Your Small Business: Getting Through the Economic Turbulence

A. Thomas DeWoskin

By A. Thomas DeWoskin



Part 1 of a 5-part series: Options for Small Business Owners in Financial Distress

turbulenceSuppose your small business has been doing fairly well over the last few months in spite of COVID-19 and the many other factors affecting our economy. However, you are worried about the upcoming change of seasons, additional shutdown orders, or other circumstances which might adversely affect it.

Or suppose you expect to do well over the holidays even in the face of (or because of) the pandemic, but dread your normally slow months of January, February, and March.

Or suppose you recently undertook a large project which fell apart and left you owing a ton of money.

Different situations require different responses.

Specific Event

If a specific event led to your problems, but your business is otherwise profitable, you may be able to work out of them.

Equipment Problems

Imagine that your business was doing so well that you bought additional equipment and hired additional employees in order to meet the demand.

Unfortunately, your new equipment didn’t work as promised. Rather than the promised six weeks, the new equipment took a year to get up and running smoothly. In addition to failing to fulfill all of your orders during this time, you paid employees overtime to produce as much as they could despite the distractions caused by the equipment problems. Continue reading »

Options for Small Business Owners in Financial Distress: A 5-Part Series

A. Thomas DeWoskin

By A. Thomas DeWoskin



options for business

Many small business owners are suffering financially due to the effects of COVID-19 and the unpredictable, rapidly changing economy in general. In this five-part series, we will discuss the various options available to small businesses in financial trouble, all the way from working out obligations informally to Chapter 11 reorganization to going out of business.

The series will cover the following issues:

Part 1: Your Small Business: The Economic Turbulence – Analyzing and improving your business operations

Part 2: Accumulating Cash and Improving Your Business’ Cash Flow – Analyzing and improving the business’ flow, as well as obtaining additional financing if necessary

Part 3: Non-Bankruptcy Ideas for Helping Your Troubled Small Business –  Ideas on using non-bankruptcy options in an effort to restructure your debts

Part 4: Bankruptcy Options for Your Troubled Small Business – Pros and cons of various types of bankruptcy

Part 5: Getting through a bankruptcy case and coming out on the other side (coming soon)

Continue reading »

Updates Made to Three Main Street Loan Facilities from the Federal Reserve

Hannah E. Mudd

By Hannah E. Mudd



covid-19 financial assistanceThe Federal Reserve Board recently adjusted the terms of the Main Street Lending Program (MSLP) in an effort to focus their support on smaller businesses who continue to suffer due to the pandemic. The minimum loan size for the Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF), and Nonprofit Organization New Loans Facility (NONLF) have been reduced from $250,000 to $100,000. The fees on these three facilities have also been adjusted to encourage business owners to apply for these loans.

New Fee Amounts for the MSNLF, MSPLF, and NONLF

  • Transaction Fees: If the initial principal amount of the Eligible Loan is $250,000 or greater, an Eligible Lender will pay the Special Purpose Vehicle (SPV) a transaction fee of 100 basis points of the principal amount at the time of origination. Eligible Lenders may require Eligible Borrowers to pay this fee. No fee will be imposed if the initial principal amount is less than $250,000.
  • Origination Fees: If the initial principal amount of the loan is $250,000 or greater, an Eligible Borrower will pay an Eligible Lender an origination fee of up to 100 basis points of the principal amount at the time of origination. If the initial principal amount is less than $250,000, the origination fee will be up to 200 basis points of the principal amount at the time of origination.
  • Servicing Fees: If the initial principal amount of the loan is $250,000 or greater, the SPV will pay Eligible Lenders 25 basis points of the principal amount of its participation in the Eligible Loan per annum. If the initial principal amount is less than $250,000 the SPV will pay 50 basis points of the principal amount of its participation in the loan per annum.

PPP Loan Considerations Continue reading »

What is The Best Franchise Model For You?

Ruth Binger

By Ruth Binger



franchiseToday, approximately 35 percent of franchises are owned solely or co-owned by women and that percentage is steadily increasing. Women’s superior relationship skills shine in service businesses and women gravitate toward more female oriented franchise models such as hair salons, weight loss centers, flower shops, cosmetic companies, etc. Driven by the desire to start a small business in order to create more flexibility and control over their time and to be their own boss, the franchising model is an exciting lure. Caution, however, speed bumps abound. Your entrepreneurial zeal should be tempered with a reality knowledge check which includes due diligence performed by you, number crunching services performed by your accountant and perspective and legal advice provided by your attorney.

What to Expect from Franchise System

Although the franchise model is no guarantee, the model may increase your chance of staying in business. The Small Business Administration, however, has consistently found that franchises have the same success rates as independent small businesses. Businesses fail for many reasons, some of which the franchise model cannot fix.  A good franchisor should eliminate, control, or manage many of the common mistakes a starting small business makes.  At the minimum for the initial investment and recurring costs of royalty and marketing monthly fees, a franchisee should receive brand recognition (trademarks, advertising and promotion), quality control, site selection and opening support, continuing training and operational guidance, stability, and value for the investment.

Continue reading »

Department of Labor’s Updated Regulations for FFCRA

Lauren L. Wood

By Lauren L. Wood



updateThe Department of Labor (DOL) published new guidelines on September 16, 2020 that revise and clarify portions of the Families First Coronavirus Relief Act (FFCRA). The new guidelines were issued following a ruling by a New York District Court that declared certain previously issued regulations invalid. These updated regulations relate to the following:

  • The requirement of “work availability,”
  • The requirement of employer approval for FFCRA leave to be intermittent,
  • The definition of “health care provider,” and
  • Requirements for notice and documentation.

The new regulations went into effect at the time they were published and will remain in effect until December 31, 2020 when the FFCRA is set to expire.

Work Availability Requirement

The DOL clarified that the work availability requirement applies to all qualifying reasons to take leave under the FFCRA. Thus, the leave may only be taken if the employer has work for the employee. The qualifying reason must be the actual reason the employee is unable to work, rather than not having work to do regardless of whether the qualifying reason occurs. Previously, the work availability requirement was only explicitly applicable to three of the six possible qualifying reasons for leave.

Intermittent Leave Requires Employer Approval Continue reading »

Changes to the Missouri Merchandising Practices Act and Claims for Punitive Damages

Steven Ahillen

By Steven Ahillen



consumer protectionGovernor Mike Parson recently signed Missouri SB 591, which brings significant changes to the Missouri Merchandising Practices Act (MMPA) and claims for punitive damages. The statute also adds new evidentiary and pleading requirements that will make it more difficult to prevail on a claim under the MMPA and to obtain punitive damages generally. The changes apply to lawsuits filed on or after August 28, 2020.

Changes to the Missouri Merchandising Practices Act

The MMPA (Section 407.010 RSMo., et seq.) is a broad consumer protection statute designed to safeguard the public against dishonest business practices. Under the MMPA, it is unlawful to engage in any deception, fraud, misrepresentation, or unfair practice in connection with the sale or advertisement of any merchandise in commerce, or solicitation of funds for a charitable purpose. While the act charges the attorney general to police the marketplace, it also provides for a private cause of action for those who have been victimized. Attorneys’ fees are recoverable under the statute, and it has proven to be a popular tool in suits against businesses. However, SB 591 adds several new requirements that a plaintiff must satisfy to prevail on an MMPA claim.

  • Reasonableness is Required

Continue reading »

Temporary Residential Eviction Moratorium Order from the CDC and HHS Announced

Hannah E. Mudd

By Hannah E. Mudd



eviction moratoriumThe Centers for Disease Control and Prevention (CDC) and Department of Health and Human Services (HHS) issued an Agency Order effective September 4, 2020 announcing a temporary moratorium on residential evictions in attempts to limit the spread of COVID-19. The agency order was issued shortly after the White House announced an order barring evictions for renters would likely be issued as negotiations in Congress for renewal of CARES Act provisions have stalled.

The order is effective through December 31, 2020 and goes further than previous moratorium measures outlined in the CARES Act based on the number of citizens who could seek help if circumstances so require. In support of this measure, the CDC and HHS cited that eviction moratorium-like measures enable members of the public to have shelter in which to quarantine, isolate, and practice social distancing resulting in an effective and beneficial public health measure to prevent the rampant spread of COVID-19.

Under the order, a landlord, owner of residential property, or ‘other person’ with legal rights to pursue evictions or a possessory action (“landlord”) is not permitted to evict a ‘covered person’ (“tenant”) from a residential property[1] until the order expires at the end of the year. Therefore, almost any person or entity who leases a residential property to another must comply with the order. (Note: ‘Covered person’ includes any tenant, lessee, or resident of residential property. ‘Other person’ includes corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.) Continue reading »

August 2020 Federal and State Extensions of Foreclosures and Eviction Moratoriums

Hannah E. Mudd

By Hannah E. Mudd



eviction moratoriumThe Federal Housing Administration (“FHA”) announced another extension of its foreclosure and eviction moratorium through December 31, 2020 for homeowners with an FHA-insured single-family mortgage covered under the CARES Act.

This extension means the FHA has now provided more than nine months of foreclosure and eviction relief to FHA-insured homeowners. As this is a continuation of the moratorium put in place in March of this year, the protections continue to apply to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (“reverse”) mortgages.

As a refresher, the moratorium requires mortgage servicers to:

  1. Halt all new foreclosure actions and suspend all foreclosure actions currently in process for FHA-insured single-family properties, excluding legally vacant or abandoned properties; and
  2. Cease all evictions of persons from FHA-insured single-family properties, excluding actions to evict occupants of legally vacant or abandoned properties.

According to HUD, “homeowners with FHA-insured mortgages should continue to make their mortgage payments during the foreclosure and eviction moratorium if they are able to do so, or seek mortgage payment forbearance pursuant to the CARES Act from their mortgage servicer, if needed.”

Under the CARES Act: Continue reading »

Guidance Released on Deferring Employee Social Security Taxes

Hannah E. Mudd

By Hannah E. Mudd



social securityThe IRS released guidance for employers regarding President Trump’s August 8, 2020 memorandum on withholding, deposit, and payment of employee Social Security taxes for the period of September 1, 2020 through December 31, 2020. Secretary of the Treasury Steven Mnuchin has since confirmed the deferral as voluntary and that employers may choose to continue to withhold and deposit employee Social Security taxes under the normal schedule.

The guidance clarifies that employees eligible for deferral are those with wages (for FICA purposes) of less than $4,000 per bi-weekly pay period or an equivalent amount for other pay periods. The deferral of eligibility determination must be made on a payroll-by-payroll basis. Any compensation not considered wages for FICA purposes does not count when making the determination of eligibility. It is also important to remember that ‘wages’ considered are not based on gross pay but are based on the amount of wages after nontaxable deductions. Continue reading »

Deadline Extended for Main Street Lending Program Loans

Hannah E. Mudd

By Hannah E. Mudd



updateThe Federal Reserve’s Main Street Lending Program (MSLP) recently expanded to include two new loans specifically for nonprofit organizations. In addition to this further explanation, all the loan facilities offered under MSLP received a deadline extension.

Now all five facilities will see the SPV cease making purchases of participations in Eligible Loans after December 31, 2020. Of course, this is subject to change should the Federal Reserve and Department of the Treasury decide it is necessary to extend the facilities.

All our blog posts on this topic have been updated (see below) and term sheets and forms are available at Continue reading »