Corporate Alert: 5 Tips for Small Business Owners to Protect Their Financial Health From COVID-19
By Edward F. Smith, Shelby L. Ranier, Daniel L. Silfani & Elizabeth G. Yeargin on March 16, 2020
On March 9, 2020, Gov. Mike DeWine declared a state of emergency in the State of Ohio in response to the COVID-19 pandemic. Since that time, we have seen increased restrictions on travel, the food and beverage industry and cancellation of group events in an effort to alleviate this public health threat. With additional constraints on the horizon and the continued emphasis on “social distancing”, business owners are left to wonder what can be done to protect the financial “health” of their companies.
- Seeking Disaster Funding: Ohio is currently seeking certification with the U.S. Small Business Administration (the “SBA”) to offer low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%. SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance. To learn more and apply: https://www.sba.gov/funding-programs/disaster-assistance.
- Review Insurance Policies for Business Interruption Coverage: It is important to leverage your company’s current resources. Most business owners have general business or commercial property insurance. Review your policies to see if they include business interruption coverage. This clause may provide relief for lost revenue, employee wages, rent payments and other overhead in light of certain governmental orders requiring mandatory business closures. If you aren’t sure the types of coverage your policy includes, contact your insurance agent or an attorney for assistance.
- Review Contracts: Many contracts have a “force majeure” or impossibility clause that may excuse performance or provide some protections in the event of an unforeseeable event. If you are experiencing supply or service disruptions as a result of the COVID-19 pandemic and related governmental orders, contact your attorney to determine if your applicable force majeure clause can protect your company’s operations. Now is also a great time to work with trusted advisors to develop a contingency plan if your business is forced to weather the loss of a major customer or supplier due to ongoing disruptions.
- Unemployment Benefit Eligibility Changes: Impending changes to the unemployment benefit system will allow workers without paid-leave benefits, including those in the food and beverage industry, to access unemployment benefits through the State. Additionally, individuals who are quarantined will be considered unemployed and will be able to apply for support. Companies that determine it is necessary to shut down operations due to the COVID-19 outbreak will also be able to apply for unemployment benefits. Additionally, the one-week delay for eligible workers to receive assistance will be waived. Contact the Ohio Office of Unemployment at 877-644-6562 with questions or to apply.
- Beware of Scams: Don’t let a scammer add insult to injury. Business owners should be overly cautious as cybercrimes will likely rise. Be on the lookout for suspicious emails from “coronavirus” related domains. Cybercriminals may send emails trying to impersonate health officials, government regulators, charitable organizations, banks and investment firms. Always be sure to use trusted sources only, avoid clicking on links in unsolicited emails, and do not reveal personal or financial information without verifying the authenticity of the source.