As many States enter Phase One of reopening local businesses, employee and customer safety remain a top priority. Additionally, keeping the business financially afloat is right behind that. If not careful, what sounds good on the surface, PPP (Paycheck Protection Program) loans could tank your business.

1)    Safety – A few resources for reopening are the CDCFDA, and OSHA. They have recommendations on cleaning including frequency and chemicals. Also included are guidelines for social distancing and capacity guidelines. Tips for handling food, cash, and more. Also covered is the correct way to wear masks. I am not a medical professional but certain that hanging from your rearview mirror is not in the recommendations.

2)    Changing rules – With the ongoing changing recommendations, it cna be difficult to follow the current versions. We have gone from “better to not wear masks” due to incorrect usage to everyone needing a mask now. With many changing recommendations, it could leave a business open to litigation if an unfortunate situation occurs and a customer or employee becomes infected. A best practice is to document your safety standards, where you sourced them from, ensure all employees are trained and follow them. In addition, ensure the training with dates and times are documented as well as a daily safety checklist timestamped with the person signing off responsible for ensuring the standards are maintained. Stay current on CDC, FDA, and OSHA recommendations. For any business following government best practices, they need legal protection. Much is still unknown about COVID-19 small businesses need protection against frivolous litigation. Between the State and Federal government, we expect some level of protection soon. If not, be active and write your Senators and Representatives.

3)    PPP Loans – While the intent is admirable to keep paychecks flowing to employees not allowed to work, it could tank your business. There are some ratios that may not fit your business. If you are banking on the ability to have the repayment waived, the requirements as of now are very tight. It may be better to think of it as a short term 24 month 1% interest loan. Of the loan amount, 75% must be used on payroll during an 8 week period to be forgiven. Also 75% of your people employed must return after the 8 weeks. There are allowances for replacing employees with different skills. A best practice is to open a separate bank account and diligently track how the money is spent. If labor is a small percentage of your expenses, the Small Business Administration loans may be a better option. It is highly advised to seek your accountants advise. Better to return the money if it will have a negative impact on your business. There is discussion in Congress on ways to allow greater flexibility tailored for small businesses. If you are in a capital-intensive business, the PPP may not be a fit for you. Hopefully a small change will be made by Congress to give the help they originally intended.

Think through

With so many things changing, the environment for small business is increasing in complexity. Stay close to your network of peers, industry associations, and the web sites listed above. Document, document, and document more for your customers, employees, and business health. This includes physical as well as financial. Seek professional legal and financial council. It is always important and perhaps now more than ever.

Feel free to post comments or email them to me. Small Business, Big Lessons ® – Stay well and support small and local.

 

Small Business

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About the Author:

Gregory Woloszczuk is an entrepreneur and experienced tech executive that helps small business owners grow their top and bottom line. Gregory believes in straight talk and helping others see things they need to see but may not want to with a focus on taking responsibly for one’s own business. He and his wife, Maureen, started GMW Carolina in 2006.