Understanding why business taxation feels so complex

Business taxation blends ever-changing rules, industry-specific treatments, and timing decisions that affect cash flow and growth. From federal and state income taxes to payroll withholding, sales tax and depreciation rules, the tax landscape demands ongoing attention. Proactive planning, clean records, and a trusted advisor can turn compliance headaches into strategic opportunities.

Core areas every business should watch

While every company is unique, most businesses face the same core tax issues. Being aware of these areas helps you prioritize where to focus time and resources.

Income tax and entity choice

Choosing the right business structure determines how profits are taxed and what liabilities owners carry. Whether you’re a sole proprietor, partnership, S corporation, or C corporation, tax rules differ. For guidance tailored to your situation, consider resources aimed at startups and growing companies like our strategic tax planning for startups.

Deductions, depreciation and credits

Maximizing legitimate deductions is one of the most effective ways to reduce taxable income. Decisions about immediate expensing (Section 179) versus depreciation (Section 168(k)) can materially affect taxable income and cash flow—learn more in our comparison of the Section 179 deduction vs 168(k) depreciation. Also review available credits such as the Employee Retention Credit and other incentives that may apply.

Payroll and employment taxes

Payroll taxes, withholding, and benefit reporting are frequent sources of audit exposure and penalties. Outsourcing payroll or working with a knowledgeable firm reduces risk—see our Charlotte payroll services for practical support.

Sales and use tax

Remote sales, marketplace facilitators, and changing state rules have made sales tax more complicated. Regular reviews and systems that capture the right tax at the time of sale are essential; our sales tax compliance guidance can help you stay current.

Special situations: PPP, loans and audits

COVID-era relief programs, like PPP loans, had specific forgiveness rules that still affect tax filings; see our overview of PPP loan forgiveness. If you face audit risk or complex disputes, firms with depth in forensic accounting and audit support can be invaluable—read about our business audit services in Charlotte.

Practical steps to make taxation manageable

Tax planning isn’t a once-a-year activity. Making small, consistent improvements can reduce stress and improve outcomes.

Keep timely, clean records

Accurate books make tax planning and preparation faster and less costly. Cloud-based accounting systems allow real-time collaboration and better reporting—explore our cloud accounting for small businesses solutions and the benefits of reliable bookkeeping services.

Plan year-round, not just at year-end

Regular check-ins let you take advantage of mid-year tax-saving moves and reduce surprises. Our year-end planning tips and resources like year-end income-tax planning help both business owners and individuals coordinate timing and strategy.

Coordinate tax and business strategy

Taxes should be part of larger financial decisions—capital investments, hiring, exit planning and retirement. For example, pairing tax planning with retirement planning for business owners or transaction-focused valuation work ensures choices support long-term goals.

Common pitfalls and how to avoid them

Many tax problems come from avoidable mistakes. Watch for these common issues and the practical steps to avoid them.

• Mixing personal and business expenses—maintain separate accounts and robust bookkeeping (small business bookkeeping).
• Missing or misclassifying employees vs. contractors—this affects employment taxes and benefits obligations.
• Failing to keep up with state-level changes—check resources such as new tax laws in NC.
• Underutilizing credits and deductions available to freelancers and small business owners—see tax deductions for freelancers.

When to bring in outside experts

Partnering with an experienced CPA is often the most cost-effective way to manage tax risk and capture savings. Consider external help when:

• You’re planning a major transaction such as a sale or acquisition—specialized valuation and advisory support matters.
• Your business is expanding to new states or expecting multi-state sales—work with advisors who handle sales tax compliance.
• You face an audit, tax lien or complex dispute—expertise in forensic accounting and audit defense can limit financial exposure, as shown in past tax lien reduction results.

How to choose the right tax advisor

Look for a balance of technical capability and personal attention. A local partner who knows your community and delivers tailored service—combined with the technical depth of a larger firm—adds meaningful value. Read our guide on choosing the right Charlotte business tax advisors and explore services that match your needs, from CPA support for small businesses to comprehensive tax services and accounting and bookkeeping.

Next steps for business owners who want clarity

Start with a tidy set of books, a clear list of recent transactions and an agenda of your next 12 months of growth plans. A short planning session with a CPA can reveal opportunities to reduce taxes, improve cash flow and avoid costly mistakes. If you’d like a practical review, get in touch via our contact page or learn more about our Charlotte tax preparation and small business advisory services.

For ongoing insights and practical tax tips, visit our blog and explore client success stories that highlight how targeted planning produced measurable results, from recovered taxes to avoided penalties (saved $60,000 in taxes and others).

By LB&J Certified Public Accountants: LB&J Certified Public Accountants combine the technical strength of a large CPA firm with the personalized care of a local Charlotte partner, delivering tailored tax, accounting, and advisory services that support both individuals and businesses. With decades of experience and a relationship-first approach, LB&J goes beyond compliance—helping clients make confident, growth-focused financial decisions. Whether you’re a small business, startup, or individual, you’ll gain a dedicated team that knows your name, understands your goals, and works with you every step of the way.

Growing a business involves more than increasing sales — it requires financial foresight, disciplined processes, and decisions that align tax, operations, and long-term goals. A Certified Public Accountant (CPA) is uniquely positioned to guide business owners through those decisions. Whether you’re a startup preparing for rapid growth or a mature company exploring new markets, the right CPA brings technical expertise and a strategic perspective that helps you expand with confidence.

How a CPA Supports Strategic Planning

Strategic planning is about setting priorities and allocating resources to achieve measurable results. A CPA contributes in several practical ways:

• Financial forecasting and modeling: CPAs prepare cash flow projections, scenario analyses, and budget models that show the financial implications of expansion options — hiring, new locations, product launches, or capital investment.
• Tax-aware decision making: Strategic plans that ignore tax consequences can erode profits. CPAs identify tax-efficient structures, incentives, and timing strategies to minimize tax costs during growth. For startups, specialized strategic tax planning for startups can be especially valuable.
• Performance metrics and KPIs: CPAs help define and measure the key performance indicators that matter for sustainable scaling, translating accounting data into actionable insights.
• Capital planning: Whether seeking equity, debt, or internal funding, CPAs analyze capital needs and prepare financial statements and forecasts that lenders and investors expect.

Key Areas Where a CPA Adds Value During Expansion

Expanding a business touches many functions. Here are specific areas where a CPA delivers measurable value:

1. Tax Strategy and Compliance

Growth often creates new tax exposures — multi-state sales tax, payroll taxes for additional employees, or changes in business structure. A CPA protects value by designing tax strategies and ensuring compliance. For example, navigating sales tax obligations during geographic expansion is essential; a CPA can help with sales tax compliance and multi-jurisdictional filings.

2. Financial Systems and Scalable Processes

Manual bookkeeping and inconsistent financial processes become bottlenecks as you scale. CPAs advise on systems that support growth — from cloud accounting platforms to outsourced bookkeeping and payroll. Transitioning to modern systems improves accuracy and provides real-time insights; learn about cloud accounting for small businesses and small business bookkeeping options.

3. Funding, Capital Structure, and Investor Readiness

A CPA prepares financial statements, valuation analyses, and due diligence packages that lenders and investors require. They advise on the right capital mix — equity vs. debt — and model the impact on cash flow and ownership. If you’re seeking relief or forgiveness programs during growth phases, a CPA can also assist with matters like PPP loan forgiveness and credits such as the Employee Retention Credit.

4. Operational Risk Management and Audits

As businesses grow, internal controls and risk management must keep pace. CPAs conduct audits or reviews to strengthen financial controls and identify weaknesses before they become costly issues. For companies needing formal assurance, business audit services are available to support credibility with stakeholders.

5. Valuation, Mergers & Acquisitions, and Exit Planning

Expansions may include acquiring competitors or preparing for a future sale. CPAs provide valuation services, model acquisition scenarios, and design tax-aware exit strategies. For business owners thinking long term, integrating retirement and succession planning into expansion plans preserves value and eases transitions.

Practical Steps for Engaging a CPA in Your Growth Plan

To get the most from a CPA during expansion, consider these steps:

• Start early: Engage a CPA during the planning stage — not after investments are committed — so tax and accounting implications can be built into the plan.
• Clarify objectives: Share clear growth goals (revenue targets, geographic expansion, product lines) so your CPA can tailor financial models and tax strategies.
• Integrate accounting and operations: Adopt scalable accounting systems, such as cloud-based platforms, and outsource routine tasks like payroll and bookkeeping if needed. See Charlotte payroll services and Charlotte accounting services.
• Use KPIs to track progress: Work with your CPA to establish and monitor the financial and operational KPIs that matter most to your business model.
• Plan for compliance across jurisdictions: If expanding to new states or countries, make compliance part of the plan — including sales tax, employment law, and local tax filings.

Special Considerations for Startups and Small Businesses

Startups and small businesses face unique cash constraints and fast-changing priorities. A CPA with experience in early-stage companies helps with capitalization strategy, owner compensation, and identifying tax incentives — and can provide targeted guidance like the firm’s startup tax planning. For small business owners considering outsourcing, specialized CPA services for small businesses and bookkeeping solutions can free time to focus on growth.

Additionally, understanding new tax laws is vital. Local updates, such as North Carolina tax law changes, can affect expansion decisions and should be reviewed with your CPA.

When to Consider Specialized CPA Services

Some situations call for specialized expertise:

• Complex transactions: Mergers, acquisitions, or large asset purchases benefit from valuation and tax structuring expertise.
• Fraud or disputes: Forensic accounting can protect the business; explore forensic accounting when irregularities arise.
• Industry-specific needs: Real estate, healthcare, and professional services each have unique tax and accounting considerations. Consult advisors familiar with your industry.

How LB&J Works With Growing Businesses

Effective financial advisors combine technical skill with a relationship-first approach. LB&J Certified Public Accountants pairs deep technical capabilities — from tax planning to audits and cloud accounting — with personalized local service for businesses in Charlotte and beyond. Whether you need ongoing financial planning, help with business financial planning, or assistance choosing the right advisors, LB&J offers tailored guidance and practical solutions. Read more on our guide to choosing the right Charlotte business tax advisors or explore recent insights in our blog.

Next Steps for Business Owners

Growth requires deliberate choices and a partner who understands both the numbers and your goals. Schedule a consultation to:

• Review your financials and forecast the cash impact of expansion plans.
• Identify tax-saving strategies and compliance requirements for new markets.
• Evaluate accounting systems and staffing needs to support scale.

Contact LB&J to discuss how a CPA can help you expand with confidence: Contact LB&J Certified Public Accountants.

Byline: LB&J Certified Public Accountants combine the technical strength of a large CPA firm with the personalized care of a local Charlotte partner, delivering tailored tax, accounting, and advisory services that support both individuals and businesses. With decades of experience and a relationship-first approach, LB&J goes beyond compliance—helping clients make confident, growth-focused financial decisions. Whether you’re a small business, startup, or individual, you’ll gain a dedicated team that knows your name, understands your goals, and works with you every step of the way. Learn more about LB&J.

We are confident that LB&J Certified Public Accountants are best-in-class for Charlotte Accounting Services. Running a business in Charlotte, NC comes with the responsibility of managing multiple roles on your plate. Being an entrepreneur, a leader, and a strategist are few roles that are highlighted but let’s not forget about the important task of accounting. Small to Medium Sized Businesses often get tangled between focusing on the growth of business and managing accounts.

Businesses still impacted by the pandemic, the SBA’s EIDL loan is still available until December 31, 2021.

What’s even better is that the SBA increased the loan limit up to $2 million for small businesses in September 2021.

The Rules Are Still The Same. 

• This is a 30-year loan.  No payments for the first 24 months, then the loan is paid back over the remaining 28 years.  The interest rate for business is 3.75% while non-profit businesses enjoy a lower 2.75% interest rate.
• If the EIDL loan is greater than $25,000, then the business must agree to collateralize the loan with business assets.
• If the EIDL loan is more than $200,000, then a personal guarantee is also required by owners who have a 20% or more ownership interest.

Businesses Who Receive The EIDL Loan Can Only Use The Funds For The Following Expenses:

• Pay or pre-pay business non-federal debt incurred at any time (past or future), including monthly payments & payments of deferred interest
• Pay regularly scheduled payments on federal debt
• Payroll
• Rent/mortgage and utilities
• and Other ordinary business expenses

Immigration Status

Business owners do not have to be US Citizens.  Each business owner with 20% or more ownership must be a US Citizen or qualified alien with a valid Social Security Number.  A green card holder would qualify for the loan.  Immigration visas where the 20% or more owner does not have a green card may or may not qualify, but it wouldn’t hurt to apply for the loan and see what the SBA says.

How Much Can You Borrow?

The SBA is calculating the maximum loan amount by looking at the 2019 Gross Profit from your tax return and multiplying it by two times that amount.  For example, if you sell goods and your sales are $500,000 and COGS are $300,000, your Gross Profit is $200,000.  A such, the SBA should allow you to borrow $400,000 with the EIDL Loan.

Credit Scores.

For loans of $500,000 or less, your personal credit score needs to be at least 570.

For Loans greater than $500,000, your personal credit score needs to be at least 625.

For businesses that began operations partially through 2019 or 2020, SBA will calculate your maximum eligible loan amount.

We at LB&J Certified Public Accountants are helping small businesses obtain these EIDL Loans from the SBA.  If you or anyone you know could take advantage of these loans before the December 31^st deadline, please feel free to reach out to us at [email protected] or call our main number at 704-919-1754.

Call LB&J today if you have any questions or would like to see how you can qualify for any of the EIDL Loan program.

Get EIDL Consultation Today!

The world is in chaos and the US government is doing everything it can to keep our economy stable.  Hundreds of Billions of dollars have been spent in the last couple of months with what seems to be little to no oversight.

With many small businesses still struggling to survive during this pandemic, there are still a lot of opportunities to be had.

As part of the CARES Act, the Federal Treasury has started a lending program that has been in the works for months now.  Very few people have heard about the Main Street Lending Program as it has been overshadowed by the Paycheck Protection Program and the Economic Injury Disaster Assistance Loan. (Click HERE to join a free Webinar we will be hosting to provide a more detailed overview of the Main Street Lending Program)

The Federal Treasury has finally opened up this program in late June and eligible businesses will soon be able to apply for these loans until it closes on September 30^th or the funds dry up.

Some businesses will use this to bridge themselves until we get back to what we hope is “normal”.  Others will use this loan as a means to push forward and upward.  There is still a lot of opportunity to make money in what seems to be chaos and this program will be the fire to fuel it.

Here are the highlights of the Main Street Lending Program:

• There are 3 different types of loans, each with their own unique purpose,
• Minimum Loan within the program is $250,000,
• Maximum loan is 4 to 6 times the business’ 2019 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) less current debt on the books, OR $35 million ($300M for the MSELP),
• 5-year loan, no principal payments for first 2 years, interest-only starting in year 2, 15% of principal due at the end of years 3 and 4, 70% remaining balance due at the end of year 5,
• Interest rate is 3% plus LIBOR (currently around 0.3%; last year around 2.4%).

Businesses who can take the most opportunity from these loans are those that require bridge loans, mezzanine financing, or secondary market financing.  In addition, you may be able to refinance high-interest debt using this program.

This is a great cash-flow tool since no payments are due for the first 12 months and even after that, only interest payments are due for the second 12 months.  The issue will be the large principal payments due after years 3, 4, and 5.

Some industries that could easily use this as a tool to reduce financing fees and grow their business are house flippers, who oftentimes use hard money loans at 18% interest rates and 3% closing costs or used car dealers who use secondary market financing with high fees and interest rates.  Also, being able to have the cash on hand to make quick business decisions provides a competitive advantage.

Those businesses with high-interest rate loans can even refinance those loans under the Main Street Lending Program to stabilize themselves and not be hostage to these predatory lending practices.

Our firm will be hosting a free webinar to discuss how the Main Street Lending Program works, how to maximize your business’ loan, and to cover the obstacles ahead.  Click the button below to register.

The Below Table From The Federal Treasury Outlines Each Of The 3 Lending Programs

As you have heard, the new CARES Act was passed last Friday and there is a lot of new legislation out there on how small businesses impacted by COVID-19 can benefit from it.  Below is a summary of the programs small businesses can take advantage of to stay afloat during these uncertain times.

Paycheck Protection Program (PPP)
This is the program that people are calling, the “free money loan”.  It’s not quite free, but there are mechanisms in place to allow for a portion of the loan to be forgivable under the right conditions.

• This loan must be obtained from a bank –  If the business has an existing relationship with a bank, this would be the best point of contact to apply for funding.  Most small businesses will qualify for this loan, as they have less than 500 employees.  The business must have been in operations prior to February 15, 2020.
• Maximum Funding – Small businesses are eligible for up to 4 months of qualified expenses (payroll expenses, mortgage payments, rent payments, utilities and payments on any other debt obligations).  The maximum funding is 250% of the average monthly payroll, prior to COVID-19.  No loan may exceed $10 million.
• Loan Forgiveness – Only 8 weeks of payroll, loan interest, rent payments, and utilities qualify for the loan forgiveness.  The entire loan is not necessarily forgivable.  We are suggesting that our clients apply for 4 months of funding, but it is important that they understand that only 8 weeks of qualified expenses are forgivable.  The rest will be structured into a loan at a 4% interest rate.  The loan forgiveness is also based on a calculation of employment stabilization.  If you did not bring your company back to its pre-COVID-19 employment structure, then the amount of loan forgiveness decreases.

Economic Injury Disaster Loan (EIDL)

• This is the SBA’s Disaster Assistance Loan that has been around for decades.  The new stimulus bill added a few boosters to the program to help small businesses survive through this pandemic.
• Banks cannot help with this loan.  This loan must be applied for either independently, or through a professional, such as a CPA or law firm.
• Loan of up to $2 Million at a 3.75% interest rate – This loan is designed to cover working capital and other ordinary costs of a business.  It is not forgivable, but the loan is designed to cover more types of expenses than the PPP Loan discussed above.  The payment terms are up to 30 years, but the SBA will determine the period the business should be able to pay it back over.
• Up To $10,000 Grant – There is a provision in the stimulus package that allows for up to a $10,000 advance on the EIDL that is not required to be paid back.  The $10,000 is to be provided within 3 days of an SBA agent initiating the application process.  The intention of this grant is to allow small businesses to cover payroll costs, debt obligations, and increased cost of supplies.

Loan Payment Deferrals

• Any small business impacted by COVID-19 with a loan backed by the Federal Government (any FDIC insured banks) should be allow a 90-day deferral period on small business loans.  If a small business has an SBA Loan, the deferral period is 6-12 months.  All a business needs to do is call their bank and ask for a deferral to start the process.

Payroll Tax Credits and Payroll Tax Deferrals

• Lastly, the new stimulus package does call for the ability to obtain tax credits on the employer’s portion of payroll taxes and even to be able to defer paying the payroll taxes, however, this is not available for businesses who obtain loans from the programs above.  The payroll credits are not that lucrative in comparison, but were worth mentioning.
• The message we are sending to our clients is that they should apply for both the Paycheck Protection Program and the Economic Injury Disaster Loan.  While the EIDL covers more business expenses, the PPP allows the opportunity for free money.

Call LB&J today if you have any questions or would like to see how you can qualify for any of the above programs and potentially get free money!

Get Cares Act Consultation Today!

Thank you for your time and let’s all stay optimistic!

As a follow-up from our article regarding the SBA announcement to preparing to provide disaster financial assistance to small businesses, we recently received word that the SBA will be training their staff on Thursday on how to process the Disaster Loan Assistance applications that will be pouring in over the next several weeks.  Prior to the coronavirus, the SBA would typically take 2-3 weeks to process a Disaster Assistance Loan.  With all of the businesses impacted by the coronavirus, hundreds of thousands of applicants will be flooding the SBA’s website to apply for disaster assistance.  We would not be surprised if the SBA’s server crashes due to the extreme volume of applicants; the same thing happened when Obamacare was first released.

The SBA is training their staff to handle the anticipated influx of applications, however, it is not always first come first serve.  Loan processing is a game of momentum, loans that can be issued more easily will most likely be processed sooner.  Like any loan, the loan process will require a lot of documentation to prove the need and to substantiate the requested loan amount.  If you are prepared and organized, your loan will most likely go through more easily than the person who is disorganized and unprepared.  Also, the longer it takes you to respond to the SBA’s request for additional information, the less momentum you have as the SBA loan processor will have more momentum with other businesses applicants.

The SBA also announced that based on certain criteria, these loans have the ability to be completely forgiven, making this essentially free money as long as you meet specific qualifications. One of these qualifications is that your business keep employees on payroll until June, 30th 2020. To learn more about the other qualifications, a certified public accountant or someone able to assist your business in these matters will need to review the specific instances based on your business needs.

With our help, we can assist in making the process a lot cleaner to make sure you receive the financial assistance your business needs to stay afloat. If you are a small business that is concerned with being able to maintain the financial ability to stay afloat throughout this pandemic, contact LB&J today so we can walk you through ways we might be able to help.

In North Carolina, the Disaster Financial Assistance program is now open (see image below) as with many other states, so we’d recommend acting soon for the reasons addressed above.

To learn more and apply, visit our Disaster Assistance page

AICPA Update – March 18, 2020 — Volume 27 No. 15

In a press conference on Tuesday, Treasury Secretary Steven Mnuchin announced that individuals and corporations can delay their tax payments for 90 days due to the coronavirus pandemic. Individuals can defer up to $1 million in payments for 90 days from the April 15 deadline. Corporations can defer up to $10 million in payments for 90 days. During that time, the IRS will not charge interest or penalties.

As of this writing, the IRS had not yet issued formal guidance on the policy. Mnuchin’s announcement did not delay the April 15 filing deadline.

The delay, as announced, affects 2019 federal income taxes only; Mnuchin did not address 2020 estimated tax payments, payroll taxes, or estate and gift taxes. For state tax developments related to the coronavirus outbreak, see the AICPA list here.

The relief came four days after President Donald Trump had declared the coronavirus pandemic a national emergency. Under Sec. 7508A, the declaration of an emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, P.L. 100-707, allows the IRS to delay certain tax filing and payment deadlines.

As early as last Tuesday, members of Congress had begun calling for a delay in the April 15 deadline, and last Wednesday the AICPA called for Treasury and the IRS to provide relief to all taxpayers.

AICPA Update – March 16, 2020 — Volume 27 No. 14

As a follow-up from our SBA announcement yesterday, regarding the SBA potentially extending financial aid to small businesses nationwide, The AICPA sent us an update regarding the likelihood of extending the tax deadline by up to 90 days. Below is the exact messaging from the AICPA. At LB&J we are committed to helping small businesses stay on top of these changes, so please stay tuned to updates regarding any confirmed tax extension along with the financial assistance the SBA is considering and other ways to mitigate the impact to your small business during this challenging time.

AICPA Update – March 15, 2020 — Volume 27 No. 13

Yesterday, we told you about our efforts and conversations with the Treasury Department and the IRS to secure filing and payment relief for taxpayers and tax preparers in light of the uncertainty and challenges caused by the spread of the Coronavirus (COVID-19) pandemic.

Based upon our conversations, we anticipate that Treasury and the IRS will announce this week an extension of the April 15th deadline by as much as 90 days, and a waiver of penalties and interest for most taxpayers.

Additionally, Treasury and the IRS are aware of the major deadline for businesses tomorrow, March 16th, and the challenges facing taxpayers and tax preparers in meeting that deadline.  They have indicated that they would be generous in determining reasonable cause abatement of any penalties for taxpayers and tax preparers unable to file in a timely manner.

We will continue to keep you updated as we receive more information.

You can also visit our AICPA Coronavirus Resource Center for frequent updates and resources to help you manage clients’ needs and your business at this time.

Update 3.19.20 – SBA Officially Opens Disaster Assistance Program For Small Businesses with the potential of getting the loan completely forgiven depending upon specific circumstances with your business. Learn more by clicking here

At LB&J CPA, we strive to help provide the most relevant business preparation, strategic accounting, proactive tax minimization and financial planning for small businesses. With the Coronavirus likely to have a rather big impact on many small businesses, we wanted to make sure people were aware of the ways the Government plans to help aid small businesses negatively affected by the virus and how to take action on any of this assistance.

For those small businesses impacted by the Coronavirus, the SBA (U.S. Small Business Association) will be accepting applications for low-interest rate loans to help with working capital.  When the program is released, the website to apply for SBA Disaster Assistance is https://www.sba.gov/funding-programs/disaster-assistance.

We can all see that the country is starting to shut schools down for a few weeks as the Coronavirus is spreading.  Doctors have indicated that the Coronavirus may fizzle out in the Summer, which indicates that businesses may be impacted for several months, not weeks.

Small businesses will be significantly impacted by this as people will be spending less.  The SBA will be accepting applications under their Disaster Assistance Program to help businesses with short-term working capital needs.  The SBA will be lending up to $2 Million Dollars for those businesses impacted by the Coronavirus at an interest rate of 3.75%.  The payback period may be as long as 30-years.

It is important to understand that the funds are for working capital only and will be “need-based”.  As such, it is important that any business looking to apply for the SBA’s Disaster Assistance get their affairs in order to prove that the business has a need.  What does this mean?  Businesses will have to prove that their business is suffering by providing documents such as Sales Reports, Year-to-Date financial statements, and past income tax returns.  So if you are behind on your accounting or filing your tax returns, get them completed and up to date immediately.

Because of the flood of applications that will be going into the SBA for financial assistance, it is important that businesses be proactive and get their affairs in order so not only are they the first ones in line to request funds, but also they have easy access to all of the necessary documents to make this process seamless.

How much a business needs in financial assistance is not always easy to calculate, however, if the economy does not get back on track until the Summer, a business may need to request 4 to 6 months of operating expenses plus enough funds for the owner(s) to pay their personal bills.  A business is better off asking for more money than needed, rather than less.

In the meantime, businesses and business owners should assess how the Coronavirus has impacted them thus far and make appropriate steps to reduce their financial risks by decreasing their monthly expenses.  Businesses should not automatically expect the SBA to give them financial assistance.  They should hope for the best, but be prepared for the worst.  Some of the things they can do are:

• Reduce Payroll – Having employees work a few hours less a day if possible will save over the long-run.
• Reduce unnecessary spending – Of course all business expenses tend to be necessary, but there are always those expenses that you can turn off for a few months and turn back on later.  Advertising expenses may be an example.  If no one is going to spend money because they are staying at home, businesses may consider reducing their advertising budgets for a few months.  Some businesses spend up to 25% of their revenues on advertising.
• Zero % Interest on Credit Card – Having debt on a business is never a good thing, but if a business can convert expenses to a zero percent credit card to hedge themselves for the next 6 months, it may be worth considering.
• Hold less inventory – If a business sells a product, holding less inventory may be a good way to reduce expenses for the short-term. At the same time, with shipments from Europe and China at a halt, getting access to products may be difficult.
• Close on your slowest days – If a business has days that are typically slower than other days, closing the business for those days may be an option. The business would need to make sure they inform customers that they are closed for the day and not out of business.

Each business is unique to another so there is no instruction book on what to do in case of a crisis.  Business owners impacted by the Coronavirus are certainly stressed.  We can only hope that the SBA’s Disaster Assistance Program will act quickly to provide the necessary aid to America’s small businesses.