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Managing Cash Flow Through Crisis

You need clear advice and actionable solutions now more than ever.

Especially as a small business owner, you are likely feeling the immediate pressure of maintaining the capital needed to sustain your business and meet payroll.

Wiss has set up a dedicated task force to mobilize around this unanticipated challenge. We are at the ready to help simplify the complexity of managing cash flow through crisis with clear advice and actionable solutions

Please reach out if you have specific questions or to schedule an advisory call.

Have questions regarding the Paycheck Protection Program (PPP)?

We've put together this comprehensive list of frequently asked questions and answers. 

Emergency Financial Relief

(Federal, New York, New Jersey Programs)

SBA Emergency Financial Assistance Programs

Through the Small Business Administration (SBA), the Federal Government is offering financial assistance programs to qualified businesses.  Below is a snapshot of each and here is a full comparison of the two programs.

Paycheck Protection Program (PPP)

Designed to help keep employees on the payroll

An additional $310 billion of funding was approved on 4/24/20 to replenish available PPP loans.

The CARES Act has put in place the Paycheck Protection Program which prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses.

More details can be found here

Who is eligible?
  • This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
  • Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standardsfor those industries.
  • Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
What are the loan parameters?
  • Loan payments will also be deferred for six months.
  • No collateral or personal guarantees are required.
  • Neither the government nor lenders will charge small businesses any fees.
  • Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.
  • Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
  • This loan has a maturity of 2 years and an interest rate of 1.00%.
How do I apply?
  • You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union,  and Farm Credit System institution that is participating.
  • Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.
  • Lenders may begin processing loan applications as soon as April 3, 2020.
What are the details behind loan forgiveness?
  • The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (75% of the funds should be used to pay for payroll costs, while the remaining 25% may be used to pay for utilities, rent, and interest on indebtedness) 
  • Employers may reduce compensation costs up to 25% without seeing a reduction in loan forgiveness
  • Borrowers may choose to calculate eligible costs using the Covered Period (CP) or Alternative Payroll Covered Period (APCP)
  • Payroll costs must be incurred and paid, but the payment may fall outside of the CP or APCP and still be counted as an eligible cost for forgiveness
  • Count payroll costs that were both paid and incurred only once
  • Borrowers will be required to submit the PPP Loan Forgiveness Calculation Form and PPP Schedule A
  • The SBA audit period will be 6 years from the date the loan is forgiven or repaid in full. You should maintain documentation until this period expires.
  • Borrowers will not see a reduction in loan forgiveness if headcount is reduced due to the following reasons: any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours.

Economic Injury Disaster (EIDL) Program:

If your business is permanently impacted by COVID-19

An additional $60 billion in funding was approved on 4/24/20 to support the EIDL program.

  • Up to $2 million in loans
  • Must prove economic injury

A new bill authorizes an additional $60 billion in funding ($50 billion for loans and $10 billion just for forgivable advances) for the EIDL program that had run out of money.

Who is eligible?

In general, all of the following entities that have suffered substantial economic injury caused by a disaster provided they were in existence on January 31, 2020:

  • Businesses with fewer than 500 employees
  • Cooperatives, ESOPs, and tribal small businesses with fewer than 500 employees
  • Sole proprietors
  • Independent contractors
  • Most private nonprofits
What are the loan parameters?
  • The maximum EIDL is a $2 million working capital loan at a rate of 3.75% for businesses and 2.75% for non-profits with up to a 30-year term
  • Payments on Coronavirus EIDL loans are deferred for one year
  • Up to $200,000 can be approved without a personal guarantee
  • Approval can be based on a credit score and no first-year tax returns are required
  • Borrowers do not have to prove they could not get credit elsewhere
  • No collateral is required for loans of $25,000 or less. For loans of more than $25,000, general security interest in business assets will be used for collateral instead of real estate
  • The borrowers must allow the SBA to review its tax records
How can I access an emergency $10,000 grant?
  • Eligible applicants for an EIDL can receive a $10,000 emergency grant within three days of application (through Dec. 31, 2020)
  • There is no obligation to repay the grant. To receive the $10,000 emergency grant, it is not necessary to have an approved EIDL loan. However, if you are able to secure a PPP loan, the $10,000 grant will be subtracted from the forgiveness amount
  • NOTE: The Paycheck Protection Program (PPP) created by the CARES Act prohibits borrowers from taking out two loans for the same purpose.
New York City Initiatives for Small Businesses

NYC Employee Retention Grant Program

Created to help companies retain employees as businesses face decreased revenue as a result of COVID-19

  • Eligible businesses will receive a grant covering up to 40% of their payroll for two months
  • Maximum funding of $27,000
Where do I apply?

visit the NYC Small Business Services website.

What are the eligibility requirements?
  • Must be located within the five boroughs of New York City and have no outstanding tax liens or legal judgments
  • Must have been in operation for at least six months and employ 1 – 4 employees across all locations
  • Be able to demonstrate the COVID-19 outbreak caused at least a 25% decrease in revenue.
    • Revenue loss – average revenue for two months in 2020 (after the COVID-19 impact) will be compared against average revenue for the same two month period in 2019 as well as average monthly revenue based on 2019 total revenue
What documents are needed to support he application?
  • Financial documents for the two months in 2020 demonstrating revenue decrease
  • Financial documents illustrating revenue for the same two months in 2019 (unless the company was not in business at that time)
  • Financial documents showing 2019 calendar year revenue
  • Most recent two months of payroll records
  • Signed Participation Affidavit verifying that the company is eligible for the program and that you are applying in order to retain employees
  • Bank account information
  • May also include some or all of the following:
    • Point-of-sales reports
    • Bank statements
    • Quarterly sales tax filings
    • 2019 tax returns
    • CPA-certified profit & loss statements

NYC Small Business Continuity Loan Program

Created to help businesses with fewer than 100 employees that can demonstrate at least a 25% decrease in revenue as a result of COVID-19.

  • Eligible businesses can apply for an interest-free loan up to $75,000
Where do I apply?

To apply, visit the NYC Small Business Services website and complete the NYC Small Business Continuity Loan Program application. Once complete, a link will be send to access an application on a partner lender’s site.

https://www1.nyc.gov/nycbusiness/article/nyc-small-business-continuity-loan-program

What are the eligibility requirements?
  • Must be located within the five boroughs of New York City and have no outstanding tax liens or legal judgments
  • Must have been in operation for at two years and employee fewer than 100 employees across all locations
  • Must demonstrate ability to repay the loan
  • Be able to demonstrate the COVID-19 outbreak caused at least a 25% decrease in revenue.
    • Revenue loss – average revenue for two months in 2020 (after the COVID-19 impact) will be compared against average revenue for the same two month period in 2019 as well as average monthly revenue based on 2019 total revenue
What documents are needed to support the application?
  • Financial documents for the two months in 2020 demonstrating revenue decrease
  • Financial documents illustrating revenue for the same two months in 2019
  • Financial documents showing 2019 calendar year revenue
  • Signed Participation Affidavit verifying the company is eligible for the program
  • May also include some or all of the following:
    • Point-of-sales reports
    • Sales reports demonstrating fees collected or earned income
    • Bank statements
    • Transaction level data from banks
    • Quarterly sales tax filings
    • Tax returns
    • Profit & loss statements
New Jersey Initiatives for Small Businesses

Small Business Emergency Assistance Loan Program

Created to provide  total of $10 million to NJ small businesses an non-profits to cover operating expenses and ensure continuity of business during COVID-19 outbreak

  • Maximum loan available of $100,000
  • Provides low-cost, flexible terms:
    • 10-year term and amortization
    • 0% interest rate years 1 – 5
    • Followed by NJEDA’s prevailing interest rate floor (capped at 3.0% years 6 – 10).
    • Payments are deferred for 12 months.
Where do I apply?

Completed applications will be considered on a first come, first serve rolling basis. Review the eligibility guide wizard here: https://assistance.business.nj.gov/

What are the eligibility requirements?
  • Physical commercial location in the State of NJ; home-based businesses are not eligible
  • Must have been in existence for at least one year
  • Must have less than $5 million annual revenue, have positive EBITDA in 2019, and be able to show a global debt service coverage ratio of 1.00 (as of 12/31/19)
  • Are able to demonstrate negative impact related to COVID-19 on or after March 9, 2020.
  • Are registered to do business in the State of NJ and are in good tax standing with the State.
  • Are in good standing with the Department of Labor and Workforce Development
  • Are able to provide a CEO certification that the firm will make its best effort not to lay off employees or will re-hire employees as soon as possible.
  • Any company owner of more than 20% will need to personally guarantee the loan.

NJ Entrepreneur Guarantee Program

This $5 million program was created to encourage private sector investors to provide additional working capital loans to NJ-based entrepreneurial businesses in which the inventors is already an equity holder.

  • Provides a guarantee of an investor loan advanced for working capital to an entrepreneurial company impacted by COVID-19. The investment must have been made after the date of emergency (March 9, 2020).
  • NJEDA will guarantee up to 80% of the total investment amount, not to exceed $200,000 per company.
Where do I apply?

The application process for this program is currently being designed and implemented. More information should become available soon: https://faq.business.nj.gov/en/articles/3835239-what-assistance-is-available-for-startup-investors-or-entrepreneurs-via-the-njeda-entrepreneur-guarantee-program 

What are the eligibility requirements?
  • Have a minimum of 50% of employees in NJ with less than 25 total employees at time of application
  • Have under $5 million in revenues
  • Having corporate headquarters in NJ (including at least one C suite member with a principal office in NJ)
  • Fall under one of these eight sectors: advanced manufacturing, information/technology, life sciences, finance and insurance, clean energy, food and beverage, advanced transportation, film and digital media.
  • Are registered to do business in the State of NJ and are in good tax standing with the State
  • Are in good standing with the Department of Labor and Workforce Development.
  • Investors must already have an equity interest and equity position in the company; investors can include individuals, trusts, and corporations. They do not need to be NJ residents.
  •  

Cash Flow Management

Cash flow is the lifeblood of your business. During this (or any) time of crisis, it is imperative to keep an eye on your cash flow and regularly monitor your cash position.  Instituting effective cash flow management may be the most important action you can take to navigate through challenging times. Here are some key fundamentals our Cash Flow Management Task Force is reviewing with clients.  Please reach out if you have specific questions or would like to schedule an advisory call to discuss how we can help you implement these practices. 

Create a Cash Flow Forecast

As a small- to medium-sized business owner, you may already review your income statement to see that the bottom line is trending positively. You should also be keeping an eye on your cash flow.  We recommend a weekly or monthly cash flow forecast to monitor your company’s overall liquidity position. Understanding the nature, timing, and amount of cash inflows and outflows is critical to projecting your liquidity position and maintaining healthy cash reserves.

Some forecasting numbers you may consider:

  • Review 2019 historical data to build a baseline for 2020
  • Payroll and Operating expense analysis including assumptions and savings
  • Line of credit analysis and loan funding analysis
  • Development of key revenue and expense assumptions to demonstrate the impact on cash flows to be expected

Ask us about the cash flow forecasting tool we’ve created to help facilitate this process 

Establish a Cash Flow Monitoring Team

Consider establishing a team with key people from across the organization to meet at least weekly, if not daily, to assess the company’s progress in managing cash. Key stakeholders may include line-level business supervisors from the accounting, finance, HR, operations, and supply chain departments who have visibility and insight into what is happening on the ground.

Some guidelines you may consider:

  • Aggregate the most up-to-date information so the committee can make effective strategic decisions
  • Establish triggers and bench markings so that when breached, require quick attention and action. Develop your game plan in advance
  • Send a company-wide communication informing the organization that the company has activated the “cash-flow management team”
  • All communications and major decisions should be communicated by and through this group

Optimize your available cash resources

Review your monthly, quarterly, semi-annual and annual recurring payments and see where you are able to cut costs. Pay close attention to those vendors who are paid by credit or debit card. You may be paying for services and products that you no longer use, or no longer meet the needs of your organization. This is as good a time as ever to eliminate the unnecessary overhead.

Some best practices to ensure availability of cash:

  • Establish a line of credit at all-time low rates and regularly “test it” if you have a credit line so it doesn’t dry up
    • Wiss routinely works with clients to complete lender due diligence requests, and we work with a group of business bankers to obtain affordable and reliable loans for our clients
  • Work with vendors on payment terms. You may be able to secure extended terms with long-standing trusted vendors
  • Sell idle assets like equipment that you are no longer using
  • Consider leasing equipment
  • Delay CAPEX and major purchases. Consider leasing equipment in the short term

Implement Accounts Payable and Accounts Receivable Automation

The requirement of working remotely has exacerbated the need and enormous value of automating accounts payable and accounts receivable.   Wiss clients who we have assisted in setting up automation have reported back how grateful they are in having streamlined these processes. 

Here are some of the many benefits to making the move to Automation:

  • Approve and pay bills anywhere, anytime through a mobile device (phone or tablet)
  • Remove friction from the process. Cut down on manual labor
  • Timely payment to vendors ensures you will remain a preferred customer
  • Real-time, online data available to make timely decisions
  • Easy to integrate with Accounting systems
  • Flexible and customizable reporting features for year end and financing needs

Reference Articles and Support Links

Coronavirus and Forbearance Info for Students, Borrowers, and Parents

Source: studentaid.gov

SBA Loan Assistance Programs

Source: sba.gov

Facebook $100 Million Small Business Grant

Source: facebook.com

What your travel insurance policy protects

Source: dfs.ny.gov

Loans of up to $50k for small businesses

Source: njeda.com

NYC financial relief for small businesses

source: nyc.gov

Small business resources

Source: business.nj.gov

0% Interest Loans for Entrepreneurs

source: kiva.org

Application for suspension of debt collection

source: ag.ny.gov

Cities and States that have paused eviction due to COVID

source: fool.com

Leverage Automation to Enhance Your Accounts Payable System

source: wiss.com

How to protect yourself from the financial impact of COVID.

source: www.consumerfinance.gov

Meet our Cash Flow Task Force

Matt Barbieri, CPA

mbarbieri@wiss.com

Paul Ursich, CPA, CFO Advisory

pursich@wiss.com

Ryan Silva, CPA, CFE, CVA

rsilva@wiss.com

Travis Miskowitz, CFO Advisory

tmiskowitz@wiss.com

James Jenco, CPA

jjenco@wiss.com

Lisa Calick, SPHR, HR Advisor

lcalick@wiss.com

Reach out to ask a question or set up an advisory consultation

Please let us know if you have any questions or would like to set up a consultation with our team.


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