Help Desk: What non-SBA aid should businesses be applying for?

The launch of the Small Business Administration’s Paycheck Protection Program has been anything but smooth, experiencing technical, administrative and funding difficulties with each step. Lack of timely guidance and conflicting interpretations by lenders, as well as professionals, left many unsure about the funds that they would be entitled to.

On April 16, the agency announced on its website that it was no longer accepting PPP applications “based on available appropriations funding,” though Congress has since reached a deal to provide another $310 billion for the program. Also on April 16, the SBA announced no new applications were being processed for its Economic Injury Disaster Loan program, including EIDL advances. That same program is now due for a $60 billion infusion.But with these programs in such high demand, and as businesses’ cash flows remain erratic and many are unable to meet their working capital and liquidity requirements, they are now forced to change their operations and seek funding from alternative sources to enable them to weather the economic downturn.
The Federal Reserve introduced one such source, the Main Street Lending program, which offers four-year loans to businesses that employ up to 10,000 people or had 2019 annual revenues of $2.5 billion or less. The loan size ranges between $1 and $25 million, with the principal and interest payment deferred for one year.

Here in Maryland, the state’s COVID-19 Emergency Relief Manufacturing Fund offers up to $100,000 to manufacturers to increase existing capacity, or quickly pivot operations, to produce personal protective equipment (PPE) for hospitals and health care workers across the country. PPE includes items such as medical masks, suits, gloves, ventilators and thermometers.
There are two additional, smaller programs aimed at helping artistic organizations and agricultural businesses, which are being administered by the Maryland State Arts Council and Maryland Agricultural and Resource-Based Industry Development Corporation, respectively.

It is essential for each business to review its operations to determine whether they are eligible for any state credits, grants and other programs. One other such program would be the ExportMD Program that offsets international marketing costs by $5,000 for small and mid-size companies.

Moreover, many counties are currently collecting information to determine whether additional relief is required. It is important that businesses provide first-hand information to local governments about how they have been impacted to allow legislators to adequately assess the negative impact and determine the best course of assistance.

Internally, each business must take steps to identify how COVID-19 has impacted its enterprise. This can be achieved through cash flow analysis, which will assist in identifying immediate supply chain and workforce disruptions. Once those are clear, a business should make a budget and a forecast to determine its liquidity needs for upcoming months. A business should assess whether to expand on profitable processes and contract others, or even pivot its operations to a new model entirely. A company may need to reduce its cash outflows by delaying payments of certain obligations or reducing its workforce.

If the business cannot meet working capital needs, lenders may be able to provide additional credit or deferment on current liabilities. Additionally, we advise to contact your vendors to negotiate payments on outstanding invoices and future expenditures. With retroactive changes to the tax code, including allowances of net operating losses carrybacks and bonus depreciation on qualified improvement property, each business should evaluate whether tax refunds are available.

While the future is filled with uncertainty, it is important to remain informed and vigilant. As we get daily updates and new legislation, each business must make necessary adjustments and implement new strategies to reduce expenses and preserve value.

Vadim D. Ronzhes is a tax consultant at Rosen, Sapperstein & Friedlander, a Baltimore-area business consulting and accounting firm that supports middle-market businesses. He can be reached at VRonzhes@rsandf.com.