BREATHING ROOM FOR SMALL BUSINESS OWNERS

Published on June 11, 2020

Greater flexibility and time were twin gifts received on June 5, 2020 from Congress and President Trump in the surprisingly bi-partisan Paycheck Protection Program Flexibility Act (PPPFA) providing clarity and breathing room for small business owners, many of whom were burdened under the heavy restrictions of the Paycheck Protection Program (PPP) passed under the CARES Act earlier in the year.

Business owners will now benefit from these new (PPPFA) provisions:

* Reduced payroll requirement from 75% to 60%.

* Extended 'Covered Period' from 8 weeks to 24 weeks.

* Postponed deadline to rehire employees from June 30, 2020 to December 31, 2020.

* Expanded the exceptions in rehiring full-time equivalent employees.

* Loan repayment extended from 2 years to 5 years.

The caveat to the benefits of the (PPPFA) legislation is the uncertainty surrounding how the Small Business Administration (SBA) will proceed in auditing a portion of the 4.5 million loans paid out under the (PPP), particularly relating to liquidity and lines of credit available to business owners at the time of the loan request. If capital access is determined to have been available to business, eligibility for loan forgiveness could be in jeopardy. Hopefully, clarification will be forthcoming to ease a business owner's mind regarding this issue.

Now is an opportune time for a business to consider partnering with a CFO consultant on a fractional, interim, or project basis, to allow the owner more time to focus on leading and growing the business, while the CFO consultant focuses on delivering alpha [added-value and Return on Investment (ROI)].