As the pandemic has continued to unfold, so has legislation and guidance on the numerous COVID-19 relief options available. Today, as businesses and nonprofit organizations focus on pandemic recovery and other challenges, the requirements of these relief programs may no longer be at the forefront of leaders’ minds. However, these requirements are equally as important as when these organizations received their relief. The following summarizes the major federal COVID-19 relief options offered and their status as of November 15, 2021. Paid Leave Under the Families First Coronavirus Response Act (FFCRA) Status: Expired September 30, 2021 From April through December 2020, certain employers were required to provide employees with paid sick leave or expanded family leave for certain COVID-19 related absences. To receive reimbursement for the required time, employers could receive a dollar-for-dollar payroll tax credit for qualified wages (including certain contributions to health insurance), which was filed on Form 941 (or Form 941-X). Through two pieces of legislation (the Consolidated Appropriations Act and American Rescue Plan Act), the same tax credits were extended until September 30, 2021, although paid leave from January 1, 2021 through September 30, 2021 was not mandated. Employers who have not reflected this pay and claimed their associated credit on their Form 941 may still choose to do so via an amended Form 941-X. For additional information, including qualifications for leave, visit the US Department of Treasury. Economic Injury Disaster Loan for COVID-19 Disaster (EIDL) Status: Available until the Sooner of December 31, 2021 or the Depletion of Funding The EIDL is available to small businesses and nonprofit organizations located in the United States and its territories, all of which have been considered a disaster area due to COVID-19. This program is a loan of up to $2 million that must be repaid directly to the SBA during a 30 year term. For-profit businesses have a 3.75% fixed interest rate while private nonprofit organizations have a 2.75% interest rate. The low-interest, long-term loan is intended to help eligible organizations overcome the disaster (or pandemic) by providing working capital to meet operating expenses. In September, SBA updated the loan program as follows:

• Borrowers can obtain the full $2 million offered by the traditional EIDL program, rather than just $500,000 used for the COVID-19 related loan (presumably due to high demand).
• Payment and pre-payment of business non-federal debt was added as an eligible use of funds.
• The deferral period was extended to 24 months from the loan origination date for all loans.
• Affiliation requirements were simplified to businesses that owners control or in which they have 50% or more ownership.
• Certain size standards for select NAICS codes were edited to increase eligibility.

While loans are still available, the Infrastructure Investment and Jobs Act, signed into law on November 15, rescinds $13.5 billion of funding from this program. In addition, the law rescinds over $17.5 billion from the Targeted EIDL Advance program, a grant program related to the EIDL for certain borrowers who were hit hardest by the pandemic. As a result, potential borrowers are encouraged to apply for loans or related increases to their loans as soon as possible as funding may not be available when the program expires on December 31, 2021. Paycheck Protection Program (PPP) Status: Lenders and SBA Accepting Applications for Forgiveness Borrowers with first draw PPP Loans likely have applied for forgiveness on those loans or have begun making payments. If a borrower has an outstanding first draw PPP loan, has not applied for forgiveness, and is eligible for forgiveness, it is not too late! Borrowers can apply for forgiveness on their loan balance at any time until the maturity date. Now, borrowers with second draw loans are likely considering how to obtain forgiveness. These borrowers are encouraged to review the SBA forgiveness applications and note key changes, including how to test potential reduction safe harbors and how to test for a wage reduction, given that the reference period has changed. Borrowers should also consider the documentation that they should maintain or submit, which may include resubmitting proof of their gross receipts decline that they used to prove their eligibility for their loan. Borrowers will once again use their lender’s PPP forgiveness portal to apply for loan forgiveness. With ten months from the end of the covered period to apply, Borrowers should not rush, but unlike the first draw, patience for more guidance is not likely needed. All anticipated guidance has been released and is available from the SBA and US Department of the Treasury. Employee Retention Credit (ERC) Status: Program Ended for Most, Filings Still Accepted The Infrastructure Investment and Jobs Act includes the retroactive termination of the ERC, meaning that qualified wages paid after October 1, 2021, are not eligible for the tax credit. However, this change is not applicable for Recovery Startup Businesses, who can continue to take the ERC on qualified wages paid through December 31, 2021. A Recovery Startup Business is defined as a business that began after February 15, 2020, earns average gross receipts of less than $1 million, and does not qualify for the ERC under the original test (which is only applicable through the third quarter of 2021). These businesses are limited to a $50,000 credit for each of the third and fourth calendar quarters of 2021. Eligible businesses who have not filed for the ERC can still do so by amending their Form 941 filings via a Form 941X for each quarter where they have paid qualified wages. As the ERC does affect income tax, it is recommended calendar year businesses calculate their ERC and file Form 941-X before the end of the calendar year. For more information about the program, visit the IRS website. Employer Payroll Tax Deferral Status: 50% Payment Coming Due 12/31/2021 From March 27, 2020 to December 31, 2020 employers had the option to defer the deposit and payment of the employer’s share of Social Security taxes and certain railroad retirement taxes. Half, or 50% of the deferred deposit, must then be deposited by December 31, 2021, and the remaining amount must be deposited by December 31, 2022 to be treated as a timely deposit. As the first deadline is quickly approaching, employers who deferred their payroll tax should ensure that they are ready to make their payment before December 31 approaches. Organizations that use a payroll processor are encouraged to contact their processor in advance to avoid any complications. For more information, visit the IRS website. Restaurant Revitalization Fund Status: Funding Depleted, Reporting due 12/31/2021 The Restaurant Revitalization Fund offered certain restaurants, bars, breweries, wineries, and similar businesses with a grant opportunity equal to revenue lost due to the COVID-19 pandemic. Many businesses that were eligible for the grants missed the opportunity due to a limited amount of funding that was quickly depleted. Those who received funds must report how much of their grant has been used against each expense category by December 31, 2021 using the Restaurant Revitalization Fund portal. Businesses unsure of eligible uses of funds can consult the Restaurant Revitalization Program Guide provided by the SBA. Shuttered Venue Operators Grant Status: Funding Depleted Live venue operators, theatrical producers, museum operators, talent representatives and other similar businesses may have applied for the Shuttered Venue Operators Grant, a grant program focused on the hard-hit entertainment industry. Depending on the award amount, businesses may be subject to certain reporting, monitoring, or auditing requirements. As a result, grant recipients should be aware of their individual requirements and ensure they fulfill them. In addition, recipients should ensure that they watch for communications from SBA, which may indicate the need for additional reporting. Grant recipients can also learn more by visiting the SBA Shuttered Venue Operators Grant relief page. Other Considerations Throughout the pandemic, many programs – at the federal, state, and local levels – became available to help businesses navigate the pandemic. Whether your business received funding from one of the listed programs or funding from any other source, consider refreshing yourself on program requirements. Many programs were implemented quickly and later evolved. Recipients must keep up to date with changing guidance and ensure they meet all requirements to obtain or retain such funding. In addition, as you spend funds, consider keeping detailed records of how each program is used. Each funding program has its own requirements, including how funds are spent. However, most prohibit a borrower or fund recipient from “double-dipping”. This means the same expense cannot be reimbursed by funds from two different COVID-19 relief programs. By reviewing program requirements and documenting the use of funds, organizations are prepared to show that their use of funds meets program requirements. For assistance with your COVID-19 relief, please contact your HBK Advisor.

Many manufacturers are completing their Paycheck Protection Program (PPP) covered periods and seeing their lenders launch their PPP forgiveness portals. Much like the rush to apply for loan funding this spring, borrowers are now rushing to apply for forgiveness. Before joining the rush, consider the following:

1. The right time to apply for forgiveness:
   
   According to the Paycheck Protection Program Flexibility Act (PPPFA) passed on June 5, 2020, a borrower has ten months after the last day of their covered period to apply for forgiveness.
   
   Some manufacturers may find it advantageous to apply before the end of the ten months, for example, if they have a business situation that calls for it, such as a transition of ownership. Others may decide that waiting for additional guidance provides them with the highest level of confidence that their loan can be forgiven.
   
   Manufacturers who have spent all their funds also might be inclined to apply before the end of their 24-week covered period. But they should be sure they have all the necessary documentation. In addition, guidance remains cloudy on certain mechanics of the calculation when applying early, so consider waiting until you are sure all aspects of your forgiveness application will comply with SBA guidance.
   
   
2. Eligible costs for forgiveness:
   
   Some manufacturers prefer to reduce the burden of documenting their expenditures by using only payroll costs for their PPP loan forgiveness application. But think about your PPP loan as a part of your business strategy, not as a standalone tool. Will applying for forgiveness using only certain expenses reduce your access to benefits from other programs?
   
   For example, a tax credit is available to certain businesses that conduct R&D (research and development) activities. Given current guidance, it might be advisable to exclude costs from your PPP loan forgiveness application that you could use for the tax credit, thereby maximizing both PPP loan forgiveness and the tax credit. Other tax credits may interact with your PPP loan in a similar fashion.
   
   It is important to discuss your PPP loan forgiveness with your tax preparer and other key advisors to ensure you are considering all programs available to you.
   
   
3. Full-time equivalent (FTE) restoration:
   
   FTE Safe Harbor #2 indicates that if you had a reduction in full-time equivalents (or FTEs) between February 15 and April 26, 2020, you have until the earlier of the date of your forgiveness application or December 31, 2020 to restore your FTE level so that the reduction will not affect your forgiveness amount. Some manufacturers, however, have regularly scheduled layoffs at the end of the year for maintenance, physical inventory or other operational requirements. If you are applying for forgiveness after the end of the calendar year, remember that your reduction elimination will be evaluated based on your FTEs as of December 31, 2020. Think carefully about employees who will be on your active payroll at that time, regardless of whether you intend to rehire them. Based on the mechanics of the calculation and FTE Safe Harbor #2 guidance, if you cannot prove those FTEs have been restored (based on your December 31 active payroll), you might not qualify for the safe harbor option.
   
   
4. PPE eligibility for forgiveness:
   
   Currently, expenses eligible for forgiveness are payroll costs (including certain employer paid health insurance, retirement contributions, and state and local taxes), and rent, mortgage interest and utilities as defined by the program. Neither general manufacturing personal protective equipment (PPE) nor COVID-19-specific PPE and supplies are eligible for forgiveness.
   
   Like all program guidelines, the rule on PPE is subject to change. Proposals in Congress include allowing certain PPE costs as expenses eligible for forgiveness. However, because a borrower must follow all guidance available at the time of application, it is important to stay abreast of changes and understand what is current guidance versus what is only a proposal.
   
   
5. Forgiveness applications do not guarantee forgiveness:
   
   Economic Injury Disaster Loan (EIDL) emergency advances (or grants), issued by the SBA will reduce PPP loan forgiveness by the amount of the advance (or grant), even if the forgiveness application indicates full forgiveness of the PPP loan. Manufacturers who participated in both programs should understand their obligations under each program.
   
   In addition, the SBA reserves the right to review all PPP loan applications for eligibility and loan amounts, as well as the PPP forgiveness applications for the forgiveness amounts. If the SBA determines you were not eligible for the loan, or if they determine that your loan or forgiveness amount was improperly calculated, you might not be granted full forgiveness. Manufacturers should discuss their concerns as they arise with their legal advisors or CPAs.
   
   

To discuss your PPP loan, its interaction with other programs, or other concerns regarding your manufacturing business, contact a member of HBK Manufacturing Solutions at manufacturing@hbkcpa.com or 330-758-8613.

July 21, 2020 UPDATE: The Federal Reserve announced that the Main Street Lending Program has been modified to allow participation from eligible nonprofit organizations including educational institutions, hospitals, and social service organizations. Eligible organizations must meet the following eligibility criteria:

• In operation at least 5 years
• Have at least 10 employees
• Have total non-donation revenues equal to or greater than 60% of expenses from 2017 through 2019
• Have 2% or more operating margin in 2019
• Have at least 60 days cash on hand
• Have a current debt repayment capacity of at least 55% measured by a ratio of cash, investments, and other resources to outstanding debt and certain other liabilities

  Learn more regarding the Main Street Lending Programs available to nonprofit organizations   Nonprofit organizations are among the organizations affected by the COVID-19 pandemic. While several relief programs are available through the federal government, determining when your organization is eligible for each program can be confusing, due to differing criteria. Here, we explore three loan programs offered through federal government programs or federal legislation due to the COVID-19 crisis and the eligibility of nonprofit organizations to apply. Economic Injury Disaster Loans The Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) is a program, administered through the SBA, that is available to eligible organizations suffering economic injury due to a declared disaster. Because COVID-19 is considered a declared disaster, these loans are available in all 50 states as well as Washington D.C., Guam, the Virgin Islands, Puerto Rico, the Northern Mariana Islands, and American Samoa. Loans awarded to nonprofit organizations are up to $2 million, carry a 2.75 percent interest rate, and are amortized over a period of up to 30 years. Payments are deferred for the first year. The following nonprofit organizations are eligible to apply:

• Private nonprofit organizations that are non-governmental agencies or entities that currently have an effective ruling letter from the IRS granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954,
• Private nonprofit organizations that have satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law, or
• Faith-based organizations. (For more information regarding faith-based organizations, please visit the SBA’s Faith-Based Organizations FAQs page).

  In addition to the loan, applicants may apply for an emergency advance (or emergency grant) of up to $10,000, based on the organization’s employee headcount. While this advance or grant awarded does not need to be repaid (even if the applicant declines the loan), it will reduce forgiveness on the Paycheck Protection Program loan, which is discussed further below. Currently, the EIDL program is only accepting new applications from agricultural enterprises due to funding limitations. It is unknown whether additional applications from other organizations, including nonprofit organizations, will be accepted in the future. Organizations who already applied for this program may check on the status of their application by contacting the SBA’s Customer Service Center at 1-800-659-2955 (TTY: 1-800-877-8339) or DisasterCustomerService@sba.gov. June 15, 2020 UPDATE: The SBA is once again accepting applications from all eligible organizations. It is unknown how much funding is still available, but applicants are awarded funds on a first-come, first-served basis. Interested organizations should visit sba.gov/disaster. Paycheck Protection Program The Paycheck Protection Program (PPP) is a loan program created through the CARES Act which was passed by Congress and signed into law on March 27, 2020. Unlike the EIDL program, the PPP is administered by lenders such as banks. The program offers eligible organizations loans equal to roughly 2.5 months of 2019 payroll costs (up to $10 million in total loan proceeds), to be used on specified payroll costs, rent, mortgage interest, and utilities. If borrowers spend the funds in accordance with the guidelines and maintain employee headcount and salaries and wages, the loan may be forgiven up to 100 percent. Loan proceeds not forgiven will be subject to a 1 percent interest rate and 2-year amortization period. Some nonprofit organizations are eligible to apply for PPP loans. Specifically, CARES allows 501(c)(3) nonprofit organizations, 501(c)(19) veterans organizations, and certain tribal business concerns to apply. Note that the organization must have under 500 employees (or otherwise meet the SBA Size Standard for its NAICS code), as well as agree to certifications that can be found on the PPP application and PPP forgiveness application. Funding is still available for this program and nonprofit organizations can still apply. Interested organizations should contact their lender to begin the application process. Note that guidance on this program continues to evolve, and the latest updates on both the loan process and the forgiveness process can be found at https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses. In addition, as Congress continues to negotiate changes to the program applicants and borrowers should watch for changes or stay in touch with their advisors to ensure they are complying with the latest program guidelines. June 15, 2020 UPDATE: While funds remain, loans will only be issued through June 30, 2020. Interested organizations should contact their lender to begin the application process. Main Street Lending Program The Main Street Lending Program (MSLP) offers loans to eligible small and medium-size businesses affected by COVID-19. The program offers loans, starting at $500,000 based on the business’s debt structure and 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA). According to the program’s Frequently Asked Questions, nonprofit organizations are currently not eligible for this program. The document states: “While non-profit organizations are not currently eligible under the Program, the Federal Reserve acknowledges the unique needs of non-profit organizations, many of which are on the front lines providing critical services and research to fight the pandemic. EBITDA is the key underwriting metric required for the [loan program]. The Federal Reserve recognizes that the credit risk of non-profit organizations, as a matter of practice, is generally not evaluated on the basis of EBITDA. The Federal Reserve and the Treasury Department will be evaluating the feasibility of adjusting the borrower eligibility criteria and loan eligibility metrics of the Program for such organizations.” For more information on this program, visit https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm. June 15, 2020 UPDATE: The Federal Reserve announced that it is seeking feedback through June 22 on its proposal to expand this program to small and medium-sized nonprofit organizations. If approved, eligible nonprofits may include organizations that:

• are considered a tax-exempt organization under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code
• were in sound financial condition before the coronavirus pandemic and could benefit from additional liquidity to manage through this challenging period
• employee a minimum of 50 and maximum of 15,000 employees
• have operational history of at least five years
• have endowments of no more than $3 billion.

  Additional financial thresholds based on operating performance, liquidity, and ability to repay debt may apply. In addition, the Main Street Lending Program has also been expanded for all organizations with a new minimum loan size of $250,000. To learn more regarding the proposal to expand the program to nonprofits, visit the Federal Reserve’s press release at https://www.federalreserve.gov/newsevents/pressreleases/monetary20200615b.htm. For additional information about general program changes, visit https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm.   For more information about relief options available to nonprofit organizations, contact your HBK Advisor.

The Small Business Administration announced on July 11 that its Economic Injury Disaster Loan (EIDL) emergency advance funds, allocated through the CARES Act, and subsequently, the Paycheck Protection Program and Health Care Enhancement Act, have run out. EIDL funds to small businesses of $1,000 per employee up to $10,000, also referred to as emergency grants, do not need to be repaid, though they reduce forgiveness for borrowers with Paycheck Protection Program loans.

While emergency advance or grant funds have been expended, Economic Injury Disaster Loans remain available to eligible organizations to support working capital needs generated by the COVID-19 crisis. Loan terms include an amortization period of up to 30 years, and a low interest rate of 3.75 percent for small businesses and 2.75 percent for non-profit organizations.

For more information on eligibility and loan terms, visit sba.gov/disaster.

If you have questions about an Economic Injury Disaster Loan, the related emergency advance or other COVID-19 relief options, please contact your HBK Advisor.

On June 15, the Small Business Administration announced it was again accepting applications from small businesses for its Economic Injury Disaster Loan (EIDL) and EIDL Advance. The program was closed to new applications in mid-April due to a lack of funding, but the Paycheck Protection Program and Health Care Enhancement Act passed on April 24 appropriated an additional $60 billion to the program. In late April, the SBA began accepting applications again, but only from agricultural businesses, which had been excluded from eligibility in the initial round of funding.

The program provides loans of up to $2 million for recovery from economic injury resulting from COVID-19. The loans support working capital and may be used to pay fixed debts, payroll, accounts payable, and other bills that would otherwise have been paid if the COVID-19 crisis had not occurred. Loans are awarded on a first-come, first-served basis.

The loans come with an amortization period of up to 30 years. Loans to small businesses carry a 3.75 percent interest rate; for non-profit organizations, the rate is 2.75 percent. An emergency advance or grant of up to $10,000 will be provided to borrowers who request it. While the advance does not need to be repaid, it will reduce forgiveness on the borrower’s Paycheck Protection Program loan if the borrower is using both programs. Loans over $25,000 may require collateral, and loans over $200,000 may require personal guarantees.

To apply for an EIDL or learn more about eligibility criteria and program terms, visit sba.gov/disaster. To discuss relief options for your business, please contact your HBK Advisor.

On March 25, the Small Business Administration (SBA) discovered a programming error on its website that exposed the personal information, including social security numbers and addresses, of businesses applying for Economic Injury Disaster Loans (EIDL) to other EIDL applicants. The agency said it has corrected the website and notified the businesses that were impacted. As well, the agency said it will provide a year of credit monitoring to the affected organizations.

Cyber-criminals and hackers are likely to try to take advantage of the SBA EIDL website error. It is their habit to use such situations to wreak havoc on businesses and individuals through social engineering attacks such as phishing. Recently, the U.S. Department of Homeland Security (DHS), the Cybersecurity and Infrastructure Security Agency (CISA) and the U.K.’s National Cybersecurity Security Centre (NCSC) issued a joint alert regarding the growing use of COVID-19 related themes by malicious actors.

A few suggestions to help you protect your identity:

1. Scrutinize emails pertaining to COVID-19, the CARES Act, EIDL and PPP:

• Would the entity that the email is “supposedly from” typically request personal information or account information via email?
• Use “hover over” technique on the hyperlink contained in the email.
• Carefully examine the resulting URL for the website/entity that will process the request.
• Verify the request via a different method (i.e., phone or online chat instead of email).

2. Consider freezing your credit files:

• A provision of the Economic Growth, Regulatory Relief and Consumer Protection Act eliminates the fees associated with freezing and un-freezing your credit files.
• Consider how often your information is public and vulnerable and what purchases might impact your credit or warrant a credit check.
• Learn more about freezing your credit files at the Annual Credit Report website. Follow these prompts:
• Choose the “Protect Your Identity” tab.
• Then choose “Security freeze basics” on the left-hand side of the screen.

3. Review your annual free credit report via the Annual Credit Report website:

• It is authorized by federal law.
• You are entitled to one free report from each of the following credit bureaus every year.
• Equifax
• Experian
• TransUnion

4. If your bank offers it, enable Multi-Factor Authentication (MFA) for all your online financial accounts.

While these are easy steps to take to provide some protection, our list is hardly all-inclusive. As well, there is no comprehensive list of COVID-19-related malicious cyber activity. Individuals and organizations should remain alert to increased activity relating to COVID-19 and take proactive steps to protect themselves.

The HBK Risk Advisory group can answer your questions about identity theft and other cyber security matters. For more information, contact me at WHeaven@hbkcpa.com.

The COVID crisis has burdened manufacturers with challenges they have never before had to deal with. In addition to managing their businesses, leaders must now consider supply chain disruptions, employee health, how to use relief funds to support their companies, and how to accommodate constantly changing circumstances.

Here are seven tips to help your business weather the COVID-19 crisis and look toward recovery:

1. Follow relief program guidelines. A variety of programs are available for businesses affected by COVID-19, including loans, tax credits, and payment deferrals.


• SBA Economic Injury Disaster Loan (EIDL)
• Expanded Sick and Family Medical Leave
• Paycheck Protection Program (PPP)
• Employee Retention Credit
• Payroll Tax Deferral
• Main Street Lending Program (MSNLF & MSELF)
• SBA Small Business Debt Relief
• State, local, or vendor specific relief options

Companies using a relief program must have a process in place to ensure they follow program guidelines. You will be required to use loan funds in accordance with the program directives and to maintain proper documentation to support how you use loan funds or tax credits. In many cases, guidance continues to evolve. Keep up to date or engage your advisors to help you follow the changing guidelines.

For businesses that did not receive EIDL or PPP loan funding, Congress continues to negotiate legislation to add money to these programs. Remain current on program availability and details. Your advisors can help.

2. Reevaluate weaknesses in your supply chain. You likely evaluated your vendors’ ability to continue supplying you through the crisis. But the effects of the pandemic on businesses continue to evolve and spread. Globally, many manufacturers have suspended operations, while others have adjusted operations to satisfy new needs, such as for medical personal protective equipment. Manufacturers of food, cleaning products, and other household staples saw an unpredicted increase in demand. In some cases, shuttered businesses have begun reopening, or have plans to reopen in the coming weeks. These changes affect the availability of some goods.



It is important to understand how this evolution will affect your supply chain. As the U.S. strives to open its economy and more businesses return to work, will the goods and materials you need remain available?


• Communicate with vendors frequently, especially those that supply you with critical goods. Understand whether your supply is jeopardized. Ask how their operations may change as more businesses reopen. Also, ask about their plans should they be unable to obtain goods or have an outbreak of COVID-19 in their facility.
• If you have contracts in place, review those contracts and re-negotiate with vendors as appropriate.
• If you fear your supply is at risk, onboard new vendors. Waiting until there is an outage is waiting too long.
3. Focus on inventory management. Once you evaluate your risk in your supply chain, focus on inventory. Businesses can improve cash flow by putting off inventory purchases, safety stock or finished goods in return for committing to order or produce just-in-time. However, risks to your supply chain during a crisis could incline you to build up inventory if your cash reserves allow.


• Determine whether you should and can increase your safety stock to ensure you can meet customer demand.
• Has COVID-19 affected your product mix? If so, consider adjusting your inventory to accommodate current needs. Monitor changes in demand.
• If you have obsolete goods or materials, consider selling them, even at a discount, to raise cash as well as dedicate cash and warehouse space to items you can convert into sales.


4. Continue using your cash forecast. Update your forecast at least weekly and plan for a minimum of the next two to three months—ideally six months or longer. Identify trends affecting your cash flow, such as changes in sales revenue, slowing customer payments, or changes in your inventory buying patterns. Incorporate these trends into your forecast.



Identify your cash challenges for the upcoming weeks or months and determine what actions you need to take to maintain liquidity. Questions to address include:


• What capital expenditures or investments are planned? Do these expenses make sense given the current economic situation, or should they be delayed?
• Can you pay your bills on time? If not, what actions can you take to remain in good standing with your vendors?
• Should you look for ways to reduce costs?
• Will you need to pursue additional working capital support? If you would like assistance with cash forecasting or determining what actions to take to address a cash flow issue, we can help. Contact us.
5. Evaluate alternative revenue streams. Many manufactures have pivoted from their traditional business models to offer different goods, such as personal protective equipment for medical providers. However, manufacturers should exercise caution in considering significant change or investment, especially if your risks include possible inefficiencies or quality defects. Some opportunities may be easier to implement than others.


• Talk to your customers and determine their needs. Brainstorming and creativity may identify new opportunities—even if temporary—that can support you and your customers through this challenging time. As well, providing superior customer service can create loyalty that will serve you well in the future.
• Are you taking advantage of your resources? For example, if you have a piece of equipment that is underutilized or previously used only for internal purposes, consider ways you can use it to meet a market demand.
• Can you shift operations toward producing products in greater demand? Temporarily reducing or eliminating some products to focus on others in high demand can maximize efficiency and increase key products’ availability.


6. Continue protecting employee health. As COVID-19 continues to threaten the health of everyone, it is important to protect employees. Continue enforcing recommendations from federal, state and local governments, which may include monitoring employee temperatures, cleaning and disinfecting frequently touched objects, preventing group gatherings, limiting visitors, and encouraging sick employees to stay home. Additional recommendations can be found on the CDC’s website at https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html. Even the CDC’s recommendations are not all-encompassing; some states and municipalities have issued additional requirements.

Other health-related considerations for manufacturers:


• Stagger work start and end times to avoid heavy traffic at entry or exit points, time clocks, or locker rooms. If possible, encourage the use of multiple doors instead of a single point of entry.
• Stagger break times to reduce congregation in break areas or lunchrooms. Consider expanding available areas that can be used for breaks or meals.
• Provide single-use bottled beverages instead of encouraging use of a common water or sports beverage cooler.
• Reduce shared use of items, where possible. Consider purchasing additional supplies of lower-cost items such as pens, office products, small hand tools, or other shared items. Ensure proper cleaning for items that must be shared, such as equipment or larger tools.
• When appropriate, keeps doors open. This will reduce the amount that the employees touch the door, but in addition, opening outdoor doors can improve ventilation.
7. Take care of yourself. While we have weathered past business downturns, the COVID-19 crisis is unique. Instead of focusing solely on business and economic factors, business leaders are concerned about the health of their families, their employees, and themselves. The pandemic has affected many aspects of our lives and heightened levels of stress at a time we have been deprived of many traditional stress-relieving activities: social distancing prevents some gatherings; gyms and entertainment venues are closed; vacations have been cancelled.



Stress and uncertainty can hinder your decision-making ability, so do not make important decisions when you are experiencing high levels of emotion. Save critical business decisions for when you are calm and collected. Incorporate stress relieving activities into your routine. Eat nutritious meals, exercise, and take time away from the news and social media, which are constant reminders of the pandemic. And remember that your trusted advisors are available to support you during this chaotic time.

For questions or to discuss how COVID-19 is affecting your business, contact HBK’s Manufacturing Solutions Group at 330-758-8613 or manufacturing@hbkcpa.com.