These are desperate times for small businesses. Reopening the economy has not gone as planned. A new surge in COVID-19 cases where businesses and recreation destinations have reopened has caused some businesses to close again quickly, fearing for the safety of their workers and fearing liability lawsuits if customers or employees are exposed to the novel coronavirus at the place of business. Throughout the country, small business owners have resorted to one desperate move after another to get enough cash to keep their businesses solvent for the next few weeks, but these temporary solutions were based on the assumption that the business climate would go back to normal sooner rather than later. As “normal” recedes farther and farther into the distance, some small business owners have decided that going out of business is their only option. If you have decided to close your business permanently, an Alabama small business lawyer can help you do it in the least financially damaging way possible.
When PPP Loans Aren’t Enough
Since the COVID-19 virus began sickening people in the United States earlier this year, more than 100,000 small business owners have dissolved their companies. Before they reached the agonizing decision to close up shop, they had tried everything to stay in business until better times. Many of them had applied for Paycheck Protection Program (PPP) loans, and some had received them. Perhaps the new provisions, which ease the requirement that PPP loan recipients must spend 75 percent of their loan money on payroll, came too late. After these locally owned neighborhood businesses had processed payroll, there was not enough money left for their other expenses, so their only choice was to go out of business.
The PPP loan initiative, as it was implemented, was confusing to say the least. Some of the money in the first round of funding went to ineligible businesses. When the small business owners who really needed the money finally received it, there were so many strings attached that some felt that they were worse off than if they hadn’t received the loan.
If You Decide to Close Your Business After Receiving a PPP Loan
Defaulting on a loan is not a decision to be taken lightly, but you might not be able to avoid it. If the principal amount of your PPP loan was less than $25,000, then defaulting on it could damage your credit. This could make it harder for you to get a small business loan if you decide to open another business in a few years. If you were approved for a bigger loan amount, you would have needed to put up personal or business assets as collateral, and you risk losing those if you don’t pay back the loan. A small business lawyer can help you decide if you should close your business, declare bankruptcy, or both.
Let Us Help You Today
An Alabama business & corporate litigation lawyer can help you make wise decisions about the ups and downs of operating a small business. Contact Cloud Willis & Ellis for help today.