Managing Your Cash Flow During A Pandemic - Business Booster

Managing Your Cash Flow During A Pandemic - Business Booster

Managing Your Cash Flow During A Pandemic - Business Booster

Managing Your Cash Flow During A Pandemic - Business Booster

Cash Flow Triage:

  • CANCEL unnecessary/discretionary subscriptions

  • CANCEL Auto-Pay - and lower monthly payments where possible

  • RENEGOTIATE credit cards for lower interest rates or balance transfers where possible. Confirm hold on loans and other debt relief on interest due to CARES ACT.

  • BUDGET your ongoing Monthly Expenses to what is critical. Eliminate the unnecessary.

  • PRIORITIZE and EVALUATE Cost/Benefit for Payroll Costs and Contractors spend in light of critical functions, reduce hours where possible, involving staff on reaching these decisions is necessary for long-term retention.

  • DEFER Tax Payments

  • Personal and Corporate Income Tax Returns – extended from April 15th to July 15th, or October 15th with an extension filed by July 15th.

  • Employer portion of Social Security Tax deposits that would’ve come due on period from March 27 to December 31st, 2020. (deferred to 2021 and 2022)

  • This info is 1 of 3 of NEW data components on the DRAFT Revised Form 941, TBU.

  • If SBA confirms PPP loan is forgiven, may not defer these taxes.

  • Deferment – 50% due December 31st, 2021, 50% December 31st, 2022

  • Self Employed may defer 50% of the Social Security Tax


  • COMMUNICATE with other Service/Utility providers and Vendors to push out/restructure payments. Keep details of all communications and changes to payment activity, and update contracts in writing by both parties.

  • The goal is to defer payment where possible until operational again and to not incur NEW operational expenses

CARES and FFCRA Relief Resources

***Criteria and Guidance is changing - be careful, keep notes, establish good reporting***

  • IRS Stimulus - $1200 per qualifying person + $500 dependents with reductions for higher Income earners (see FAQs below). Trick: To get status enter a ‘.’ after an abbreviated street name (Dr. Hwy. Ln.) to get status.



  • State Unemployment Insurance (Employees) Benefits

  • Pandemic Unemployment Assistant (PUA) available for business owners, independent contractors, self-employed, freelancers, gig workers that received a 1099 in 2019. Can apply for benefits beginning April 28, 2020.


  • Economic Injury Disaster Loan (EIDL) – SBA is unable to accept new applications at this based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

  • Paycheck Protection Program (PPP) – applications re-opened April 27th. Continue with your Business Bank/Lender – OR – other SBA 7a lenders such as Smart Biz Loans.

  • Key Points – Forgivable if payroll costs account for at least 75% of loan and mortgage interest, rent, utilities 25%. Must track these costs for 8 weeks following loan disbursement. Payment deferred for six months. If loan used for other purposes, SBA will require repayment.

  • Payroll costs calculated as 2.5 x avg mth payroll

  • Changes to guidance from early April:

  • Payments to Subcontractors (1099s) are to be Excluded because they can apply directly

  • Independent Contractors, Sole Props and Self-Employed can apply. Payroll Costs are net earnings.

  • Interest rate was changed from .5% to 1%

  • First Come First Serve

  • See Fact Sheet for additional info

  • Families First Coronavirus Response Act (FFCRA, Sick and Family Leave Pay Relief)

  • Wages paid from April 1st to December 31, 2020, see detailed criteria below

  • This is 2 of 3 NEW data components on the DRAFT Revised Form 941, TBU.

  • Refundable tax credit but must file Form 7200 in advance and fax Quarterly

  • Work with your payroll provider and document any Leave Pay paid including documentation from impacted staff

  • Employee Retention Tax Credit (ERTC)

  • A good Plan B for PPP but presents a Cash Flow issue

  • Must have had either fully/partial suspension of operations – OR – gross receipts drop of 50%+ vs comparable quarter in 2019

  • Payroll Tax credit of 50% of wages paid up to $10k maximum, so $5k maximum credit per employee for the entire period March 27th to December 31st, 2020

  • Begins with Q2 2020 (April-June). Ongoing guidance for last few days in March to be added to Q2 form.

  • This is 3 of 3 NEW data components on the DRAFT Revised Form 941, TBU. Will report employment taxes retained (instead of deposited, these = credits). Refundable tax credit but must file Form 7200 in advance and fax Quarterly.

  • Recipients cannot also receive a PPP loan.

  • Cannot double-dip, i.e., include wages for which employer received tax credit on FFCRA

  • Employees not counted if employer is allowed a Work Opportunity Tax Credit for employee

  • Rules change for over 100 FTEs (tax credit only on Employees paid that did not work)

  • Quick math establishing point where ERTC is better than PPP:

  • Assuming 3 FTEs or 6 PTEs at $25/hour, 40hours/wk, 4wks/month = $12k payroll per month x 2.5 = $30k PPP Loan (forgivable)

  • Equivalent $30k ERTC based on 6 Employees, their max wages $10k (for $5k max credit per employee) would be reached in approx. 2.5months ($1k/week).

  • ERTC a preferred option for >6 employees in this example.

Set yourself up for Success - Preparing your Financials

  • Bookkeeping / Financial Reporting is critical for the entire loan process

  • Loan applications – summarize totals using .xls that justify with pertinent backup the # on application. Backup includes payroll journals, and/or owner draws details AND Bank Statements. It’s ok to make notes on the application and backup to tie it all together!

  • Loan disbursements tracking – for 8 weeks following receipt of loan proceeds

  • Due diligence – on employee related leave, business disruption, loss of Clients

Biz Structure and Payroll related Takeaways

  • Lessons Learned – Payroll vs Draws, Legal Structure (Sole Prop vs Corporation), Bookkeeping

  • Actionable steps – bookkeeping, financials, timeline based game-plan for funding

  • Growing your Biz / Attracting Investors and Outside capital – many of these takeaways will prepare you.

RESOURCES – newsletters spell out program details and IRS resources

Dropbox link -

  • This doc

  • PPP Fact Sheet

  • RS Form 7200 – for advance credit against employer payroll taxes

  • .xls template to justify PPP Loan amount incl. sample Owner Draw report

  • .xls template to track 8 week disbursement period for Paycheck Protection Program

  • .xls template Cash Flow tracking against Monthly P&L (can forecast as well)

PDF Download

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