answering your covid-19 financial resources …...answering your covid-19 financial resources...

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.


• 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


What are some things I can do to help with cash flow right now?

with Mandi Wagner


• 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


• 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)


What are the SBA Relief Resources? with Carrie Callaway Cardy


• 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...

https://covid19relief.sba.gov/#/

https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses


Can you summarize the tax credits that currently exist for businesses?

with Andy Cates

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• 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


What other actions can businesses take to improve

cash flow? with Andy Cates

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• 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


• 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)


When are alternative capital options attractive? with Brian Murphy

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• 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


What are the most common alternative capital options?

with Brian Murphy

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• 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


What are the key considerations for companies and business owners?

with Brian Murphy

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• 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


A Few Ideas & Final Thoughts with Marie Gallanar

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• 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


• 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…


• 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

https://www.cdc.gov/coronavirus/2019-nCoV/index.html

https://www.who.int/emergencies/diseases/novel-coronavirus-2019

https://esd.wa.gov/newsroom/covid-19

https://www.insurance.wa.gov/coronavirus

https://www.governor.wa.gov/issues/issues/covid-19-resources

https://www.governor.wa.gov/issues/issues/covid-19-resources

https://www.sba.gov/disaster-assistance/coronavirus-covid-19

https://benefitcomply.com/employercovidresources/

https://www.osha.gov/SLTC/covid-19/standards.html


• 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

https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/cleaning-disinfection.html

https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/cleaning-disinfection.html

https://equinoxbusinesslaw.com/blog/how-to-implement-the-families-first-coronavirus-response-act/

https://equinoxbusinesslaw.com/blog/how-to-implement-the-families-first-coronavirus-response-act/

https://www.mossadams.com/services/accounting/tax/credits-and-incentives

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





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]

mailto:[email protected]





Thank you!

answering your covid-19 financial resources …...answering your covid-19 financial resources...

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