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The Opening Dilemma

Without a consistent national strategy and leadership, decisions on how to open are economy are left to state and local leaders.  While very few states have me the limited criteria published by the CDC, states are proceeding and are in various phases of re-opening. At the same time, we have failed to contain COVID-19 at the national level. We are not facing a second wave, as the first wave is not over. We see progress in former hot spots, while other areas are seeing record-setting spikes in cases and hospitalizations.

The challenge we face as business owners is how to adapt.

It is one thing to be closed or limited in operations and then re-open.  It is a whole different scenario if we continue to see slow downs, halts, and backtracking.  None of the CARES Act or other relief packages account for businesses need to scale back or close a second time (or third time, or more). Recalling employees only to furlough them again is a damaging cycle. It is hard to plan if you are unsure how you will be able to operate next month or next quarter.

When will this end?

COVID-19 will be behind us when we have a vaccine that is proven to be safe and effective. We will not know this until months after large percentages of the population have been vaccinated, possibly 12 to 24 months from now.  Until then, expect the need for remote work, extra safety precautions, changes to business conditions, and starts/stops with re-opening.

Near Term Flexibility / Long Term Plan

The best advice we have heard, and shared, is to be flexible in the short term while planning for your long term.  In the short term:

  • Understand the phases, guidance, and rules at the local and state level for your business. These may differ for each of your business locations.
  • Understand the phases, guidance, and rules facing your customers.  This is harder to track and manage, but possible if you ask your customers for this information when you engage with them. Doing so will identify issues and help you overcome obstacles.
  • Do not rely solely on local guidance and rules. Unfortunately, re-opening guidance and restrictions have become politicized.  While relying on local rules may provide legal cover, doing so may harm your business if employees or customers get sick.
  • Expect the uncertainty to continue. We scrambled to adjust to closing and continue to scramble as reopening rules come into play and change. Many of the adjustments we made were fine as stop-gap measures.  Now is the time to step back and formalize the changes.  Make sure that your policies and procedures are accurate and up to date. Make sure users are working on company systems and not “shadow IT” services. Make sure your data is on company systems and properly protected.
  • Consider making temporary changes permanent, at least in part.  Many of us realize that more jobs can be done remotely, and done well, than previously thought.  You can take advantage of this long-term in several ways, including reducing the size of your physical offices, recruiting outside of your immediate geographic locations, and offering staff more flexibility.  Doing so can strategically lower costs and improve productivity.

If you want to discuss your near-term or long-term plans, please contact us. We are offering free and discounted services to help you ensure your next steps carry you forward.


 

PPP Changes Ease Loan Forgiveness

(Updated  June 24, 2020)

UPDATE:  The deadline to apply for a PPP loan is June 30, 2020. 

  • As of June 20th, approximately $100 Billion remains in the program and available for loans.
  • The modified forgiveness terms makes it much easier to ensure your loan is forgiven.

In an effort to address limitations of the Payroll Protection Program (PPP) loans, the Senate passed, and the President sigened, a House version of the legislation to update the program.

As a PPP borrower:

  • You can optionally extend the eight-week period to 24 weeks, making it easier to reach full forgiveness.
  • Your payroll expenditure requirement changes to 60% from 75%, but is now “all or nothing” instead of scaled based on percentages.
  • You can use the 24-week period to restore staffing and wages to the levels needed for full forgiveness. The deadline is also extended to December 31, 2020 from June 30, 2020.
  • You may be able to invoke one of three exceptions if unable to fully restore the workforce.
    1. You can exclude employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic.
    2. You can adjust calculations if you cannot find qualified employees
    3. You can adjust calculations if you are unable to restore business operations to Feb 15, 2020 levels due to on-going COVID-19 operating restrictions.
  • You now have five years to repay the loan instead of two years
  • Your interest rate remains at 1.00%
  • You are now eligible to defer payroll taxes under the CARES Act, even though you are a PPP borrower.

SBA Re-Opens Disaster Loan and Grant Program

(Published 6/17/2020)

The Small Business Administration (sba.gov) announced earlier this week that small businesses can again apply for relief via the Economic Injury Disaster Loan (EIDL) program.  This includes applications for fee, up to 10,000 advances, regardless of the loan’s approval.

The interest rate is fixed at 3.75 percent and terms run from 2 to 30 years based on each borrower’s cash flow and ability to make payments. You can defer an EIDL for a year and can use the funds for “debts, payroll, accounts payable, and other bills that cannot be paid due to the impact of the disaster and that are not already covered by a Paycheck Protection Program loan,” the SBA wrote in a news release.

You can request an advance of $1,000 per employee, up to a combined $10,000. This advance will not have to be repaid, and small businesses may receive an advance even if they are not approved for a loan. If you have received a Paycheck Protection Program (PPP) loan, the amount that can be forgiven will be reduced by the amount of your EIDL advance.

Some agricultural businesses are now also eligible as a result of the latest round of funds appropriated by Congress in response to the COVID-19 pandemic.

Unlike PPP loans, you must apply directly through the SBA, and not through a lender. Click here to learn more or here to apply.

Resources for Opening Safely

(Published 5/21/20)

As part of our commitment to collate and share COVID-19 response and recovery information , we have compiled resource list to help you safely and appropriately open your physical locations.

General Guidance

Worker Safety and Accommodations

Unemployment Insurance

Families First Coronavirus Response Act (FFRCA)

Cleaning and Disinfecting

Social Distancing

Screening / Monitoring Employee Health

Business Travel Limitations

Protective Equipment


For more COVID-19 related assistance, please contact us.


 

PPP Loan Forgiveness Application and Guidance

(Published 5/18/20)

The Small Business Administration published the Loan Forgiveness Application and instructions for Payroll Protection Program (PPP) loans. Like the original PPP loan and program information, the guidance provided in the instructions is not fully defined or clear.

Here is some guidance collated from multiple sources including Forbes, AICPA, and several accounting firms.

Application

The application has four components:

  1. PPP Loan Forgiveness Calculation Form;
  2. PPP Schedule A;
  3. PPP Schedule A Worksheet;
  4. (Optional) PPP Borrower Demographic Information Form.

Borrowers are required to submit items (1) and (2) to their lender, a long with a list of supporting documents. You lender may require additional supporting documentation.

You must attest to certain certifications on the forgiveness application.  Note that while some are similar to the PPP loan applications, there are new, specific certifications. Read and understand these certifications before your Authorized Representative signs the application.

The application requires that borrowers who, along with its affiliates, received aggregate PPP funds over $2 million, check a box alerting the SBA to the size of the aggregate loan. If this may apply to you, seek legal guidance with respect to your loans and the affiliation rules.

Forgivable Costs

The Covered Period for forgiveness is the eight-week (56 day) period beginning with receipt of funds.

The SBA’s guidance provides for four broad categories of costs that are eligible for forgiveness, as covered below. With some exceptions, these costs are forgivable as incurred, or paid, during this period provided that at least 75% of incurred costs are attributable to payroll costs. Costs must incurred or paid during your Covered Period.

1. Payroll costs

The SBA guidance allows you to request forgiveness for payroll costs “incurred” or “paid” during your Covered Period, or an Alternate Payroll Covered Period aligned with the start of the first payroll period after receipt of PPP funds.  Incurred costs are recognized on the day they are earned; paid costs are recognized on the day paychecks are distributed or the ACH transaction is made. If your pay periods do not line up with your Covered Period, you may included incurred payroll costs not yet paid if they are paid on the next pay date.

Payroll costs include:

    • Cash Compensation, such as:
      • Gross salary / gross wages (Up to $15,385 — the equivalent of $100,000 per year — per employee)
      • Gross tips
      • Gross commissions
      • Paid leave (excepting leave covered by the FFCRA)
      • Allowances for dismissal or separation
    • Non Cash Compensation, per SBA guidance, includes the total amounts of:
      • Employer contributions for employee health insurance, excluding pre- or post tax employee contributions
      • Employer contributions to employee retirement plans, excluding pre- or post tax employee contributions
      • State and local taxes assessed on employee compensation, excluding taxes withheld from employee earnings

Payroll costs include compensation to owners at the lower of the $15,385 or the 8-week equivalent of owners’ compensation during 2019.

2. Business Mortgage Interest

The SBA guidance allows for forgiveness of business mortgage interest payments during the Covered Period for any mortgage obligation in place before February 15, 2020.

3. Business Rent or Lease

The SBA guidance allows for forgiveness of business rent or lease payments on real or personal property during the Covered Period for any lease agreements in place before February 15, 2020.

4. Business Utility Payments

SBA guidance allows forgiveness of business utility payments for services in place before February 15, 2020, including:

    • Electricity
    • Gas
    • Heating Oil
    • Water
    • Telephone
    • Internet Access
    • Transportation

Limitations

In addition to payroll limitations and the required payroll cost percentages, the CARES Act limits forgiveness if you reduce the average number of full-time equivalents (FTEs) during your Covered Period as compared with your past reference period (per your application).  The SBA guidance provides for an exception if a new FTE Reduction Safe Harbor applies.

Calculating FTEs

Per the SBA, you can calculate your FTEs in one of two ways:

    1. Enter the average number of hours paid per week for each employee during the Covered Period or the Alternative Payroll Covered Period, divide by 40, and round the total to the nearest tenth.  The maximum for each employee, however, is capped at 1.0.
    2. Assign a 1.0 for employees who work 40 hours or more per week; 0.5 for employees who work less than 40 hours.
FTE Reduction Exceptions

The SBA allows for exceptions and does not penalize your for FTE reductions due to one of the following conditions:

    1.  Reduction related to any positions for which you made a good-faith, written offer to rehire an employee during your Covered Period or Alternate Payroll Covered Period that was rejected by the employee.
    2. Reductions during your Covered Period or Alternate Payroll Covered Period for employees who (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction in hours.
FTE Reduction Safe Harbor

The SBA also recognizes a safe harbor that may keep you from losing loan forgiveness based on a reduction in your FTE level.  You are exempt under Safe Harbor if (1) you reduced your FTE levels in the period beginning February 15, 2020, and ending April 26, 2020; AND (2) no later than June 30, 2020, you restored your FTE level to that in place for the pay period including February 15, 2020.

Salary / Hourly Wage Reductions

The CARES Act reduces your loan forgiveness amount if you reduced certain employee salary and wages by more than 25% during your Covered Period or Alternate Payroll Covered Period when compares with the period from January 1, 2020 to March 31, 2020.

Additional Guidance

Prepayments

  • You may not include prepayment of costs not yet incurred in your forgiveness calculations.

EIDL Advances

  • Any Economic Injury Disaster Loan (EIDL) advances, typically $1,000 per employee up to a maximum of $10,000, will be a direct reduction from your final PPP loan forgiveness.

Loan Interest

  • While the CARES Act includes as an allowable use of the loan to be ““interest on any other debt obligations that were incurred before the covered period,” the SBA guidance does not include this on the forgiveness application.
  • While you may use PPP funds for this purpose, you should not include these costs on your forgiveness application without specific professional guidance.

Health Insurance

  • The definition of “health insurance” is not clear.
  • Obtain professional guidance with respect to including or excluding dental, vision, and other insurance expenses from the forgivable cost calculation.

As you plan your COVID-19 response and recovery, our Recovery Road Map Assessment can help you plan and execute your next steps. Contact us for more information.


 

Where to Look for IT Savings

Almost all of our businesses are feeling the impact of COVID-19.  Revenues and cash flows are down and some costs are rising. We are all looking to cut expenses. Information technology and services can be a good place to find savings.

Most businesses can find savings in their IT services. Here are some places to look.

Unused Accounts

It is a common practice to hold onto the accounts for past employees or projects with the expectation that we may want or need to access the information at some point in the future. Often, these accounts incur costs as they remain billable within your systems. Here are some methods that you can use to clean up old accounts in Microsoft 365 and G Suite without losing data:

  • Transfer ownership of files and other data to other employees before removing an account.
  • Transfer ownership of files and other information to a designated archive account that will hold historical information for multiple past employees
  • Use a backup service to snapshot the account(s) and verify you can restore the data. Most cloud backup services let you restore to an alternate user and the licenses are significantly less than the Microsoft 365 or G Suite account.
  • Export data from past employee accounts into searchable format as an archive
Redundant Services

We see businesses sign up for new services, or keep existing services, even when they already have similar capabilities.  A lack of awareness and training can lead to redundant IT services. In most cases, even with feature differences taken into consideration, these redundant services are not needed — or are only needed by a few specific people.

If you are running Microsoft 365, you can use …

  • Teams for
    • Video conferencing instead of paying for Zoom, Webex, or GoToMeeting
    • Audio conferencing instead of paying for a third party service
    • social communication and teamwork, instead of paying for Slack
  • Teams Live to stream/broadcast events to large private groups or the public
  • OneDrive, SharePoint, and/or Teams for sharing files with others, instead of paying for DropBox
  • SharePoint for secure internal and secure external portals
  • Planner for project and task management instead of Trello and other third party applications
  • Bookings for appointment setting instead of paid services like ScheduleOnce and Calendly
  • Shared Inboxes and Groups for simple service desk / call center functions

If you are running G Suite, you can use …

  • Google Meet for video conferencing instead of paying for Zoom, Webex, or GoToMeeting
  • Google Meet audio conferencing instead of paying for a third party service
  • Chat for social communication and teamwork, instead of paying for Slack
  • YouTube Studio to stream/broadcast events to large private groups or the public
  • My Drive and Shared Drives for sharing files with others, instead of paying for DropBox
  • Sites for secure internal and secure external portals
  • Shared Inboxes and Groups for simple service desk / call center functions
Shadow IT

Chances are, if you scan your environment, your company charges, and expense reports, you will find employees using one-off or personal IT services that you have not approved or authorized.  In addition to costing you money, these services remove data from your systems and expose you to the risks of data loss and liability. In many cases, employees turn to “Shadow IT” services because they perceive these services as more convenient or easier to use than company resources.  Here are ways to reign in Shadow IT:

  • Actively look for employees using Shadow IT services.  Scan your environment, credit card fees, and expense reports. You can also use tools like Blissfully to find and quantify these services.
  • Find out why employees are using the services.  Is it a missing capability or are they unfamiliar with how use the capabilities of company systems?
  • Educate and train employees, rather than discipline
  • If shadow IT is filling a need, find a way to provide the capability within company systems if possible
Move to Scalable Services

While it may sound counter-intuitive, now may be a good time to migrate some IT services to solutions that will scale better as you company continues to adjust to changing markets and business conditions.  Moving from in-office, co-located, or hosted file servers to cloud file services, for example, replaces fixed assets and operating costs with services that can scale up and down with staffing levels and/or business volume.  Moving to scalable services may be even more appropriate if you are facing hardware or system end of life, or if doing so will simply and improve access to applications and files for those working from home.

Be Careful with Your Cuts

It may be tempting to cut services you feel that you rarely use.  Be careful, however, that you do not make short term savings decisions that will cost you much more later. See our companion post to learn more.


For help evaluating your IT environment for efficiency, please contact us to schedule a free Cloud Advisor session, or take a look at our Recovery Road Map Assessment.


 

Be Careful with your COVID-19 Cuts

Almost all of our businesses are feeling the impact of COVID-19.  Revenues and cash flows are down and some costs are rising.  We are all looking for ways to cut expenses. Information technology and services can be a good place to find savings.

As you look to reduce costs, be careful about what services you cut.  Cutting services seen as ancillary or support can save you money in the short term.  Looking forward, cutting any of these services creates real risks that larger problems with bigger costs will impact your business.

Cloud Backup Services

It is tempting to drop your cloud backup service, particularly if you have rarely had to restore, the likelihood you will need to recover lost or damaged content is increasing.  The increased use of home computers and “shadow IT” services, along with an increase in cyber attacks, leads to more accidental and intentional damage and loss. And with more work being done remotely, the reliance on your electronic files, and cloud-resident data in particular, is higher than ever.

Advanced Threat Protection

Almost all email services, including Microsoft 365 and G Suite, have sophisticated malware and virus protections built-in.  They are not, however, your best defense against rapidly changing cyber attacks.  Advanced threat protection provides the extra measure of protection against sophisticated attacks that take advantage of human nature and behaviors and new (zero-hour) attacks. By validating sources and links, and testing links and attachments in a safe sandbox, advanced threat protection can prevent the carnage of ransomware and identity theft.  With a significant spike in phishing attacks, now is not the time to lower your guard.

Service and Support Agreements

It can easy to overlook the value of service and support agreements, particularly if you do not feel that you use them often enough.  Don’t measure the value of these agreements by the cost per call or cost per hour. The value is the time, money, and aggravation saved by having resources on-call that can identify and solve problems, train and guide your users, make system changes, and manage your services. The value is not just in the 15 minutes help, it is having access to resources with the knowledge and experience to address the issue in 15 minutes instead of 15 hours.

By selecting your cuts carefully, you can save money while protecting your business.

See our companion post for more about Where to Look for IT Savings.


For help evaluating your IT environment for efficiency, please contact us to schedule a free Cloud Advisor session, or take a look at our Recovery Road Map Assessment.


 

 

SBA Clarifies “Good-Faith” Certification for PPP Loans

(Published 5/13/20)

The US Small Business Administration, today, published and update to the PPP Frequently Asked Questions (PDF) to clarify confusion regarding loan audits and the “Good Faith” certification of need signed as part of the loan application process and form. The SBA added Question 46 as, “How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?”

To summarize the impact

  • PPP loans under $2 million will not be audited.
  • Affiliated PPP loans will be consolidated for audit purposes.
  • The term “current economic uncertainty which makes the PPP loan request necessary to support the ongoing operations” was not clearly defined. Audits will most likely be based on individual facts and circumstances for each borrower.
  • Borrowers and affiliated borrowers with loans in excess of $2 million should be prepared to support their need of a PPP loan with documentation.

The full content of the question and answer is quoted as follows:

Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.

Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.

Cyber Attack

Phishing Attacks Spike Amid COVID-19 Crisis

Cyber AttackIt should be no surprise to you that we are seeing a surge in phishing and other cyber attacks, as criminals look to take advantage of the COVID-19 crisis. A sample of recent news reports illustrates the scope of the problem.

  • In April, the FBI issued a warning about COVID-19 stimulus package scams (CNET).
  • In mid-April, Google reported the daily volume of malware and phishing attack emails jumped to more than 18 million per day (The Verge).
  • Last week, TechRepublic reported a surge in phishing emails trying to exploit DocuSign and COVID-19.
  • Hackers are impersonating Zoom, Microsoft Teams, and Google Meet for phishing scams (The Verge 5/12/20).

Understand the Risk

The risk to your business, employees, and customers is greater at time when your systems may be less secure.

If your employees are using home computers while following stay-at-home orders and guidance, your risk of falling victim to an attack is significantly greater.  Most home computers do not have commercial-grade, next-generation endpoint protections and many run outdated versions of the consumer-grade products installed.

CPR is Still the Best Practice

Our model remains the best, holistic method of avoiding attacks at the human and tech levels, and for responding should something slip through.

Communicate & Educate

  • Remind your employees to be on the look out for suspicious emails, phone calls, web links.
  • Encourage your team to get help and verification if a message or interaction appears or feels suspicious in any way (better safe than sorry).
  • Consider testing employees with simulated attack messages and identify those that may need additional training and guidance.

Prevent & Protect

  • Deploy multi-factor authentication (MFA) and, optionally, single sign-on (SSO) services to prevent the use of compromised accounts.
  • Install Advanced Threat Protection solutions for inbound and outbound email to catch phishing, ransomware, and other illegitimate message.
  • Deploy “next generation” endpoint protection on computers and mobile devices to detect, prevent, and undo damage from dangerous files and applications.
  • Put Web and DNS protection services in place to prevent downloading attacks from hacked websites and identity impersonation.
  • Monitor the “dark web” for direct and third party breaches that may compromise your employees’ business accounts.
  • Take advantage of data loss prevention features built into G Suite and Microsoft 365, and consider tools to identify and prevent unauthorized access, permission errors, and data loss.
  • Eliminate the use of “shadow IT” services, particularly free or consumer-grade services by providing those capabilities to employees and making sure they know how to use them.

Restore & Recover

  • Ensure that you back up and can recover your data, regardless of location.  Your data is not just on your physical or virtual servers, it resides in your Microsoft 365 or G Suite environment, in SaaS applications like Salesforce, on desktops and laptops, and on mobile devices.
  • Put business continuity systems in place with affordable services that let you spin up and run images of your servers and workstations in a cloud data center while you recover your primary systems.
  • Have a breach response plan and service in place as an increasing number of attacks are stealing information, as effective data breach response involves:
    • Forensic analysis and recovery
    • Legal compliance with reporting requirements
    • Legal strategies to minimize liability
    • Increased customer service demand
    • Communications with customers, stakeholders, and the media
    • A potential need to provide consumer protection services
    • Cyber Insurance claims management

Fortunately for most businesses, putting these protections in place is affordable and can be done with minimal impact on your employees and their productivity.  Understand your needs, assess the value proposition (include the risks and costs of doing nothing), and deploy a solution that is the best fit for your business.


Please contact us for assistance as you evaluate your risks, needs, priorities, and solutions.


 

Detailed Guidance from CDC on Re-Opening Businesses

(Published 5/8/20)

As reported by the Associated Press, scientists at the Centers for Disease Control and Prevention (CDC) prepared a report providing specific guidance for re-opening for different types of businesses and organizations. The report, Guidance for Implementing the Opening Up America Again Framework, was due to be released on May 1st, but was blocked by the administration.  We are providing a link to a copy of the leaked report.

As business owners and leaders, we are responsible for the safety of our employees, customers, and others with whom we come in contact.  The more factual information and science-based guidance we have, the better. For our businesses to survive and grow, we will need to operate safely and effectively in the months ahead.  We need to prepare and execute plans well.

Click here to see the report.