If you have been able to access funds from one of the loans available to small businesses through the CARES Act, you are one of the lucky ones. Any source of income you can get while your business is legally prohibited to operate, or while customers are too scared to come back even if you are allowed to open, is a reason to be grateful. The saying applies, though, that, if something seems too good to be true, it probably is. The Paycheck Protection Program loans are not the freebie that they originally seemed to be, but they can help your business avoid the worst-case scenario in the summer of COVID-19. It is a good idea to consult an Alabama small business lawyer before making any final decisions about how to spend the loan money your company has been able to access.
Being Able to Cover Payroll Does Not Solve All Your Problems
Through the Paycheck Protection Program, the CARES Act offers loans of up to $10 million to any business that employs 500 employees or fewer. Even better, the loans are forgivable if you use at least 75 percent of the loan money for payroll. You can use the other 25 percent on other overhead business expenses, such as rent, utilities, or interest-only payments on your mortgage.
Like the name says, the main purpose of the loans is to enable you to keep paying your employees until your business can re-open. This has several benefits for the economy as a whole:
- You will not have to lay off your employees, therefore, when your business reopens, the employees can just resume their normal duties. You can just get back to work without spending time and money on the rehiring process.
- Your employees will have a source of income and will not have to file for unemployment. More workers getting a paycheck means fewer creditors scrambling for money.
- Since your employees will already have a job, they won’t have to apply for a new job.
The Paycheck Protection Program alone is not a perfect solution to all your financial worries as a small business owner. For example, it doesn’t reimburse you for the loss of perishable foods your restaurant couldn’t sell because it had to close.
You might wonder what good it is to pay your employees if your business isn’t operating, but if your employees are still getting paid, you are still within your rights to change their job duties temporarily to something they can do while social distancing. For example, you can assign waiters and waitresses to work as delivery drivers or to manage social media campaigns promoting your restaurant’s takeout menu items. Realistically, the Paycheck Protection Program loan will not cover all your expenses; you will still need to strategize with your small business lawyer about the big picture of the future of your business.
Let Us Help You Today
A business law attorney can help you access emergency funds and put them to the best possible use. Contact the Alabama business & corporate litigation attorneys at Cloud Willis & Ellis for help today.