5 Questions with Trey Whitt, CPA, During COVID-19
The Homewood Chamber is asking local experts for their thoughts on the Coronavirus crisis. The newest interview in our series is with Trey Whitt, a partner at Dent Moses.
1) From the accounting perspective, what is your first piece of advice you have for a small business going through a crisis like COVID19?
To the greatest extent possible, preserve cash. We are hopeful for a return to “business as usual” within a few weeks, but it is possible and perhaps even likely that certain segments of the economy will not experience a full recovery until much later. Negotiate with your lenders, landlords, and key vendors now to secure more favorable repayment terms and limit expenditures to the essentials.
2) What would you want a client to keep in mind about Paycheck Protection Loans and Economic Injury Disaster Loans?
The Paycheck Protection Program (PPP) loan is payroll-based and may only be used for payroll, benefits, utilities, rents and mortgage interest. The design of the program is such that, if your employee headcount and payroll remain steady through the eight-week measurement period after the loan is funded, most or all of the loan will be forgiven. Bear in mind, however, that there could be some unforgiven portion at the end of eight weeks, and that portion of the loan must be repaid within two years. I am advising business owners to project now what that unforgiven portion might be so that they may budget to repay that portion immediately or over the two-year repayment period.
The economic injury disaster loan (EIDL) is intended to be more of a traditional financing vehicle with potentially larger loan amounts and longer repayment terms available, but with no forgiveness provision. One benefit of the loan application is that the SBA advances the borrower $10,000 upon receipt of the application, and this advance is not required to be repaid. While the PPP loan is more of a stopgap working capital loan, the EIDL is more of a long-term, permanent financing option.
Initially, it was believed that a business owner would be required to choose one loan or the other. It is now our understanding that an owner may apply for and receive loan proceeds under both programs.
3) How important is accounting expertise in the current financial climate?
Access to skilled financial and business advisors – including accountants, lenders, attorneys, risk management specialists and personal financial planners – is essential now more than ever. Moreover, it is especially helpful when those advisors know one another and are able to work as a team to deliver the best outcomes for businesses, owners and workers.
4) If businesses aren’t eligible for CARES Act assistance, what advice do you have for them?
Most businesses will find some aspect of the CARES Act or the Families First Coronavirus Response Act (FFCRA) that provides some benefit. Probably the more difficult challenge is digesting the full scope of available benefits and staging them in a way that provides the greatest benefit to the business, its owners and its workers.
5) What do I need to keep in mind for filing 2019 or 2020 taxes?
Tax returns that are ordinarily due on April 15th have been delayed until July 15th. Additionally, quarterly tax payments normally due April 15th and June 15thhave also been pushed back to July 15th. While this delay provides much-needed relief, July 15th now has the potential to be a big check-writing day for many taxpayers. I am encouraging taxpayers to file their 2019 returns as soon as possible and delay paying until July 15th. That way, they will know what they owe (if anything) for 2019 and can begin to shift their focus to 2020.
To learn more about Dent Moses, visit their website.