Getting Through COVID-19: A Financial Game Plan for Small Businesses

By Janet Berry-Johnson, CPA on July 17, 2020

Editor’s note: on July 1st, a bill was passed extending PPP applications to August 8th. However, many lenders will be winding down applications before then. We recommend applying as soon as possible. If you need 2019 bookkeeping completed for your application, Bench can help.


Over the past week, several big tech companies announced that most of their staff will be working remotely to encourage “social distancing” and limit the spread of coronavirus. Here at Bench, our bookkeepers went fully remote to ensure that COVID-19 has no impact on the delivery of books for our clients.

But not every business has that luxury. Even those that can implement work from home policies are building the plane as it flies. The coronavirus outbreak is putting many businesses at financial risk, whether from lost business, reduced productivity, disrupted supply chains, or all of the above.

If you’re worried about what COVID-19 will mean for the financial future of your small business, here’s a game plan that can help.

Check your insurance coverage

Some small businesses carry business interruption insurance, either as a stand-alone policy or part of an overall package policy. Depending on the type of policy your business holds, you may have coverage for some types of losses. However, there’s a good chance the coverage might be limited, or contain exclusions.

After the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003, many insurance companies updated their business interruption policies to exclude infectious diseases.

Every policy varies, so it depends on the wording of your policy, its exclusions, and limitations. Review your policy and talk to your insurance agent to see what, if anything, your policy covers.

If you don’t have insurance coverage, it’s likely too late to purchase it now—insurance companies usually won’t cover losses for a crisis that’s already underway. However, after COVID-19 blows over, you’ll want to look at business insurance for the future.

Implement an emergency budget

If you can do any cost-cutting, now is the time. Minimize travel and non-essential spending, cancel subscriptions that aren’t critical, and pause any large projects that you can put off for later.

Companies that have been aggressively paying down debt should consider switching to making just the minimum monthly payment to conserve cash.

If your expenses are outrunning your revenue, and you can’t think of any obvious areas where you can trim the fat, check out our big list of cost-cutting ideas.

And if you don’t have a clear enough view of your finances to understand whether it’s time to cut expenses or not, consider hiring a bookkeeper (like Bench). We’ll do your books, send you monthly financial statements, and give you access to our daily cash flow tool called Pulse. During a financially volatile time, it’s critical that you understand where your finances stand.

Get a low-interest loan and consider refinancing

It might also be a good time to refinance high-interest loans to lock in a lower interest rate.

On March 15, 2020, the Federal Reserve cut interest rates to 0% in an effort to keep borrowing costs low for consumers and businesses. Those low interest rates will remain in place indefinitely.

Refinancing to a lower interest rate can reduce your monthly payments, which will help you hold on to cash in a time of uncertainty. It can also help you pay off that debt faster, because more of your monthly payment is going toward paying down the principal rather than paying interest.

The Fed also dropped the requirement for banks to hold cash reserves equal to 10% of customer deposits. That change is designed to make it easier for banks to continue issuing loans to small businesses, so businesses can keep operating.

One of the most attractive financing options that came out of the CARES Act is the Paycheck Protection Program. You can get a low-interest, completely forgiveable SBA loan if you use it to cover payroll and rent costs for your business. Learn more here.

The SBA has also announced that it will offer disaster relief loans to small businesses affected by the coronavirus. Eligible small businesses can receive up to $2 million in working capital to replace lost funds. If you need to take advantage of funding opportunities to keep your doors open or meet payroll, talk to your bank. You can also look for an SBA-approved lender by using the Lender Match tool.

Proactively communicate with lenders and vendors

If you know you’re going to have trouble making loan payments or paying vendors and suppliers, let them know as soon as possible. Many companies have announced they are offering free services, allowing skipped payments, holding off on shutting off services for missed payments, and waiving late fees for individuals and businesses impacted by COVID-19.

Having difficult conversations with lenders, vendors, and suppliers is never pleasant. Still, you need to be proactive about communicating any financial difficulties you might face in the coming weeks and months. You might be surprised at their willingness to extend payment terms or come to some other arrangement—these are extraordinary times.

Whatever you do, don’t ignore the situation or fail to respond to emails and phone calls. That will only make a tough situation worse.

Check out state-wide assistance programs

State and local governments have been implementing different programs and initiatives designed to help small businesses weather the financial impact of COVID-19.

For example:

  • The New York City Department of Small Business Services is offering small businesses zero-interest loans of up to $75,000 to help offset lost revenues. They’re also offering small businesses with fewer than five employees a grant to cover 40% of payroll costs for two months to help retain employees.

  • California’s Franchise Tax Board announced special tax relief for California taxpayers affected by COVID-19, granting an extension of time to file and pay 2019 California tax returns until June 15, 2020.

  • The Washington State Employment Security Division may pay unemployment benefits while employees are on standby or working reduced hours. This will help employers hold on to highly-trained employees who might otherwise look for another job.

Each state’s plan to assist small businesses varies, so check with your local governor’s office or Chamber of Commerce for the latest updates and resources.

Further reading: COVID-19 Financial Resources, State by State

Talk to your accountant and tax advisor

The federal government is still working on plans to assist small businesses.

For example, the U.S. Treasury has already offered a 90-day extension on paying your taxes, if your tax deadline is April 15. Our recommendation (which isn’t official tax advice): file your taxes on time so you get your tax refund as soon as possible. Then delay your tax payment as close to July 15 as possible.

There have also been talks of cutting payroll taxes, offering tax credits, providing paid sick leave, sending direct cash payments to impacted taxpayers, and other financial assistance programs.

Things are moving fast, so stay in touch with your accountant or tax advisor to learn about new programs as they come out. We’ll also keep this article updated with all the latest information.

Other COVID-19 resources


This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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