By Jon Pinney & Kyle Stroup
In the wake of the COVID-19 coronavirus pandemic, KJK is advising clients on how to mitigate risk and manage their business. Below is a list of 10 things that businesses should be doing right now to best position themselves to survive this unprecedented crisis.
1. Apply for a Small Business Association (SBA) Loan
- The SBA is offering forgivable loans through the newly created Paycheck Protection Program that do not require collateral or a personal guarantee.
- This loan program is unprecedented and is designed to bridge employers through this period.
- KJK has built a custom Loan Calculator that employers can use to determine the amount of their maximum loan and projected forgiveness.
See Additional Resources: FAQs on the program
2. Post the Department of Labor’s (DOL) FFCRA Notice
- The Families First Coronavirus Response Act (FFRCA) requires all employers with 500 or fewer employers to provide paid sick leave and family leave to employees affected by the coronavirus (exemptions are available for employers with fewer than 50 employees).
- Each covered employer must post a notice of the FFRCA requirements in a conspicuous place on its premises or by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website; the DOL published a FFRCA model poster to use.
- FFCRA is effective from April 1, 2020, to December 31, 2020, and will apply to all eligible leave taken within that time span.
See Additional Resources: Summary of DOL Guidance; FFCRA Cheat Sheet
3. Review Insurance Policies and Submit a Claim
- Many businesses have business interruption insurance but have been told that coverage does not apply to a “pandemic.”
- While some policies purport to exclude coverage under these circumstances, in order to preserve your rights, KJK is advising businesses to make a claim if their business has been adversely interrupted.
- State regulators or litigation will ultimately determine if policy holders have coverage – be sure to file a claim to preserve your rights.
- KJK also recommends that all businesses review their general liability policies to determine if there is coverage for other forms of losses.
See Additional Resources: Overview of Business Interruption Insurance to Coronavirus Claims
4. Review Line of Credit and Loan Terms
- Businesses should review their loan documents for provisions that could trigger a default or a reduction of available loan proceeds.
- Some businesses have already drawn on their lines of credit – be sure to factor in the maturity date and borrowing base terms that could unexpectedly require a pay-down or repayment.
- As noted above, KJK is advising clients to apply for SBA loans if they need additional capital during this period (see above).
See Additional Resources: Navigating Default Risk and the Workout Process During the Coronavirus Downturn
5. Tighten Cyber Security Controls and Increase Testing and Training
- Cyber security attacks have increased since more businesses are operating remotely, potentially exposing their networks to new threats.
- Companies need to implement new (stricter) cyber security controls and conduct more penetration tests and training to protect their network.
- With respect to the movement of funds, KJK is advising clients to add additional layers of authentication to their current security protocols and remain vigilant about potential cybercrimes in connection with treasury functions.
See Additional Resources: Five Ways to Protect Your Business from Cyber Attack
6. Update and Review Estate and Succession Plans
- This is not a time to panic or be alarmist. Rather, it is an opportunity to take thoughtful steps to ensure that your plans are up-to-date.
- KJK is advising all clients to review their plans and communicate openly with family and their management teams about the details.
See Additional Resources: Estate Planning Amid Coronavirus
7. Verify Compliance With Ohio’s Stay At Home Order
- Ohio’s Stay At Home Order required all “nonessential” businesses to close their doors until at least April 3, a deadline that will likely be extended.
- The Order made clear that certain supply chains must stay intact so that essential businesses can remain open and operational.
- Ohio’s Lieutenant Governor has repeatedly advised that businesses have a written justification on hand for why their business is essential in the event that local health departments come to enforce the Order’s provisions.
See Additional Resources: Ohio Orders Residents to Stay Home and Certain Businesses to Close
8. Protect Employees
- Employers should adopt and educate employees on health guidance being issued by the various government agencies, including the CDC.
- These include “social distancing” mandates, sanitization protocols and regular hand-washing and wiping high-traffic surfaces with disinfectants, among other requirements.
- For employees who have come into contact with someone diagnosed with COVID-19 or who are feeling symptoms of COVID-19, employers are required to send employees home and prevent them from returning to work for set periods of time.
See Additional Resources: What Essential Employers Need to Know About Workplace Safety in the Age of Coronavirus
9. Manage Your Liquidity
- Having adequate cash on hand will allow your business to navigate the economic impact of COVID-19.
- To best manage your business’s liquidity, it is essential to be proactive and manage expenses.
- Multiple financial relief programs are now available and helpful information can be found by visiting KJK’s Coronavirus Resource Center.
See Additional Resources: Developing a Cash Management Plan
10. Develop a Communication Plan
- Creating a response team for centralized communication is essential so your business can navigate during this period.
- In the event that an employee tests positive for COVID-19, you don’t want to be figuring out what you’re going to say and when – you want to rely on your pre-determined communication and crisis plan that also incorporates the latest guidance complying with employment laws during this period.
- And for employers with remote workforces, it is important to keep in contact with them, whether that’s scheduling regular phone conferences or requiring teams meet virtually, lines of communication need to remain open so your business can come out of the COVID-19 pandemic stronger.
If you have questions or would like to discuss further, please reach out to KJK Managing Partner Jon Pinney at jjp@kjk.com or 216.538.8695.