- Overview of borrowing options available
- Other methods to help infuse cash into your business
- Ways to work on your business during this time
Recorded: April 9, 2020
Interview: Vincent J. Russo, J.D. Russo Law Group, P.C. & ElderCounsel Principal, and Valerie Peterson, ElderCounsel
Duration: 20 minutes
Vincent joined Valerie previously to discuss the Paycheck Protection Program and is back today to talk about other cash flow opportunities during this difficult time.
Law firms have a lot of challenges right now and have to look into alternative options to make sure they continue to be successful and can serve their elderly clients. Vincent’s office has 9 attorneys, 19 staff with 5 offices in New York. The challenges of keeping everything going.
Borrowing options currently available as part of the CARES Act
The Paycheck Protection Program is the number one place for all of us with small businesses (under 500 employees) for a payroll loan. If you do it a certain way, you can get a loan forgiveness. Everyone started to file last week and we overwhelmed the system. A lot of issues and problems on the rollout but hopefully things are getting organized. On April 10th, independent contractors and self-employed will also be able to apply.
This is where small law firms need to get the funds to pay employees to get us through the slow period until business ramps back up.
Economic Injury Disaster Loan (EIDL) Program
This is another program through the Small Business Administration (SBA). With the Economic Injury Disaster Loan, after meeting certain qualifications, you can seek an emergency advance loan for $10,000. The money would be available within 3 days and you wouldn’t need to pay it back. It is to take care of your immediate needs. You can apply for both the Paycheck Protection Program and the Economic Injury Disaster Loan, but you need to understand that the $10,000 will reduce the loan request amount that you make for the Paycheck Protection Program. You can’t double dip and ask for both programs for the same expenses. If you are spending them on different things, you can apply for both.
View the FAQs linked below for more details about the Economic Injury Disaster Loan.
Other Methods to Help Infuse Cash into Your Business
Another option would be to create a credit line with your bank for a loan. This would be a way to get money quickly.
Also think about cash going out. Once you get past payroll, rent is usually the other biggest expense. Contact your landlord and have a conversation with them. Seek a suspension of the rent for a month or two, or a deferral of the rent that is paid back in installments over a period of time. Many tenants are seeking a reduction, or a suspension and landlords are looking at working it out so they can keep their tenants. Don’t hesitate to have these conversations.
Other expenses to think about. Every time a bill comes in, think if you’ll pay it, hold it, or have a conversation. Credit card companies are deferring with no interest. Think about what you should be spending your money on these days. Maybe it’s equipment that can be held off. On the other hand, spend your marketing budgets. Do not stop spending money about getting the word out about your services.
How Can Lawyers be Working on Their Businesses During this Time
We all have to evaluate our staffing levels and how we can sustain ourselves. If you can keep everyone employed, that’s the way to go. If you can’t, you furlough them. They are still your employees and keep their healthcare benefits, but you’ve reduced your payroll for a certain amount of time. Another thing you can consider doing is a payroll cut across the board.
Focus on productivity. Now is a time to attack the work process and accounts receivable. Then think about it as an individual basis to come up with marketing campaigns, fine-tuning office processes, and proactively calling your clients.
Pull together as a team and you’ll be more successful in the future.
Additional Materials: (104.7 KB)
Materials include: EIDL Emergency Advance FAQ 2020-04-09 (PDF)
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