The Paycheck Protection Program Is a Lifeline, but Not a Panacea
Right now in America, almost everyone is glued to a screen. Toddlers click on candy-colored YouTube videos while their telecommuting parents attempt to get some work done. College students watch their professors drone on in a small corner of the computer screen, which is mostly taken up by PowerPoint slides. In the evening, almost everyone old enough to own a credit card binge watches documentaries that are just disturbing enough, gawks at videos of the mansions where celebrities are quarantined, or clicks through news headlines with trepidation. For small business owners, though, the summer of COVID-19 is a different kind of house of horrors. You gaze at spreadsheets of your expenses, wondering where you are going to get the money to pay your creditors until you are allowed to open for business again. Fortunately, there are plenty of options for small business owners to borrow money or postpone payment on existing debts, but nothing in this world is free. A business law attorney can help you make the right choices to enable your small business to survive the stay-at-home orders.
What the Paycheck Protection Program Covers and What It Doesn’t Cover
Many small business owners rejoiced when they found out that the CARES Act include the Paycheck Protection Program, which allows businesses with 500 employees or fewer to borrow up to $10 million. Of course, that was when it looked like businesses would be reopening by Memorial Day, which now sounds like a very remote possibility. $10 million seemed to go a lot farther back then. You were optimistic about being able to continue processing payroll while your business was closed, instead of furloughing employees or terminating their positions entirely.
Keeping workers on the payroll is, in fact, the main purpose of the Paycheck Protection Program. Its real aim is to provide relief for workers, as much as, if not more than, employers. An unprecedented number of Americans have applied for unemployment during the COVID-19 crisis, and small businesses continuing to pay their workers, even if the company’s business activities have been suspended, will lessen the economic collapse. More companies will stay in business, fewer home mortgages will go into default, and the economy will recover more quickly after DC reopens.
Of course, payroll is not the only expense you have to keep paying while your business is closed. Therefore, the Paycheck Protection Program stipulates that you can spend up to 25 percent of your Paycheck Protection Program loan on a limited range of non-payroll expenses, such as rent, utilities, or mortgage payments. That doesn’t solve all your problems, though. What do you do about inventory that went to waste or loan payments on company-owned vehicles, for example? Simply, you can’t pay it all through the Paycheck Protection Program. You need to brainstorm with your lawyer about ways to reduce your expenses and find other sources of funding to keep your business solvent until you can reopen.
Let Us Help You Today
A resourceful small business lawyer can help you plan for the COVID-19 crisis and the long, slow recovery. Contact the Washington DC business law attorneys at Tobin O’Connor Concino P.C. for help today.