Sara Pauly is not one of those small business owners scrambling to fill out paperwork for part of the more than $350 billion in government aid available through the Paycheck Protection Program or the Economic Injury Disaster Loan.
FILE PHOTO: The skyline of New York and the Manhattan bridge are seen as the outbreak of the coronavirus disease continues in the Manhattan borough of New York City, New York, U.S., April 10, 2020. REUTERS/Eduardo Munoz
Many small business owners are in a similar situation, where even an influx of relief cash will not help them stay afloat. The dilemma they face is whether to seek aid or close up, often by going bankrupt. “Business bankruptcies go hand-in-hand with personal bankruptcy,” said Carl Peterson, vice president of small firms at the American Institute of Certified Public Accountants.
Weinberg noted that for now programs like the Paycheck Protection Program cover just a few months of payroll. One of his clients is a dermatologist with his own practice - if the shutdown lasts too long, he may have to close down and go work for a hospital system.Once you have assessed your cash flow, look at your solvency, says Scot Bishop, a certified public accountant and financial planner in Houston. For instance, a restaurateur with a loan coming due in May will have trouble refinancing.
If you are a one-person shop, you “can go away with minimal effort,” said Kashif Ahmed, a certified financial planner in Bedford, Massachusetts. One of Ahmed’s clients put his business in hibernation for now. Litigation is what brings bankruptcy to a head. “If there is potentially going to be a big judgment against the entity, then bankruptcy is the only way to put a stop to it,” Hughes said.
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