answering your covid-19 financial resources …...answering your covid-19 financial resources...
TRANSCRIPT
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• We will begin at 10am. • There will be no sound until we begin the webinar. • We have muted your audio from our end, but we
would appreciate it if you would also mute yourself, just in case.
• You will be able to submit questions during the webinar by using the “chat box” feature located at the bottom of your screen.
• We plan to get through as many submitted questions as possible, but will follow up with an FAQ article detailing the information discussed today and links to resources along with a recording of today’s webinar.
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Welcome to the COVID-19 Webinar
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS 3
Panel of Speakers
Mandi Wagner Mandi Wagner is a VP and Commercial Banker with the KeyBank Middle Market team in Seattle. She serves a variety of industries including manufacturing, aerospace, nonprofit and distribution. Mandi has over 25 years of experience in financial services, 20 of those with Key.
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Brian Murphy Brian is President and Managing Director at Meridian Capital and also leads the firm's Aerospace & Defense and Diversified Industrials practice groups. Over the course of his 15-year investment banking and strategic consulting career, Brian has advised clients across industry segments, including aerospace, manufacturing/distribution, consumer products, technology, and telecommunications.
Carrie Callaway Cardy Carrie Callaway Cardy is a VP, Sr SBA Relationship Manager at KeyBank with over 15 years of banking experience. Carrie has a passion for small business and volunteers with various organizations including SCORE and Start-Up 425 teaching finance classes for future entrepreneurs.
. Andy Cates Leader in the Moss Adams Tax Services practice and is the firm wide leader for public and private company financial statement reporting of income taxes.
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• We have taken the questions you provided and organized them into common themes.
• Information presented is not legal or tax advice. • This is a very fluid situation, with information changing by the
day, hour, minute and every jurisdiction is handling the COVID-19 pandemic differently.
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Disclaimers
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS 5
The Effects of COVID-19
Illness
Economy
Layoffs
Remote Work
No School
Slow downs
Uncertain
Shelter in Place
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
What are some things I can do to help with cash flow right now?
with Mandi Wagner
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Assess your situation • Best & worst-case projections • Where is your cash • Communicate and combine resources
• Actionable AR & AP Strategies • Become less dependent on paper & leverage technology • Be vigilant about fraud • Mutually agreed upon terms with suppliers
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Cash Flow Strategies
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Managing Your Costs • Talk to your lessor about concessions on lease payments • Consider salary/distribution reductions and postponing capital
investments • Talk with your retirement plan advisor to see if you can amend
contributions • Access to Capital
• Talk to your bank about options • Consider refinancing real estate to extract equity and lower rates • Take advantage of resources (Tax, SBA, Insurance)
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Cash Flow Strategies (Continued)
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
What are the SBA Relief Resources? with Carrie Callaway Cardy
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Economic Injury Disaster Loan - EIDL • What we know about the SBA Disaster Loan & EIDL Advance Program today? • Where can I apply for this?
• https://covid19relief.sba.gov/#/ • Where can I find the up to date information on the Payment Protection Plan
(PPP)? • https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-
small-businesses • Who should apply for which loan? Can I use them together? • Relief for current loans
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What we know today...
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
Can you summarize the tax credits that currently exist for businesses?
with Andy Cates
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ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Employee retention tax credit. • Eligible employers may claim a quarterly credit against Social Security taxes
equal to 50% of up to $10,000 in qualified wages per employee. • Paid sick leave credit.
• Two refundable payroll tax credits are now available to small employers as part of a mandated two-week paid leave policy.
• Payroll tax deferral. • Employers can defer payment for employer-payroll taxes incurred between
the date the CARES Act is enacted through December 31, 2020.
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Tax Credits
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
What other actions can businesses take to improve
cash flow? with Andy Cates
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ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• File Form 4466 • For a quick refund of corporate income tax deposits (deadline is
4/15) • Net operating losses.
• Five-year net operating loss (NOL) carryback opportunities for losses arising in taxable years after 2017 and before 2021.
• Qualified improvement property. • Technical correction to qualified improvement property (QIP),
allows bonus depreciation.
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Improving Cash Flow
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Business interest limitation—IRC Section 163(j). • Generally, for most taxpayers, the interest deduction limitation has
increased from 30% to 50% of adjusted taxable income for tax years beginning in 2019 or 2020.
• Accelerated recovery of AMT credit. • Taxpayers may claim refunds for any remaining AMT credit carryover in
their first tax year beginning during 2019. • Business loss limitation—IRC Section 461(l).
• Excess business-loss rules in Section 461(l) enacted in 2018 have been suspended until tax years beginning after 2020.
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Improving Cash Flow (Continued)
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
When are alternative capital options attractive? with Brian Murphy
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ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Capital markets have experience significant slowdown given economic and business uncertainty.
• Full sales, majority recapitalizations, non-bank cash flow lending have virtually halted (outside of select industries).
• Alternative capital resources offer incremental liquidity or growth capital to more aggressive pursue market share capture or inorganic growth initiatives (i.e. M&A).
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Current Market & Alternative Capital
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
What are the most common alternative capital options?
with Brian Murphy
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ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Non-Bank Debt Capital • Driven by stability of cash flow • 6%-9% current interest with limited amortization • Severally impacted by current COVID-19 environment
• Mezzanine Debt • Subordinated debt or structure equity instrument • 10% - 14% current interest, often with embedded equity instruments (i.e. warrants) • Interest only payments until maturity
• Minority or Growth Capital • 18%+ target returns • Often structure as preferred equity and include dividend opportunity for shareholders • Non-control PE funds or family offices are the most common providers. Many
traditional control investors are allocating funds to pursue.
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Most Common Options
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
What are the key considerations for companies and business owners?
with Brian Murphy
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ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Desired flexibility vs. cost of capital • Required diligence • Track record of providing similar forms of capital • Non-economic factors such as industry knowledge and
operational support provided by lender / investor
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Key Considerations
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
A Few Ideas & Final Thoughts with Marie Gallanar
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ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• SAIF in Oregon establishes $10m workers safety fund for sanitation. • Some insurance carriers are offering payment grace periods up to
90 without cancellation. • There is a discussion draft for a proposed COVID-19 backstop fund
that has not yet been formally introduced that would provide reinsurance to the carriers once there is a more than $250m loss in the industry.
• If your business has experienced a financial loss a result of COVID-19 talk to your broker about filing a claim.
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Other Relief
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• Make a plan and communicate with your team. • Stay abreast of changes and adjust accordingly. • Use your trusted advisors as resources.
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Final Thoughts…
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• CDC: https://www.cdc.gov/coronavirus/2019-nCoV/index.html • WHO: https://www.who.int/emergencies/diseases/novel-coronavirus-2019 • Employment Security Department (ESD) COVID-19 Newsroom:
https://esd.wa.gov/newsroom/covid-19 • WA State OIC: https://www.insurance.wa.gov/coronavirus • WA Governor, Jay Inslee site: https://www.governor.wa.gov/issues/issues/covid-19-
resources • SBA Disaster Relief Funds: https://www.sba.gov/disaster-assistance/coronavirus-covid-19 • Benefit Comply: https://benefitcomply.com/employercovidresources/ • OSHA: https://www.osha.gov/SLTC/covid-19/standards.html
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Resources
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
• CDC Guidelines for Disinfection: https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/cleaning-disinfection.html
• FFCRA Leave Graphic: https://equinoxbusinesslaw.com/blog/how-to-implement-the-families-first-coronavirus-response-act/
• Tax Credits: https://www.mossadams.com/services/accounting/tax/credits-and-incentives • IRS Guidelines for payroll tax credits: https://www.irs.gov/newsroom/treasury-irs-and-
labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus
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Resources Continued
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
Mandi Wagner Relationship Mgr – Commercial Key Bank 425-789-2824 [email protected] Carrie Callaway Cardy Relationship Mgr. - SBA Key Bank 425-208-1098 [email protected]
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Contact the Speakers
Andy Cates Partner – Tax Moss Adams 206-302-6372 [email protected] Brian Murphy President Meridian Capital 206-224-6156 [email protected]
ANSWERING YOUR COVID-19 FINANCIAL RESOURCES QUESTIONS
Thank you!