According to a recent Goldman Sacks survey, by the first week of August approximately 84% of businesses will have exhausted the loans that they have received from the government through the Paycheck Protection Program (“PPP”). Yet, New Jersey remains in Stage Two of its reopening plan, which means that gyms, health clubs, bars, indoor dining, entertainment venues and other higher risk business, remain closed. For many businesses that have been permitted to open, social distancing requirements and a lack of consumer confidence have resulted in increased costs, but decreased revenues. While the PPP loans, and other disaster assistance loans have helped many of these businesses weather the storm for the last several months, as these loans are depleted, more and more small business owners will have to make the difficult decision whether to struggle on or to close the doors.
For those businesses that not yet reopened, the decision whether to reopen might be partially based on the willingness of the landlords and other creditors to remain patient and not pursue collection efforts. Another factor is whether the employees, who are no longer receiving paychecks, will commit to return to work when the business reopens. The decision must also be based on a realistic, and emotionally difficult analysis of whether, even when the doors open, the business will be able to sustain itself.
As for the businesses that have reopened, the analysis as to whether to remain open is similar. Those small business owners have the benefit of being open and tracking income and expenses. If the business has been relying on the PPP funds to supplement income, the question is how much is the shortfall and can it be made up. Those businesses that have exhausted their PPP funds and have been able to continue to operate or that will be able to meet their obligations when the funds are gone should be fine.
We are here to help:
The decision to continue with the business or not is a difficult one. It is one that should be made with the guidance and assistance of an attorney or financial professional. The lawyers at the law firm of Levitt & Slafkes, P.C. have been helping individuals and small business owners in financial difficulty for over 30 years. Contact our office by telephone at (973) 323-2953 to schedule a free consultation, or contact us online.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information on this website and blogs is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.