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I applied for federal loan assistance and learned that the funds have been exhausted. What do I do?

Question to the DL: I own two environmental companies. Both firms have zero revenue and mounting expenses especially now due to shut down caused from COVID-19. I applied for federal loan assistance and learned that the funds have been exhausted.  The environmental practice was already on its way down when the US EPA soften its stance on enforcement and monitoring in South Florida.  For the first time since 1993, I have no idea on what to do and how to survive through this?

DL Answer: Thank you for your question. I appreciate the trust that you put in me to ask. :> Here is my take on it.

As we all know, cash is king. The first thing that you need to do is to take advantage of every AP payment deferrable option available to you. Most large vendors are allowing deferments of at least 90 days or more. If they haven’t reached out to you about it, then you reach out to them today. This includes corporate credit cards, automobile payments, and even rent. Many of them are not doing it unless the business asks. Keep as much cash on hand as possible.

Now to discuss loan deferments. If you have any SBA backed loans currently, then your lender can get the SBA to pay those loans (interest and principal) for 6 months and you do not have to pay it back. You need to ask for it. This is not tied to the Paycheck Protection Loan Program and can be done today. If you do not have any SBA backed loans, then you can apply for an express loan. I am not sure how much money you need, but there is not a whole lot of paperwork for loans of $25K or less and that can be good is cash is low. Anything above will most likely have to go through the 7a loan process which can take longer. If your cash flow is poor now, that will be a problem going through the regular SBA loan process. But, it will not be a problem going through the Paycheck Protection Loan Program process as they only care about payroll. See below.

Now for good news, Congress is expected to finish passing the CARES Act 2 in the next few days that that will open up your funding options again. Here is what you need to do now to prepare for when that happens:

1. Get in touch with an SBA approved lender (if you do not already have one). Go with your current bank if they have one because most lenders are submitting applications for those they have a relationship with first. Tell them that you want to apply.
2. Get the following ready just in case: Quarterly 941 reports for 2019 and the first quarter of 2020. Your articles of incorporation and bylaws.

Now that the cash discussion is out of the way, you need to do a little worst-case scenario planning. What portions of your business are cash flowing now and which ones aren’t? List them as business processes and then you need to prioritize them. Then look at them and detail if not performing any of the non-cash generating business processes will cause an issue with regulatory entities such as the IRS. Those processes stay on the list and you continue to operate them. The other non-cash generating processes, you need to start to look to cut expenses from or stop altogether.

Let me know if you would like to talk directly in more detail. I am happy to help!

Stay agile. Stay safe. Stay sane.

Karen. The Disaster Lady.