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4 Tips for Businesses Impacted by the Coronavirus

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Immediate Financial Obligations / SBA Economic Disaster Loan Program

Joseph Corish
March 24, 2020

Small businesses across the United States are currently faced with the very real and extreme effects of the Coronavirus on their continued business operations. This unprecedented illness and the resulting drop in substantial revenue of many companies will place great strain on businesses and forcing quick analysis and decision-making about how they are to deal with payment of their current financial obligations considering such falling revenue. While the answer may differ for each business and the industry in which it operates, there are some potential approaches and options to assist in addressing how each business should react to the inability to fully pay its expenses in the short term They are as follows.

1. Communicate with your landlord, lender and creditors

In my 32 years of representing commercial and private lenders and borrowers, the single biggest mistake a company can make is to stick its head in the sand and not promptly contact its landlord, lender and other creditors when the company is having significant financial issues. I would recommend not waiting until after a company has suffered financial problems and defaulted on its payment obligations before contacting its creditors. Your landlord, lenders and other creditors can help you a great deal more on the front end of problems then on the back end. You also will help build trust with your landlord, lender and other creditors which is extremely important during financial downturns. I can assure you that landlords, lenders and other creditors are anticipating the drop in their customers’ financial condition and are currently waiting to be contacted by business owners to discuss options. They see your call coming and are looking to find a path to best address the payment of your company’s outstanding obligations.

2. Possible Workout Terms

There are several potential solutions that you can raise to help you handle the payment of your company’s obligations. Just to set forth a couple of such options:

3. SBA Economic Disaster Loan Program       

On March 6, 2020, Congress passed a Coronavirus appropriations act, which, among other things, deemed the Coronavirus outbreak a disaster for the purposes of the Small Business Act. In the following days, and after receiving requests by state governments to do so, the Small Business Administration (SBA) declared Virginia, the District of Columbia, and Maryland disaster areas. These declarations mean that the SBA can offer Economic Injury Disaster Loans (EIDLs) under the Small Business Act to certain small businesses that are facing “substantial economic injury” because of the virus. To qualify for an EIDL, the small business must meet the following criteria: 

If the small business meets those criteria, then it may be eligible for an EIDL from the SBA.  An EIDL from the SBA will have the following terms: 

4. Additional Loan or other Disaster Relief Programs

The federal and state governments continue to work diligently on new programs and products to offer the general public whose businesses are suffering.  Businesses should review the news and all loan or other revenue supporting programs that most likely will be announced over the upcoming weeks.

Please contact Joe Corish or any member of Bean, Kinney & Korman’s lender group below should you have questions or need assistance.

Andrea Campbell Davison

Blake Frieman

Zack Andrews