In the age of the pandemic, the only certainty for businesses is that there will be uncertainty until there is certainty. That sounds like an absurd riddle but it is true. Consider what is now on the plate of the small business owner. If application was made for a Payment Protection Program loan (“PPP”) but awaits approval, will it ever be funded? In the meanwhile should employers lay people off or reduce salaries? If employees are laid off will they come back to work when things settle down? What is the likelihood of employees coming back to work if they can make more money from unemployment benefits than their regular pay? Do employees not return because of fear of exposure to the virus at work? If a PPP loan is obtained, will at least 75% of the loan be utilized for payroll and approved expenses such that the loan will be forgiven?
Author: Andrew M. Thaler
Most small business owners unavoidably have to either incur business debt in their own name (think of an American Express Card) or personally guarantee business debt. The Coronavirus has had a devastating effect on small business. Many small businesses will simply not be able to weather the storm and survive. In this scenario, an inability of non-operating companies to pay its debts will leave small business owners with personal liability on business debt. Now is the time to educate oneself on personal bankruptcy because if an individual has more business than consumer debt, they may be exempt from chapter 7 bankruptcy’s rigorous Means Test and, instead, subject only to a more flexible and forgiving budget test.
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