more, an early pay discount or more time to pay? Coming right out and asking for payment might not communicate the right message. But asking “Do you think you’ll be able to pay the outstanding invoices under the current terms? If not, how can best help you?” would probably be appropriate under most circumstances.
  6. Should 1099 independent contractors be included in my PPP application?
    • No. According to the current guidance, only wages for W-2 employees should be included. That can and should include owners who receive W-2 wages, when applicable.
  7. If I bank with multiple banks, do I have to apply for an SBA loan through the bank where I have my payroll accounts?
    • Not necessarily. Simply speaking, you are able to apply at any bank that will accept your application. And generally, if your business has a bank account, that bank will likely be able process your application. That said, some banks will only accept an application if you have a business account there. And some banks are giving priority to customers who already have loan accounts. More information about the PPP loan program is available here.
  8. If W-2 wages were higher in the first quarter of 2020, can we use that? Or do we have to use 2019 wages?
    • This is likely governed by your specific bank. The guidance seems to indicate you can use current wages, so an average based on a running-12-months might be an option. We are advising clients to have both available (12 months ended December 31, 2019 and 12 months ended March 31, 2020) when completing the PPP application for their specific bank. Here is a list of other supporting items you should have readily available.
  9. My bank isn’t accepting new PPP applications. Is there a list of banks that will work with non-customers?
    • Although the SBA has not released an official list, Fortune Magazine made one.
  10. I understand that the U.S. Government has extended the tax deadlines, effectively moving Tax Day to July 15, 2020. Does this apply to state returns as well? 
    • Not automatically. It depends on the state and the type of tax (individual, corporate, sales, payroll, etc.). The Florida Department of Revenue, for example, recently sent out email reminders that said, “Employer’s Quarterly Report (Form RT-6) for January, February and March 2020 is due. You must file a report for each quarter, even if no tax is due. To ensure the accurate payment of reemployment benefits, it is vital that reports are filed timely. If you file and pay electronically, you must initiate payment no later than 5 p.m. ET on Wednesday, April 29, 2020. If you file a paper report, your report and payment must be postmarked by Thursday, April 30, 2020.” However, it appears that Florida is waiving penalties for nonpayment in some cases. More details about Florida’s Department of Revenue COVID-19 response can be found here. Pease don’t assume that extensions are automatic or that penalties will be waived. Check with your particular state (and your particular situation) to be sure!
  11. What if I have student loans? Do I still have to make my payments?
    • No, at least not for federal student loans. It’s called a forbearance. And it’s automatic. In most cases, your lender will contact you directly (although many of them are behind). You can read about this and other COVID-19 details on the Federal Student Aid website.
  12. How do I apply for unemployment?
    • This varies state by state. If you are in Florida, this is the website, and here is a simple PDF we found that might assist you. Most states will be similar. We recommend that you do this early in the morning before the website is overloaded.
  13. I applied (or tried to apply) for PPP with my bank, but I haven’t heard much (if anything) in response. Did it work? When should I expect funding? Did I miss the deadline? Will I be left out? 
    • You are not alone! We’ve heard several variations and iterations of this question. And this response from a local Florida bank seems to answer it best, and likely echoes what many other bankers would say if given the chance:

      We are participating in the Paycheck Protection Program under the SBA as outlined in the CARES Act passed by Congress. We are keenly aware this program has been somewhat confusing both for banks and for customers. We have been accepting applications and processing them through the SBA online portal. As all banks are, we are awaiting final guidance on loan documentation and authorization information from the SBA. We are aware there are multiple stories in the news and on social media outlining big numbers that are supposedly already funded. However, based on our conversations with actual SBA representatives, we believe the numbers are referring to applications processed through the system, not dollars that have been funded by banks to borrowers. At this point, we continue to process applications received from our clients, but are carefully assessing the volume to ensure we are able to meet our commitments before taking on additional applications. It is our desire to assist as many businesses as we can, but must be prudent to ensure we have the capacity. Please reach out to your relationship banker if you have questions about the PPP program.

  14. Where’s my stimulus payment??
    • Well, we have some good news… Stimulus payments are now in process! You can track the status of your payment or enter your direct deposit information directly on this page on the IRS website. If you want to know more about the program, including how much you may be eligible to receive, you can find that information on this page.
  15. I received proceeds from PPP or EIDL. How do I account for it?
    • In the event you receive funds from the PPP program, we recommend creating an “Other Account Type.” Choose Other Current Liability and name it Government Assistance Loan (or similar). When it is forgiven, your CPA will have instructions on how to record the change from loan to grant.
    • If you receive an EIDL grant, we recommend creating an “Other Account Type.” Choose Other Income and name it Government Grant (or similar). In the event that additional EIDL loan money is received, those funds should be recorded using the Other Current Liability as noted above.
    • NOTE: Given its wide acceptance among small businesses, these options were written specifically for organizations using Quickbooks as their accounting software, but most accounting packages will have similar options.

If you have a question, comment below or ask us here! More questions and answers coming to this post soon. Please check back often!