The current situation is putting financial stress on companies of all sizes. Companies should be proactive in their planning and if necessary, in communicating with their bank. We have been in contact with lenders and are hearing a consistent message – for borrowers that reach out to their lenders with a comprehensive plan of action banks are willing to consider loan modifications, including converting loans to interest only for a period of months and granting temporary increases to revolving credits to cover working capital needs.
The information below provides guidance for planning steps company owners/leaders (“owners”) should consider and also provides information on some of the government assistance that is being put in place.
Steps to Take Immediately:
If additional borrowing or modifications to current loans will be required open communication with the bank is crucial. Owners should determine and justify the specific need and have an outline of a specific structure including the amount needed/loan modifications required, collateral analysis, potential payback period.
Review the overall operation and consider potential supply chain risks and alternatives, risks and alternatives for employee absenteeism, delivery risks and alternatives and any other key aspects of the operation that could be impacted.
Information on Government Assistance:
The IRS and the State of Maryland have both extended the income tax deadline for paying income tax due until July 15, 2020. This applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates.
The IRS has extended the deadline to file tax returns until July 15, 2020. For more information regarding the Coronavirus tax relief from the IRS - IRS - Coronavirus.
The State of Maryland has extended the deadline to file certain business- related returns until June 1, 2020. For more information on Maryland tax filings - MD State Tax filing info.
Consult your accountant/tax professional to confirm how this applies to your specific situation.
For the State of Maryland, all licenses, permits, registrations, and other authorizations issued by the state, its agencies or any political subdivision that would expire during the current state of emergency that was declared by Governor Hogan on March 5, 2020 will be extended until at least the 30th day after the state of emergency is lifted.
The Maryland Insurance Administration issued an advisory regarding business interruption insurance - Business Interruption Insurance. Owners should consult their insurance professionals for information on their specific policies, but the advisory says in part “All insurance policies have exclusions of coverage for risks that are too great to be underwritten at an affordable price. Global pandemics like COVID-19 usually fall into this category. However, policies can be different. We recommend that businesses review their policies and reach out to their insurance professionals with any questions.”
The U.S. Small Business Administration is offering low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Maryland business are eligible to apply for a loan under this program. Details on this loan program, including a link to apply for a loan, can be found in this link - SBA Disaster Assistance Loans.
We are obviously in unprecedented times which require immediate and continuous action. Hopefully, the ideas outlined above provide you some helpful guidance for these times. The CCA team is fully engaged and operational and available if you have any questions or would simply like to have a conversation with one of our team members.