One of my favorite aspects of the work I do is engaging with people and sharing knowledge. With so much confusion in the current climate, especially surrounding small business survival, I’ve been pleased to have opportunities to dispel some of the misinformation out there and bring clarity to extremely challenging topics.
Among the most recent appearances were ABC 7 Chicago, WRLR Radio, and Q&A sessions with State Representative Will Guzzardi — at his most recent Town Hall — as well as professional organizations Bookkeeping Buds and the Logan Square Chamber of Commerce. (See the Speaking Engagements section of my Services page for links to all the above and more.) My interview with Block Club Chicago went on to inspire a favorite recent blog post.
And at times I’ve even been so lucky as to share the stage with clients, most recently Chris Busse of Penguin Foot Pottery and Dinah Grossman of Spinning J Cafe & Bakery. These folks inspire me daily and are one of the reasons I do what I do (well, two of the reasons). Their companies have focused on taking care of employees above all else — not only their safety, but also their financial well-being and health benefits. And they have harnessed their own creativity, resiliency, and flexibility as true entrepreneurs to carve out a new space for their offerings in a vastly different world, redefining themselves in the process.
Spinning J is offering homemade comfort food and groceries — full dinners available for pick-up or delivery, along with take-and-bake rolls and their famous pies. The decision to stretch their prep time so that staff work 24-hours-a-day in shifts, and to have their own employees run deliveries, allows them to maintain social distancing while keeping the paychecks coming. And by offering grocery staples, they are helping their vendors and maintaining supply chains as well.
If you are a small business owner looking for ways to pivot your business and re-imagine yourself, see my recent blog post on Small Business Advice. If you run a professional or public organization and are looking for an impassioned speaker full of knowledge on small business relief options, reach out to me to see if we’re a good fit. And if you want to learn pottery or eat comfort food from the safety of your home — or any number of other amazing offerings — check out my awesome clients.
The Chicago Department of Business Affairs and Consumer Protection is no longer offering their usual onsite workshops, but they are announcing a few virtual ones — not a whole month at-a-time, so I’ll just append this post as I learn of new ones. Here’s what we know about so far.
Wednesday, 5/13 at 3:00 PM Webinar Protecting Yourself Against Business COVID and Cybersecurity Scams – Stop Perpetrators in Their Tracks Presented by the Better Business Bureau of Chicago and Northern Illinois and Sagin IT Services/Data Protection and Network Security
Better Business Bureau of Chicago and Northern Illinois and Sagin IT Services/Data Protection and Network Security will team up for “Protecting yourself against Business COVID and Cybersecurity Scams – Stop Perpetrators in their Tracks.”
Click here to register for the Wednesday, 5/13 Webinar.
Thursday, 5/14 at 9:30 AM Webinar Paycheck Protection Program & Other SBA Resources for Small Businesses Presented by the SBA Public Affairs Specialist Jessica Mayle
If your small business has been impacted by coronavirus, join this free online training to learn more about serveral funding programs to address the COVID-19 outbreak, including the Paycheck Protection Program. We’ll discuss eligibility requirements, how to find a lender, and timelines for disbursement. Bring your questions.
Click here to register for the Thursday, 5/14 Webinar.
Friday, 5/15 at 9:30 AM Webinar Manage Your Business Remotely Presented by JinJa Birkenbeuel, Birk Creative, A Certified Grow With Google Partner
In this live class, I will share the free and easy to access Google tools that can help you stay productive no matter where you are. In this session we’ll show you how to: – Update your customers with critical business information through your Business Profile, Google Ads, and your website. – Communicate remotely with your customers and employees with tools like Google Meets and Gmail, and how to access and collaborate on files with your team through Google Drive. – And we’ll share next steps and resources available to help you manage remotely.
Wednesday, 5/20 at 3:00 PM Webinar A Focus on Empathy: Storytelling in Branding Presented by Adam Arcus, VP, Creative at 1871
Learn the importance of storytelling in branding that engages empathy alongside design, multimedia, and copywriting with Adam Arcus, VP, Creative at 1871. Take away tangible and actionable methods on how to lead with empathy as a business in order to connect with your customers during the Coronavirus Pandemic including: memory making science, multimedia storytelling made simple, and the importance of narrative in a brand.
Click hereto register for the Wednesday, 5/20 Webinar.
Friday, 5/22 at 9:30 AM Webinar Small Business Capital and Coaching During the Recovery Presented by Accion Serving Illinois & Indiana
As Chicago’s economy starts to reopen, how can your business be best prepared? Join this presentation, with moderated Q&A after, in which Accion Serving Illinois & Indiana CEO Brad McConnell will discuss capital and coaching options for small business during the COVID-19 recovery period.
Click here to register for the Friday, 5/22 Webinar.
Wednesday, 5/27 at 3:00 PM Webinar Transform Your Dream Into a Real Startup Presented by Score Chicago
Do you have what it takes to start and run a successful business? If so, do you know what the start-up journey is like? Or what initial steps you need to take? This webinar will help you assess your prospects, give you the initial direction you need, and inspire you to move forward to realize your dream. The webinar will also cover pricing, promotion, competition and marketing to give you a competitive edge. Topics Covered in the Start-up Webinar: · Identifying Successful Traits · Assessing Your Journey · Navigating Organization and Regulations · Gauging Market Potential · Avoiding Failure
Click here to register for the Wednesday, 5/27 Webinar.
Friday, 5/29 at 9:30 AM Webinar Marketing Strategy and Tactic Presented by Chimbly Consultants
Are you wondering what a marketing strategy can look like? Are you interested in learning about how marketing tactics are connected to strategy? In this workshop, Francisco Ramirez from Chimbly Consultants will cover the basics of marketing starting with strategy. Participants will leave with an understanding of the importance of marketing strategy and what tactics to use and measure to be successful in business.
Click hereto register for the Friday, 5/29 Webinar.
To view the Paycheck Protection Program & Other SBA Resources for Small Businesses, click here.
To view the Resources Small Businesses During the COVID Pandemic, click here.
To view the Navigating the New Stay at Home Order, click here.
To view the Workers’ Rights and Resources During COVID-19 webinar-Spanish, click here.
To view the Workers’ Rights and Resources During COVID-19 webinar-English, click here.
Partner Webinars:
To view the Coronavirus (covid-19): Small Business Guiance & Loan Resources by The Small Business Administration (SBA),click here.
To view Coronavirus (covid-19) Small Business Guidance & Loan Recovery for Sole Proprietors by The Small Business Administration (SBA),click here.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Things are scary right now — we’re seeing how size and capital are rewarded in tough times, not just good ones. We’re recognizing that operating on cash flow and not having savings is risky. And we’re keenly aware of how our employees depend on their jobs for their health insurance.
But it’s not all grim… we’re not entirely powerless. There are loads of resources out there, and if we went into entrepreneurship in the first place, chances are we have some of our own: Creativity, Resilience, and Flexibility: – Creativity? Brainstorm. Imagine a new world, not a return to the old one. – Resiliency? You’ve likely overcome struggles before, or know other business owners who have. Tap into this. – Flexibility? Take off the blinders and open up your view to all the possibilities out there.
With that in mind, here are ten valuable pieces of advice for what to do next.
1) If you still have staff you’re paying, I recommend taking advantage of the Employee Retention Tax Credit that you get by reducing your required regular payroll deposits, and applying for the balance on Form 7200. I know that Gusto (my favorite payroll company) is helping many of its clients through this process, which provides immediate cash in the form of certain payroll tax payments that don’t have to be made (in essence an advance on the credit). Treasury has indicated that you cannot take ERTC and PPP at the same time (though it sounds like they are working on a way for folks to take advantage of ERTC and simply have it deducted from the PPP forgiveness should the business end up with PPP funding).
2) Payroll Tax Deferral – similar to the above, in the sense that you only benefit from this if you have staff still on payroll (or yourself if you are a shareholder-employee), but this one is just a delayed payment of the employer portion of Social Security taxes. Again, I know Gusto is doing this for their clients on request. And again, guidance initially indicated that you couldn’t do payroll deferrals and PPP, but has since indicated that you can defer these payroll taxes until the end of the PPP forgiveness period, and the original due dates for the deferment will stick. More info here.
3) EIDL – the Economic Injury Disaster Loans are still an option for farmers only. Only the advance is forgiven, and there’s no way to know how much of an advance you’ll get (though in general it seems to line up with $1K per employee), but if you need cash, you should apply. If you request $25K or less, there’s no personal guarantee or collateral required.
4) Regarding the Paycheck Protection Program: – Get your PPP application in order if you have not applied already. I’ve got a whole list of lenders accepting applications in this blog post. – Similarly, work with your accountant to establish a plan for tracking the loan for forgiveness, so you have everything set up properly from the moment the funds are received. There’s a lot we don’t know about the forgiveness calculations from SBA. Make a plan to structure your forgiveness-period payroll to ensure the maximum amount of the loan will be forgiven. – And make sure you have a business checking account! Some folks are using personal checking accounts for their business – these rules about this changed four years ago, but some were apparently grandfathered in, and these small business owners are finding that the banks will not even consider their applications as a result – even though they’ve been banking there for ages. The banks are prohibited from depositing PPP funds into a personal account.
5) Pivot Your Business: If you haven’t already, start redefining your business model now. Even once the stay-at-home order is lifted, it might be quite some time before people are comfortable shopping or dining or drinking out. Research alternative models; ask around as to what other businesses are doing; investigate new revenue streams; communicate with your employees.
Some examples: – switching to online sales and other new/expanded sales channels (even for service-based businesses like entertainment, makeup/hair lessons, art/hobby and cooking classes); – offering virtual shopping and curbside pickup; – pairing with other businesses to deliver/ship care-packages; – going to a 100% take-out model with a contactless pick-up window; – having staff take care of customer ordering and deliveries instead of GrubHub or Caviar, or switch to a co-op bike delivery service; – provide services for free and ask for tips, donations, or pay-as-you-can; – increasing your marketing and social media presence, improving your website; – offering in-demand products along with your usual offerings, such as groceries or alcohol; – teaming up with your local Chamber of Commerce to establish a virtual neighborhood store, and more.
This is likely the #1 most important thing you can do to come out on the other side once this is behind us. And don’t just take my word for it. Lots of resources are out there to help you reinvent yourself. Among them: five things to recognize now: you’re not alone; what you do now will determine your future success; recognize that the future has already changed; we can never over-prepare… and this too shall pass.
6) Go on unemployment. If you’re no longer able to pay yourself, or you’re paying yourself a substantially reduced salary, you may be eligible. Shareholder-employees have been eligible since Day One for the full amount (they receive W-2s from their own companies and have been paying into the system all along), and as of yesterday, self-employed folks such as sole proprietors and partners in partnerships are able to apply. Even if you received PPP funds, you can claim backpay for the period of time between when you stopped being able to pay yourself and when the PPP funds arrived.
7) Remember that there is currently no 10% penalty for withdrawing retirement funds – if you feel confident that you can survive this period but need cash now to do it, consider accessing those accounts now.
8) Cash flow forecasting is something I wish all small businesses did, but they don’t. Consider working with your accountant to build a cash-flow projection system to figure out how to get through this. CashFlowTool.com is a great resource, and they offer free webinars on how to forecast, if you don’t have a professional you can go to (or even if you do).
Once you’ve gone through the effort, you can then see: – Are there any weeks where it looks like there will be a cash shortfall? – If so, what is the plan to address that? – Can we adjust in- and outflows to attain a better cash position by:
Reducing days sales in accounts receivable
Extending repayment days in accounts payable
Negotiating better terms with suppliers on purchases
Reducing operating expenses
Delaying capital purchases
Sell equipment that is no longer needed
Run specials on any slow-moving inventory to convert it to cash
Have owners contribute additional equity or loans to the company
9) Apply for small business grants — the focus has been on PPP, EIDL, ERTC and other federal relief efforts, but remember that there are public and private resources available at the state, county and city levels as well. You can just google “COVID relief” and the name of your industry and see the various options.
10) And I know this sounds insane… but try to take moments, tiny little vacations, away from your anxiety. I have to tell myself this every day. There is so much that is out of our hands; we have to work on the things over which we have control, and try to let go of what we don’t. The world isn’t working the way we want it to, or maybe even thought it did. For a lot of us, that’s a shock, and the emotional weight of that can pull us down. To survive this, we’ll need to shake off the anxiety and plan for a brighter future.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
ABA Banking Journal reported last night that the SBA has updated its Payroll Protection Program FAQ confirming that PPP “borrowers who attempt to rehire employees that were laid off will not have their loan forgiveness amounts reduced if those employees decline the offer to return to work”.
The exact wording of FAQ #40 is here:
This is huge news for some of my clients who run restaurants, cafes, retail, and other types of businesses where working remotely is not an option, and where working conditions are cramped and staff are unable to maintain 6-foot social distancing. Understandably, some employees are hesitant to return to a job that puts their health and the health of their families and communities at risk, especially if those staff members or their loved ones are immuno-compromised.
There has been a lot of political talk about this situation, criticizing furloughed employees for this choice, but let’s all try to remember that the only folks making more money on unemployment are generally earning less than $45,000 annually — and these are the people we’re asking to put their lives in danger for our economic benefit. It’s not exactly a fair criticism, in my opinion.
That said, it certainly negatively affects the small business owners I serve, and I have been challenged by these dual needs pulling my heart in opposite directions, as I can empathize with both perspectives. The business needs to spend 75% of the PPP funds on payroll, and maintain 75% of the prior full-time-equivalent hours for their staff. So if staff are unwilling to return, then the entire PPP forgiveness is put at-risk.
This new FAQ lifts that burden for employers, which I applaud. It does make it clear that the unemployment benefits for those employees may be in jeopardy as a result, but at least the owner does not have to shoulder the burden of being the bad guy who reports them (at least, not according to this FAQ — state unemployment laws may have other requirements).
Two recommendations for business-owners who receive PPP funds and are challenged by this situation, where former employees do not want to return to a risky work environment because they are making enough on unemployment:
Offer returning staff a hazard-pay bonus to make it worth the risk. Obviously this isn’t an option for those who are immuno-compromised, since no amount of money is worth their life; but for everyone else, consider increasing their pay temporarily with weekly retention bonuses. This will increase company loyalty, help meet the 75% payroll rule for PPP forgiveness, and assist in rebuilding the business. You can easily set up a “Hazard Bonus” payroll item in your payroll software.
Point out to staff that returning to work will leave them additional unused weeks of unemployment pay for future use, if the business ends up having to close again after the PPP funds are exhausted.
Finally, some good news. Awaiting further guidance on PPP forgiveness and will be posting more as I learn more.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
I have a lot of small business clients in retail and services that could use some assistance pivoting their offerings online, and am hoping this webinar can provide a jumping-off point.
Presented by World Business Chicago – Join 37 Oaks Consulting, ChiBizHub, World Business Chicago and City of Chicago Business Affairs & Consumer Protection (BACP) for an informational webinar to help inspire you on ways you can shift, move or elevate your business to an e-commerce model.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
The popular and problematic Paycheck Protection Program is up and running again starting 10:30 am tomorrow, Monday, April 26th.
But given the number of client emails and texts I’ve received today on the topic, I realized that there is still a lot of confusion about what a small business’s next steps should be. So here are a few urgent reminders:
Apply Today — Do Not Wait Until Tomorrow
The SBA is opening their e-Tran system Monday, April 26th at 10:30 am — that’s when banks and other lenders are able to begin submitting their completed application packages from customers. In other words, don’t wait until tomorrow to apply. Make sure your bank has your information ready-to-submit the moment e-Tran goes live. If you haven’t already applied (or cannot find out the status of your existing application), get your completed information to your (possibly new) chosen lender today. This means pull together all your documentation now and submit it in one package. Do your banker and yourself a favor and avoid delays that will require them to follow up with you for missing information.
Confirm Status of Existing Applications
Because the PPP has gone through so much flux and so many iterations and guidance/ FAQ releases, a lot of early applications seem to have gotten “stuck” — the banks were not prepared for how to communicate with so many customers at-once, so in cases where there was missing documentation, some applications were held up in limbo. Most banks have been working through those piles frantically since the program ran out of money, in order to be ready for the second tranche — but if you have not yet heard from your lender about the status of your application, it’s time to check in with them now. Many banks, including Chase, have (finally) included a link to application status information on the customer landing page (you must sign in first).
If you have access to a real human being, such as a branch manager or loan officer, try reaching out to them if the usual channels aren’t working. I had one client show up in-person one morning when the bank opened — they initially told him they couldn’t assist with PPP issues; then he explained his unique situation, and it turned out they were able to fix the problem. But please remember — I beg you — that these are real people. They are overworked, are sometimes given poor training, do not have enough hours in the day to analyze the constantly-changing guidance thrown at them, and are often being forced to come into an office without sufficient PPE or social-distancing opportunities. They are exhausted, anxious, and yelling at them will not help. It’s not their fault that Congress wrote a sloppy law that allowed multi-million-dollar companies to access money that was theoretically meant for you. Be nice.
Apply With Multiple Lenders If Your Application Has Stalled
There has been a lot of confusion here — the rules still aren’t quite clear. According to many unofficial sources (most of them lenders), you may apply with multiple companies. What the law indicates is that you may not accept more than one loan.
So there’s a lot of complexity here. Obviously, applying with multiple lenders clogs up the system for other applicants. And while multiple applications aren’t against the rules, some banks are claiming that they could result in applications being voided or delayed.
But if not all lenders — and not all staff processing these loans — are created equal, then why should you be penalized because your bank (or more likely, your small business department within your bank) doesn’t have its act together? My advice (unofficial “don’t sue me” advice), at least to my own clients, is that if your bank isn’t communicating with you — if you don’t know the status of your existing application and have no idea if it’s even being moved forward — then by all means reach out to one or more other lenders.
From Brit Morse in a recent article in Inc.: But that doesn’t mean you should only apply at a single lender. The chaos of the program’s roll out along with the fact that different banks have deployed different resources and processes to address the influx of these loans, might necessitate applying at multiple lenders.
Also, for clients using the Gusto payroll platform, they have been offering since almost the beginning to connect its customers with lenders. Go here and then sign in — you’ll be given the option to submit your info.
Cross River Bank – I have had folks reporting good success with them. Divvy – Fintech company that has access to multiple lenders. First Bank Fulton Bank Fundera – I have had folks reporting good success with them. Fintech company that has access to multiple lenders. Funding Circle – Fintech company that has access to multiple lenders. Kabbage – Fintech company that has access to multiple lenders. Solera National Bank Womply – Fintech company that has access to multiple lenders. Zions Bank
If You Need The Money, Apply — Even If You’re Late To The Game
This second round is expected to go quickly, but don’t let that discourage you from applying. Rob Scott, a regional administrator for the SBA, told CNBC that “If someone didn’t qualify or didn’t apply, they should absolutely apply for the second round.” (Of course, this is insensitive blockhead who also said, “Overwhelmingly, the funds have been used for what it has been intended to do,” Scott said. “There are outliers. There are outliers in every program.”)
The SBA did not maintain a queue after money for the first tranche ran out — any application that was in-process was dumped. So when lenders go to the e-Tran system on Monday, they’ll be evenly-matched.
We have no way of knowing how long this disaster will last, and whether there will be a third wave of funding at some point. From Business Journal Daily: “Whether there is a third round of funding – Bank of America has suggested it would take $900 billion in relief to get all small businesses the money they need – will likely be determined closer toward the end of the second round.”
This will give you an opportunity to build a relationship with a lender that may prove helpful in the future in ways you can’t predict.
Forgiveness? Not So Fast.
I keep working on a spreadsheet to help my clients determine how best to spend their PPP funds for maximum forgiveness — and it keeps changing with each morsel of guidance we receive from the Treasury and SBA. For now, just know that for businesses that already received their funds, the SBA is working on developing the guidance for how business owners will prove they retained staff to have their loan forgiven. I’m sure I’ll be posting plenty on that here on my blog in the upcoming weeks.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
From the American Bankers Association at 8:52 am on April 25th:
With the Small Business Administration reopening its E-Tran system for Paycheck Protection Program applications on Monday morning, SBA last night issued guidance to help borrowers and lenders calculate and document the maximum PPP loan amount a business may be eligible for. The guidance covers several situations about which lenders have sought clarity.
The guidance addresses calculations and documentation requirements for applicants that are:
Self-employed with no employees.
Self-employed with employees.
Self-employed farmers who report income on Schedule F.
Partnerships.
Subchapter S and C corporations.
Nonprofit organizations.
Eligible nonprofit religious organizations, veterans’ organizations and tribal businesses.
Limited liability company owners.
“Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rules,” SBA added in the guidance. “The U.S. government will not challenge lender PPP actions that conform to this guidance and to the PPP Interim Final Rules and any subsequent rulemaking in effect at the time.”
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Many of my clients are self-employed (they file Schedule SE to pay payroll taxes on their income tax returns, rather than receiving a W-2 as an employee), and therefore are not required to pay into the state’s unemployment fund at the Illinois Department of Employment Security. This also means that they are not allowed to draw on the unemployment system.
However, with the current pandemic raging, the government recognized that these folks need the same safety net the rest of society can count on, and states were instructed to make benefits available to them.
There were a few problems with that. Although the federal government instructed states to cover self-employed people — this includes sole proprietors who have employees, as well as folks who don’t think of themselves as running a business: gig workers, independent contractors, and those performing odd jobs for a living — it unfortunately did not give states any guidance, budget or other resources for how to make that happen.
First-off, keep in mind that unemployment claims have skyrocketed. In one month, IDES has received more claims than in all of 2019. Staff are overworked, and being asked to come into an office instead of working from home, because data security issues have always required it. Many folks have become sick and had to take time off, or are struggling with childcare issues due to schools being canceled.
Then take into account the fact that most state unemployment computer systems are ancient in terms of technology. Many are actually written in COBOL, a language in wide use in the 1960s. So when these programs break, there aren’t a lot of software developers around who can fix them — to the extent that IBM is actually offering free COBOL classes to computer programmers (even beginners) in hopes they can help out some of these agencies. It’s already hard enough to work with these legacy systems… but reprogramming them to accept an entirely different application, documentation and workflow (self-employed people don’t have paystubs or W-2s to prove income) is a huge overhaul project in itself. (Which they don’t have time to do because claims have skyrocketed, they are overwhelmed, and understaffed.)
Furthermore, the staff working at state unemployment agencies aren’t trained to review this new documentation, or to make calculations as to the amount of benefits to which they’re entitled. Reviewing tax returns is simply not the same as reviewing paystubs and W-2s, and this will take some time — new rules will have to be devised, new procedures created, and then employee training will have to occur… all while a pandemic rages and folks are (see above) overwhelmed and understaffed.
So when I read comments like that of Morgan Ione Yeager from Highland Park, who is “appalled and disgusted” by the delays and claims, “there’s no reason why it needs to be this difficult,” I can’t help but wonder what she knows, about software programming and benefit calculation training while being overwhelmed with an unprecedented number of current claims and working onsite with insufficient protections… that I don’t.
Which is to say — this situation is indeed horrible, and difficult, and sad. But please remember these are human beings trying to make this happen.
Enter some good news. An entirely new system specific to self-employed workers is being written in a period of weeks in order to have things up-and-running as soon as possible, with benefits rolling out around May 11th, reports the Chicago Sun-Times.
In addition to the new system, other “upgrades include: recruiting retired IDES employees to come back to work; boosting IDES’ phone system capacity by 40% plus extending daily call center hours; opening another call center with 200 employees’ and hiring consultants to overhaul and build new IDES platforms.”
In the meantime, I recommend you continue to watch the news and the IDES site — please check it no more than once-a-day, to reduce the load and make it easier for others applying for benefits — and be ready with whatever you have that can support your calculation of your annual income, such as a tax return, 1099-MISC forms you have received for work performed, or a statement print-out of earnings from the company for whom you are a contractor. You may wish, as a former administrative law judge for IDES has recommended, to write a letter with the initial date you stopped receiving income and attempted the unemployment application submission, just to make sure you have backup illustrating you began the process (to me, this seems like it would clog the system up further, but if there’s any concern about your claim not being honored, it seems like a reasonable approach).
For more information on how unemployment benefits vary so widely from state-to-state, check out this great article. The number of complicating factors involved makes apples-to-apples comparisons almost impossible.
And… if you’ve got some free time on your hands and are interested in a career change, don’t forget about those free COBOL classes.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
New financial relief for student loan borrowers who were not covered under the federal CARES Act was announced by Governor JB Pritzker:
“Under this new initiative, Illinoisans with commercially-owned Federal Family Education Program Loans or privately held student loans who are struggling to make their payments due to the COVID-19 pandemic will be eligible for expanded relief. Borrowers in need of assistance must immediately contact their student loan servicer to identify the options that are appropriate to their circumstances. Relief options include:
– Providing a minimum of 90 days of forbearance – Waiving late payment fees – Ensuring that no borrower is subject to negative credit reporting – Ceasing debt collection lawsuits for 90 days – Working with borrower to enroll them in other borrower assistance programs, such as income-based repayment.”
To find out if you qualify for this relief, please contact the U.S. Department of Education’s Nation Student Loan Data System at NSLDS.ed.gov or 1-800-433-3243 for questions about federal loans. For private loans, please contact your lending company directly.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
I was honored to be interviewed for and quoted by Block Club Chicago in their article entitled, Chicago Small Businesses Shut Out Of Federal Government’s Loan Program. (It was especially interesting to be surrounded unexpectedly by some beloved clients and former clients in the same article.)
Of course, no article can publish more than a few words here or there by any one person, so I’m sharing the entire email interview Q&A here on my blog. Feel free to quote me.
What’s it been like to be a small business accountant this last month? Are you inundated with calls and emails?
Absolutely. The questions started right after the Families First Act came out on March 18th, with confusion about the requirement to offer paid sick and family leave, and how to get reimbursed by the government for it. Then the CARES Act came out on March 27th – and it’s been a more-than full-time job since then. Just the research and analysis portion is many hours per day… and responding to clients, writing blog posts and email blasts, and helping people with calculations has made it even busier than tax season usually is (which of course I’ve fallen behind on due to all of this).
It’s been impossible to get back in touch with everyone – there just aren’t enough hours in the day – so I decided on April 3rd to start offering a free daily Zoom Q&A for any client who’s interested, since so many people are asking the same questions, and we can all learn from each other’s experiences. That’s been a huge help, and has led to my doing similar sessions for other groups, like the Logan Square Chamber of Commerce, various professional accounting organizations, and hopefully soon, a Town Hall with our State Rep, Will Guzzardi.
There’s just so much misinformation out there caused by poor guidance, regulations that make no sense, and some terribly-written legislation that is so vague, it creates more questions than it answers. Add to that the panic everyone is feeling, and you get a lot of rumors. Dispelling those and clarifying what’s what has felt like the best way to contribute to the small business cause. I’ve decided not to charge any of my clients for work on COVID-19 relief resources, with the idea that keeping these businesses alive should be my main goal, or the fabric of the Logan Square community I’ve called home for over 20 years will be ripped apart. I don’t want the chains – those with capital to survive this period – to swoop in after all the small businesses disappear. We’ve got to do everything we can to keep them going.
What percentage (roughly) of small business owners who you work with are getting grants — city or federal — right now?
Among my clients, these are the stats:
EIDL – 5% of applicants PPP – 6% of applicants Chicago Resiliency Fund – 0% of applicants; in fact I don’t know anyone who has received anything from this fund, which was supposed to be a bridge loan until you could get other relief. IL Hospitality Grant – 0% of my clients who applied; though I know in actuality the number is closer to 5% overall.
To clarify, there are other sources for relief that do not require an application and approval, such as the Employee Retention Tax Credit, or the Payroll Tax Deferral Program – both of which an employer claims on their payroll tax return; but this requires that they are still paying their employees and does not account for those who do not have sufficient revenues or savings to make that happen.
Have any of the small business owners you work with gotten the PPP loan?
Yes, one was already funded, and two more have signed with confirmations from their bankers that the money is on the way. A couple were in the 72-hr waiting period and lost it. This is out of nearly 70 applications, that we spent the past three weeks preparing. I’m seeing similar low percentages among colleagues’ clients.
UPDATE: as of April 19, a total of five of my clients received funding.
Has the PPP loan been a source of frustration among small business owners you work with?
I don’t mean to be rude, but this is an almost laughable question. At least, it would be if everything hadn’t ground to a halt yesterday, leaving hundreds of thousands of applications stranded, and along with that, many businesses that may have to declare bankruptcy. I haven’t slept for two nights because of it. A dear friend is a Senior VP at a major bank and she shared the news of the funding running out the second it came to her. She said that is was among the worst days of her career – so much anguish and angst for their customers, so many people waiting for fund replenishment, irate and desperate clients full of ire and threats, and her own emotional exhaustion and anxiety through the roof. She said – and this rings so true for me as well – “It’s not my fault, but it is my problem, and I can’t fix it”.
But even before the funding ran out, there were so many sources of frustration:
There were no templates or calculations released by the SBA, and the regs and guidance were so vague that multiple rounds of guidance were released. The most recent was named the “Second PPP Interim Final Rule”, if that gives you any sense.
Bankers were so busy at their jobs that they couldn’t take three hours a day to do continuing education from the daily guidance their companies and the SBA/Treasury were releasing; this caused them to give inaccurate guidance to their customers, who would go to their accountants for help, and find that not even their accountants necessarily knew all the rules. And when they did, they’d have to go back-and-forth and accountants would effectively train their clients’ bankers on the regs.
Banks are required by the federal government to follow “Know Your Customer” and “Anti-Money-Laundering” rules, which made it almost impossible to take care of anyone who wasn’t a current customer. This had small business owners freaking out, if their bank was slow to respond and they tried looking elsewhere. Congress tried to tell banks not to do this, but the courts allowed it, since it was precisely because banks were trying to follow the previously-existing federal regulations set upon them.
Banks said they were processing applications in order, but that turned out to be a bald-faced lie for some. I know of folks who applied with Chase for example, on the same day, and one had their money in-hand by the 15th, whereas others were still waiting to hear back from anyone, their applications presumably sucked into a black hole.
There was a big exception that I see as a loophole in the law: allowing anyone in the hospitality industry to consider EACH LOCATION as separate – meaning a restaurant group or chain could apply for the $20M maximum for each of their locations, effectively giving big companies a major opportunity to grab funding meant for small-to-medium businesses.
I think perhaps most frustrating, though, was that it’s clear that companies with capital and resources hired attorneys and accountants to jump on this the second it came available. These bigger companies have bigger payrolls and therefore were more likely to request the full $10M per location (as opposed to about $20-50K per each of my clients). They also tend to have existing relationships with banks, such as a business Line of Credit, so they had a real person they could call and get in line immediately. They used up the funding, leaving little left for those without the resources to apply immediately.
Check out these stats on PPP funding compiled by a couple of my colleagues, and you’ll see how the average loan went down over time, supporting the theory that those with resources applied first, were approved first, and were granted more money.
Do you have any advice for small business owners right now?
Yes, quite a few suggestions:
If you still have staff you’re paying, I recommend taking advantage of the Employee Retention Tax Credit that you get by reducing your required regular payroll deposits, and applying for the balance on Form 7200. I know that Gusto (my favorite payroll company) is helping many of its clients through this process, which provides immediate cash in the form of payroll tax payments that don’t have to be made (in essence an advance on the credit). Treasury was initially telling us that you could not do this and PPP at the same time, but it turns out they are working on a way for folks to take advantage of ERTC and simply have it deducted from the PPP forgiveness should the business end up with PPP funding.
Payroll Tax Deferral – similar to the above, in the sense that you only benefit from this if you have staff still on payroll (or yourself if you are a shareholder-employee), but this one is just a delayed payment of the employer portion of Social Security taxes. Again, I know Gusto is doing this for their clients on request. And again, guidance initially indicated that you couldn’t do this and PPP, but has since indicated that you can defer these payroll taxes until the end of the PPP forgiveness period, and the original due dates for the deferment will stick. More info here: https://www.akerman.com/en/perspectives/interplay-between-paycheck-protection-program-loans-and-payroll-tax-provisions-under-ffcra-and-the-cares-act.html
EIDL – the Economic Injury Disaster Loans are still an option. Only the advance is forgiven, and there’s no way to know how much of an advance you’ll get (though in general it seems to line up with $1K per employee), but if you need cash, you should apply. If you request $25K or less, there’s no personal guarantee or collateral required. (Note: since the writing of this, EIDL funding has also been exhausted, but is likely to be replenished with the upcoming relief bill expected to be signed April 23rd.)
Regarding the PPP: – Get your PPP application in order if you do not already, and ask around to other small businesses who did get funded to identify a bank that has more of a success rate than others. Have everything ready-to-go the second that the PPP receives more funding. Keep in mind that the SBA has said that they are not maintaining a queue of applications that were submitted to them by banks. There is no saying whether your banker will keep your place in-line internally, either. So be ready just in case you have to resubmit your application. I have quite a few resources and a checklist on my blog at http://www.thedancingaccountant.com – Similarly, work with your accountant to establish a plan for tracking the loan for forgiveness, so you have everything set up properly from the moment the funds are received. Make a plan to structure your forgiveness-period payroll to ensure the maximum amount of the loan will be forgiven. – And make sure you have a business checking account! Some folks are using personal checking accounts for their business – these rules about this changed four years ago, but some were apparently grandfathered in, and these small business owners are finding that the banks will not even consider their applications as a result – even though they’ve been banking there for ages. The banks are prohibited from depositing PPP funds into a personal account.
If you haven’t already, start redefining your business model now. Even once the stay-at-home order is lifted, it might be quite some time before people are comfortable shopping or dining or drinking out. Research alternative models; ask around as to what other businesses are doing; investigate new revenue streams. Some examples: online sales, pairing with other businesses to deliver/ship care packages, going to a 100% take-out model with a contactless pick-up window, having staff take care of customer ordering and deliveries instead of GrubHub or Caviar, increasing your marketing and social media presence and improving the website, offering in-demand products along with your usual offerings, such as groceries or alcohol, teaming up with your local Chamber of Commerce to establish a virtual neighborhood store, etc.
Go on unemployment. If you’re no longer able to pay yourself, or you’re paying yourself a substantially reduced salary, you may be eligible. Shareholder-employees are already eligible (they receive W-2s from their own companies and have been paying into the system all along), and hopefully in a few weeks we’ll see sole proprietors and partners in partnerships able to apply. (IDES is simply not set up to receive their applications yet, as they need totally different information than W-2 employees. Neither their systems nor their staff have the ability to accept this info yet.)
Remember that there is currently no 10% penalty for withdrawing retirement funds – if you feel confident that you can survive this period but need cash now to do it, consider accessing those accounts now.
Cash flow forecasting is something I wish all small businesses did, but they don’t. Consider working with your accountant to build a cash-flow projection system to figure out how to get through this. CashFlowTool.com is a great resource, and they offer free webinars on how to forecast, if you don’t have a professional you can go to.
And I know this sounds insane… but try to take moments, tiny little vacations, away from your anxiety. I have to tell myself this every day. There is so much that is out of our hands; we have to work on the things over which we have control, and try to let go of what we don’t. The world isn’t working the way we want it to, or maybe even thought it did. For a lot of us, that’s a shock, and the emotional weight of that can pull us down. To survive this, we’ll need to shake off the anxiety and plan for a brighter future.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
