Pandemics and Payrolls

How to use the SBA’s new Payroll Protection Program to support your employees during the COVID19 shutdown.

By JOE SANTUCCI, Brook Capital Consulting ©2020

1 April 2020

“I just want to see if I can float them something until this thing is over,” said a Mississippi business owner about his employees during our telephone conversation two weeks ago.  He was, understandably, concerned about how he was going to make payroll while his business experienced an almost 60 percent decline in revenue.  At the time we were talking there were few options available to him.  But that’s changed in recent days.  The Small Business Administration (SBA) has added another tool to help small businesses support their employees during the COVID-19 shutdown.

The SBA 7(a) Payroll Protection Program offers qualified businesses up to a $10 million loan to cover eligible payrolls, interest paid on mortgages, rent, and utility payments.  With an interest rate of 1% and the possibility of total or partial loan forgiveness, it’s an incredible option that business owners should at least consider.  The intent is to sustain business payrolls and rotating expenses until they can be paid the old-fashioned way: with revenue from real operations.

The SBA’s payroll protection offer makes great sense for most small businesses.  If you have a mortgage, lease, and utility payments that were established prior to February 15th of this year, then this is basically free money.  You can keep your employees on normal payroll until you’re able to bring them back after government-ordered restrictions are lifted and your customers reappear.  This means you can, almost literally, pick up where you left off.  No new hiring efforts or new trainees to worry about, and no missing those important first few days of being open because utilities were cut off or landlords weren’t receiving rent checks. 

We can help you through the SBA’s new, streamlined process to get you started.  Most importantly, we can help you evaluate your business’s financial situation to make sure this particular SBA program is sensible for you.  It’s all about best-fit financing to help your business step forward despite today’s challenges.

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