These are very challenging times for businesses in the Philadelphia region.
Tens of thousands of restaurants, retail stores, and other firms have been ordered to shut down, employees are being forced to work from home, supply chains are disrupted, and orders have been drying up. Many of my clients are increasingly concerned about whether their businesses will even survive this pandemic because no one knows how long the economic situation will last.
But most will survive. This situation will not last forever. Things will turn around and, I believe, strongly rebound. But in the meantime, if you’re running a small business you have to do everything in your power to hoard the most important asset you have — and no, I don’t mean toilet paper. I mean cash. To do this, I urge you to take these actions right away.
The Small Business Administration is now offering different kinds of loans to small businesses. Usually, the SBA just guarantees the loans extended by authorized banks and the process can take a while. But now, under its Economic Injury Disaster Loan Program, most smaller companies can apply for a loan directly from the SBA. Borrowing can be as much as $2 million and is at interest rates attractively ranging from 2.75 to 3.75 percent. Borrowers can pay these loans back for up to a 30-year period, or even sooner. I’m told that because the loans are direct, both the approval process and turnaround times are shortened so you can get the cash in your bank account quite quickly.
Congress should be passing a new bailout bill this week and many expect it to offer provisions for small businesses that will include relief for localities, relaxation of payroll taxes, and direct payments to individuals. In addition, a new bill is quickly gaining momentum that will allow small businesses to receive grants (not loans, so no payback is required) from the Small Business Administration that will help them cover their payroll costs through June 30. Every small-business owner should be keeping a close eye on the coming legislation and be prepared to act.
Pennsylvania, New Jersey, and Delaware have issued orders for non-essential or non-life-sustaining businesses to shut down. If your business is not essential, then, please, keep your people (and yourself) home and safe. However, if you believe that your business should also be allowed to continue, you can apply for a waiver both on the Pennsylvania and New Jersey websites. Remember that even if you’re not allowed to continue operations at your facility, both states are allowing you to keep doing business as long as everyone stays at home. If you need help getting your workers set up remotely, the big online conferencing providers such as Zoom, and Microsoft are offering financial incentives and discounts.
Right now, most states around the country are waiting for the federal government to provide them with assistance and are pointing their small businesses toward the Small Business Administration. However, Pennsylvania and New Jersey have a number of business loans and other resource programs in effect that can provide low-cost financing for companies in need. If you need free business advice or counseling to help see you through these times, you should reach out to the advisors at Small Business Development Centers at Temple, Lehigh and Rutgers Universities.
On Monday, the city of Philadelphia and the Philadelphia Industrial Development Corporation (PIDC) launched the COVID-19 Small Business Relief Fund, a $9 million-plus grant and loan program to support struggling and barely afloat businesses in the city. The fund is designed to help businesses with less than $5 million in annual revenue meet payroll and save jobs threatened by the spread of the virus. The city also is pushing back the the filing and payment dates for real estate taxes and some business taxes. For commercial and residential property owners unable to pay property tax by March 31, the Department of Revenue has extended the deadline 30 days. The due date for 2020 real estate taxes is now April 30. The deadline to apply for an installment plan to pay 2020 property taxes was also extended to April 30. Businesses can apply for fund assistance at www.phila.gov/COVID-19-business-relief.
The Treasury Department has extended the date of filing personal returns to July 15, including the requirement to make your final 2019 payments. However, if you think you’re due a refund from last year, then I recommend you get your taxes filed as soon as possible so that you claim that money. No refunds can be paid until all the forms are in. Talk to your accountant.
It was only just a few weeks ago that our biggest problem was finding people, right? My belief is that when the pandemic ebbs, businesses will get back to business quickly and the demand for workers will again be strong. New federal legislation is requiring employers with less than 500 employees to pay for sick and family leave time. However, there will be a tax credit available and relief from payroll taxes and if you have less than 50 employees the Department of Labor has the authority to exempt you from compliance if the policy would "jeopardize the viability of the business as a going concern.” A great summary of all your workplace considerations is on Philadelphia’s Fox Rothschild, website. Think long term — you will need these people (and they will need their jobs) sooner than you think, so communicate, educate and take care of them.
Your goal is to conserve cash. So go to your larger suppliers and vendors (you know who they are) and ask for help. Many big companies — such as Facebook and JP Morgan — are offering grants to small businesses. But other big vendors are pitching in, too. Local giants such as PECO and Comcast are offering programs to help not only individuals but also their small-business customers. Online lenders such as Kabbage and big banks from Capital One to Wells Fargo are waiving fees and extending payment deadlines. Even some landlords like Philadelphia’s Nathan Nichols are offering to defer payments. Why? Because, like Daniels, many big corporations want to “ease a little bit of stress” among their tenants and customers. Call your larger vendors and ask for help. If you’re like many of my clients, you’ll be encouraged by their response. They want to keep you in business as much as you do.
There is no sugarcoating it: This is a bad situation. And it will probably go on into the summer. If you’re running a restaurant, a shop or a business that has been closed down because of this pandemic, I am very much in sympathy. But we, as business owners, must rise to the occasion. We’ve got companies to run and employees who rely on us.
Take the steps above. Conserve cash. Weather the storm. We’ll make it.