Global Leadership During COVID-19 With FMD Partner Brian Hunter
As the world continues to adjust to the impact of COVID-19, there is a lot to consider. The Business Development Academy recently interviewed FMD Managing Partner Brian Hunter on a global panel. Brian also serves as the global chair of Integra International, a worldwide association of 130 independent accounting and consulting firms. You can find the full video below, as well as a timeline of when Brian speaks.
Brian’s three biggest takeaways are as follows:
1. The importance of pivoting
These are unprecedented times, requiring businesses of all shapes and sizes to adapt in ways they likely wouldn’t have predicted. Whenever possible, look at this time as an opportunity to get creative and evolve as a business. It can feel frustrating to abandon or rewrite your business plan but approaching it from a creative perspective may provide the boost your business has been looking for.
2. Creatively staying connected
At the end of the day, humans are social creatures, and we are all lacking the level of connection that we are used to. This is an opportunity to reach out to people (virtually) and build and maintain connections. We are all in this together, making it a great opportunity to provide feedback to one another.
3. Balancing compassion and productivity
As Brian put it, “The companies that balance compassion and productivity will be the real winners here”. It’s important to remember that COVID-19 is causing a disruption in almost every business around the world. Instead of worrying about a decline in productivity, use this time to be compassionate, and remember that we are all just people trying to navigate this confusing time. There are things we can’t control right now, but there is also a lot that we can control. By focusing on that, we will get through this unique time together.
Watch the video below for more great insight from Brian and other global leaders. Below is a timeline of when Brian speaks:
2:08 – Brian’s introduction & background on Integra International
6:10 – Brian talks about the importance of pivoting
18:40 – Brian talks about keeping virtual events engaging & continuing building relationships
31:10 – Brian discusses the transformation from accountant to trusted advisor
42:09 – Brian shares the importance of balancing compassion and productivity
48:30 – Brian discusses his outlook on COVID-19 recovery
Assessing productivity as you cope with the pandemic
The COVID-19 crisis is affecting not only the way many businesses operate, but also how they assess productivity. How can you tell whether you’re getting enough done when so much has changed? There’s no easy, one-size-fits-all answer, but business owners should ask the question so you can adjust expectations and objectives accordingly.
Impact of remote work
Heading into the crisis, concerns about productivity were certainly on the minds of many in leadership positions. In March, research firm Gartner conducted a snap poll that found 76% of HR leaders reported their organizations’ managers were concerned about “productivity or engagement of their teams when remote.”
Many of these fears may well have been alleviated after a month or two. News provider USA Today collaborated with researchers YouGov and social media platform LinkedIn to conduct a poll in April that found 54% of respondents (professionals ages 18-74) said that working remotely has positively affected their productivity. They cited factors such as time saved by not having to commute and fewer distractions from co-workers.
The bottom line is that allowing — or, in recent months, requiring — employees to work remotely shouldn’t drastically alter your expectations of their productivity. Every employee must continue to fulfill his or her job duties and meet annual performance management objectives (as perhaps adjusted in light of the pandemic and altered economy).
However, it’s unrealistic to expect anyone to accomplish markedly more just because he or she is no longer subject to a long commute and regular office hours. In fact, when assessing productivity, business owners should bear in mind the dual challenge of work-life balance while working remotely (childcare obligations, etc.) and the mental health component of living through a pandemic.
Solid metrics
If remote work isn’t a major concern for your company — either because your employees were already doing it, adapted to it readily or simply cannot work from home — there remain some tried-and-true ways to evaluate productivity. Metrics can be useful.
For example, one broad measurement of productivity is revenue per employee. To calculate it, you’ll need to check your financial statements to see how much revenue your business brought in during a defined period. Then, you divide that dollar figure by your total number of employees. The idea is that every worker should generally bring in enough revenue to rationalize his or her paycheck.
It’s not a “be all, end all” metric by any means, but revenue per employee can help accurately shape your understanding of productivity and cash flow. And, as mentioned, you’ll need to think about how this year’s economic conditions have altered your productivity needs and what employees can reasonably accomplish.
Careful calibration
When the subject of productivity arises, many business owners’ instinctive answer is “more, more, more!” Carefully calibrating your expectations and goals, however, can lead to more sustainable results. We can help you choose and calculate the right metrics and set realistic productivity objectives.
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SBA reopens EIDL program to small businesses and nonprofits
SBA reopens EIDL program to small businesses and nonprofits
Just last week, the Small Business Administration (SBA) announced that it has reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program to eligible applicants still struggling with the economic impact of the COVID-19 pandemic.
The EIDL program offers long-term, low-interest loans to small businesses and nonprofits. If your company hasn’t been able to procure financing through the Paycheck Protection Program (PPP) — or even if it has — an EIDL may provide another avenue to relief.
Program overview
Applicants must be businesses with 500 or fewer employees, sole proprietors, independent contractors or certain other small entities. EIDL funds come directly from the SBA and provide working capital up to certain limits.
The loans have terms of up to 30 years and interest rates of 3.75% for businesses and 2.75% for nonprofits. The first payment is deferred for one year. Plus, the Coronavirus Aid, Relief and Economic Security (CARES) Act has temporarily waived requirements that applicants must have been in business for one year before the crisis and be unable to obtain credit elsewhere. A borrower of $200,000 or less doesn’t need to provide a personal guarantee.
Recipients must use EIDL proceeds for working capital necessary to carry a business until resumption of normal operations and for expenditures needed to alleviate specific economic hardships related to the pandemic. These may include fixed debts (such as rent or mortgage), payroll, accounts payable and other bills that could’ve been paid had the disaster not occurred and aren’t already covered by a PPP loan.
EIDL proceeds may not be used to refinance indebtedness incurred before the COVID-19 crisis or to pay down loans owned by the SBA or other federal agencies. Loan funds also cannot be used to pay federal, state or local tax penalties, or any criminal or civil fine or penalty. (Other limitations apply.)
Emergency grants
Under the CARES Act, EIDL applicants may request an Emergency Economic Injury Grant, also referred to as an “EIDL advance,” of up to $10,000. The grant is to be paid within three days and must be used to:
Provide paid sick leave to employees unable to work because of COVID-19,
Retain employees during business disruptions or substantial shutdowns,
Meet increased costs to obtain materials unavailable because of supply chain disruptions,
Make rent or mortgage payments, or
Repay other obligations that cannot be met because of revenue losses.
Recipients of an emergency grant don’t have to repay it — even if the business is eventually denied an EIDL. However, in April, the SBA announced that it has implemented a $1,000 cap per employee on EIDL advances up to the $10,000 maximum. Thus, an applicant with three employees would receive an advance of only $3,000.
Equally valuable
The EIDL program may not have received as much attention as the PPP, but it’s equally valuable to small businesses and nonprofits striving to remain operational during the ongoing public health and economic crisis. We can help you determine whether you’re eligible and, if so, complete the application process.
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Overview of the CARES Act and Paycheck Protection Program with Partner Vincent Gotko
Overview of the CARES Act and Paycheck Protection Program with Partner Vincent Gotko
Recently, our partner Vincent Gotko presented to the Birmingham Bloomfield Chamber about legislation passed due to COVID-19. Gotko’s presentation focused on the CARES Act recently signed in to law.
Viewers can learn more about how the CARES Act impacts businesses and individuals, as well as get more information on the Paycheck Protection Program. This program was passed on March 27, 2020. The intended purpose of the fund is to continue paying employees. Loan forgiveness options are available. More information and an overview of the program can be found here:
https://www.youtube.com/watch?v=javRS5uO5r8
Another important topic impacting many businesses is employee tax credits for employers. This includes the employee retention credit, credit for required paid sick leave, and credit for required paid family leave. The last two are part of a separate act passed just before the CARES Act. More information about these credits and how to use them can be found here: https://www.youtube.com/watch?v=FGta8BfFsow
You can find a summary of COVID-19 legislation here: https://www.youtube.com/watch?v=EPnFl5GP58I
This video goes over individual provisions regarding special rules for the use of retirement funds: https://www.youtube.com/watch?v=Oy0uKCovJj8
This video provides more information on the changes to charitable contribution deduction rules: https://www.youtube.com/watch?v=grls5L5csPQ
If you want to learn more about the modifications for net operating losses impacting businesses, click here: https://www.youtube.com/watch?v=-m4PGZvFOBE
This video covers the delayed payment of employer payroll taxes:
https://www.youtube.com/watch?v=SbZftbeD-0k
For more information about the importance of hiring a CPA and how CPAs can help during this time, click here: https://www.youtube.com/watch?v=vZqw-QzO67c
More information about Fenner, Melstrom & Dooling, PLC can be found here: https://www.youtube.com/watch?v=4e5Rysy4Vrg
For more information and to better understand the full picture, Mr. Gotko’s full presentation can be viewed here: https://www.youtube.com/watch?v=iOsJnfEh8dQ.
If you need more assistance determining how these new laws and programs impact you and your business, a trusted Fenner, Melstrom & Dooling, PLC advisor would be happy to answer your questions. Fill out the form on our contact page or give us a call, and we will help you determine your plan moving forward. These are unique times, but we are getting through it together!
FMD is monitoring the progress of this bill closely and we will post and update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters.
H.R. 7010 Passes U.S. Senate Without Revision - Paycheck Protection Program Flexibility Act of 2020 (PPPFA)
H.R. 7010 Passes U.S. Senate Without Revision - Paycheck Protection Program Flexibility Act of 2020 (PPPFA)
Late in the day on June 3, 2020, the U.S. Senate passed H.R. 7010 by unanimous consent with virtually no changes to the bill passed six days earlier by the U.S. House of Representatives. It is anticipated the President will sign the bill into law as soon as possible.
As we highlighted in our previous post, the most significant provisions of this new bill are as follows:
1. Extends the covered period from 8 weeks to 24 weeks from date of loan origination or December 31, 2020, whichever comes first. (Loan recipients who received a PPP loan prior to the enactment of this bill may elect to retain their original 8-week covered period.)
2. Replaces the June 30, 2020 “safe harbor” rehire date with the December 31, 2020 date.
3. Eliminates the proportional reduction of forgiveness if:
A. an employer can document in good faith they are unable to re-hire the same, or equally qualified, employees they had on February 15, 2020 on or before December 31, 2020, or
B. the employer is able to document an inability to return to their same level of business activity at or before February 15, 2020 due to compliance with guidance issued by the Secretary of Health & Human Services, the Director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration during the period March 1, 2020 to December 31, 2020, related to the COVID-19 pandemic.
4. Reduces the amount of PPP Loan proceeds required to be spent on payroll related costs from 75% down to 60%.
5. Establishes the repayment deferral period for unforgiven PPP loan proceeds to end when the amount of loan forgiveness is remitted to the lender (presumably by the SBA).
6. Extends the repayment period of any unforgiven PPP loan amounts from 2 years to a minimum of 5 years.
7. Requires loan repayments to begin 10 months after the last day of the covered period if no application for forgiveness is filed with the lender.
8. Allows PPP loan recipients to be eligible to participate in the payroll tax payment deferral provisions of the CARES Act.
Although the bill was not changed by the Senate, we have seen the U.S. Small Business Administration make many interesting interpretations of various provisions of the PPP Loan Program and the proposed forgiveness calculations since the CARES Act was passed. It is anticipated we will see a new round of Frequently Asked Questions (FAQs) and Interim Final Rules to provide additional guidance on this bill.
FMD is monitoring the progress of this bill closely and we will post and update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters.
U.S. House of Representatives Passes H.R. 7010 to Modify PPP Loan Forgiveness Calculation (Paycheck Protection Program Flexibility Act of 2020)
U.S. House of Representatives Passes H.R. 7010 to Modify PPP Loan Forgiveness Calculation (Paycheck Protection Program Flexibility Act of 2020)
On May 28, 2020, the U.S. House of Representatives passed H.R. 7010 that provides several modifications to the calculation of PPP loan forgiveness and repayment terms. The bill passed with an overwhelming 417 to 1 vote.
The bill is now in the U.S. Senate for review and debate, so it is not law yet; however, it is clear from the House vote that the legislature is listening to small business owners who are struggling to meet the 8-week covered period spending and re-hire provisions. This 8-week period is particularly challenging for businesses located in states where mandatory stay at home orders are still in place and for those industries that operate where customers and employees interact in close physical proximity (i.e. restaurant/bars, gyms, salons, tattoo shops).
The significant provisions of the new bill are as follows:
1. Extend the covered period from 8 weeks to 24 weeks from date of loan origination or December 31, 2020, whichever comes first.
2. Extend the June 30, 2020 “safe harbor” rehire date to December 31, 2020.
3. Eliminate the proportional reduction of forgiveness due to an employer’s inability to re-hire enough full-time equivalent (FTE) employees due to shutdown orders on or before December 31, 2020.
4. Reduce the amount of PPP Loan proceeds required to be spent on payroll related costs from 75% to 60%.
5. Extend the repayment deferral period of unforgiven loan proceeds from 6 months to 1 year.
6. Extend the repayment period of any unforgiven PPP loan amounts from 2 years to a minimum of 5 years.
7. Require loan repayments to begin 10 months after the last day of the covered period, if no application for forgiveness is filed.
8. Allow PPP loan recipients to be eligible to participate in the payroll tax payment deferral provisions of the CARES Act.
The above provisions will likely be modified by the Senate but are a good indication of where the actual final law may end up.
FMD is monitoring the progress of this bill closely, and we will post an update as soon as we know more. In the meantime, please continue to visit our website for continuing updates on all COVID-19 related matters. www.fmdcpas.com
Budgeting and Money during COVID-19 with FMD Partner Daniell R. Patterson
FMD Partner Daniell Patterson recently had the opportunity share in a discussion with Randall Denha of Denha & Associates, PLLC and Jonathan Dwoskin of The JONDwoskin Experience. In this segment, Patterson provides insight and advice for getting through the current market and uncertainty of the Coronavirus pandemic era.
Below are some key takeaways from the discussion.
How should the average American be budgeting during this crisis especially if they are living paycheck-to-paycheck, now and for the next six months?
COVID-19 has caused everyone to re-evaluate fixed costs and overhead structure, personally and professionally.
SLOW DOWN. Clients should take things slow and not make quick decisions just because the crisis is happening fast; stick to your plan.
Each individual and business should do their best to conserve cash and eliminate non-essential expenses.
Take time to put together a simple monthly budget to better understand where your money is going. Look at your recurring charges such as subscription services and consider pausing them. These discretionary costs will often be a quiet drain on your accounts.
Talk to your creditors about deferring payment. It is important to advocate for yourselves and most creditors are being very receptive right now. SBA loans will give a 6-month forbearance automatically, where they are making your loan payment for you, providing some quick relief.
Reframe your mindset. Asking for help or relief from creditors shouldn’t be shameful. This isn’t a reflection on you as an individual, this is the situation that COVID-19 has created.
Many people have fear about money and a crisis like this spurs that fear and keeps people from an abundant mindset. In a market like this, how do you advise clients to grow their relationship with money?
It’s important to realize that every situation is unique, and so everyone will react differently. Some people may feel that this is a time to be aggressive and take advantage of opportunities, while others will slow down and re-evaluate the situation.
We all want to be able to see a horizon at the end of all of this. It is challenging to live with the uncertainty of not knowing what will happen or how long this situation will last.
The Importance of a CPA
It is important to have trusted mentors in your life. CPAs often find themselves as the quarterback in their client relationships. A large part of the value a CPA provides to their clients comes from the network of qualified and trusted individuals that they bring to the relationship as well as the real-world experience of working with clients.
CPAs are able to help clients understand the nuances of this time such as how to complete the PPP loan application and request for forgiveness.
CPAs help you do the work up front so that your business can be as profitable and successful as possible. This helps produce a strong financial statement at the end of the year.
By examining your financial statements, CPAs are able to help you retain as much as you can through saving money on taxes, and structuring your business properly for the highest ROI. Often it’s not necessarily how much money you make, it’s how much you retain and invest in the future.
Subchapter V: A silver lining for small businesses mulling bankruptcy
Subchapter V: A silver lining for small businesses mulling bankruptcy
Many small businesses continue to struggle in the wake of the coronavirus (COVID-19) pandemic. Some have already closed their doors and are liquidating assets. Others, however, may have a relatively less onerous option: bankruptcy.
Although bankruptcy obviously isn’t an optimal outcome for any small company, there may be a silver lining: A new bankruptcy law — coupled with an under-the-radar provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act — has made the process quicker and easier. It may even allow you to retain your business.
New law made better
The law in question is the Small Business Reorganization Act of 2019. That’s right, it was passed just last year and took effect on February 19, 2020, about a month before the pandemic hit the country full force.
The Small Business Reorganization Act added a new subchapter to the U.S. bankruptcy code: Subchapter V. Its purpose is to streamline the reorganization process for smaller companies and, in some cases, improve their odds of recovery.
When signed into law, Subchapter V applied only to companies or proprietors with less than about $2.7 million in debt. However, under the CARES Act, this amount has been temporarily increased to $7.5 million in debt. (Additional details apply; contact a bankruptcy attorney for a full explanation.)
Potential improvements
For small-business owners, Subchapter V could improve the bankruptcy process in several ways:
You may be able to keep your company. Under a Chapter 11 reorganization, business owners typically don’t receive an equity stake in the reorganized company until all debts are repaid. Subchapter V creates a pathway for owners to retain their equity if their disposable income is distributed to creditors over a certain period (generally three to five years) in a “fair and equitable” manner.
You may not need creditors’ approval to proceed. Small-business bankruptcies have long been stymied when one group of creditors object to the reorganization plan. Under Subchapter V, once a bankruptcy court approves the plan, the reorganization may proceed without creditors’ approval.
You may incur fewer costs and get it done more quickly. Subchapter V offers the opportunity to reduce the documentation and level of detail required under a traditional Chapter 11 proceeding. In turn, this can make the process less costly and more expeditious.
Prudent path
Given the extreme and sudden nature of this year’s economic downturn, bankruptcy has unfortunately become an option that many embattled small businesses will need to consider. Our firm can help you assess your company’s financial position and choose the most prudent path forward. Contact a trusted FMD advisor today.
© 2020