In order to slow the transmission of COVID-19 (coronavirus), the Georgia Department of Public Health strongly recommends social distancing. State and local governments have put a number of different restrictions on businesses to control the outbreak. Unfortunately, the pandemic has created some unique, often difficult challenges for small businesses.
At MG Law, we are proud to support our community. Our team wants to make sure that our local small business owners have the tools and information that they need to navigate the COVID-19 outbreak. Here, we highlight some of the key legal considerations for small businesses dealing with the coronavirus pandemic.
Small Business and COVID-19: Four Important Considerations
- State and Federal Support (Paycheck Protection Program)
As part of the COVID-19 economic relief package passed within the CARES Act, the federal government created the Paycheck Protection Program (PPP). Administered by the Small Business Administration (SBA), the PPP provides fully forgivable loans to small and mid-sized businesses that have been adversely affected by the coronavirus outbreak. Under the federal program, qualifying small businesses may be granted a fully forgivable loan to cover:
- Most payroll expenses;
- Mortgage interest payments;
- Commercial lease obligations; and
- Utility payments.
As a general matter, PPP loans cover up to 8 weeks of expenses. To maintain eligibility for full loan forgiveness, a small business must satisfy certain criteria, such as spending 75 percent of their total loan on payroll, keeping most employees on staff, and providing proper documentation to the Small Business Administration. While the application process is complicated, Forbes Magazine reports that the agency recently issued guidance loosening some of the legal requirements—thereby granting small businesses additional flexibility and making it easier to qualify for full loan forgiveness.
- Business Interruption Insurance Coverage
Some small businesses may be eligible for financial support through a commercial business interruption policy. As described by the Insurance Information Institute (III), business interruption insurance provides coverage for lost income when a company is forced to suspend/scale back operations in the aftermath of a disaster.
Unfortunately, many business interruption policies explicitly or implicitly exclude coverage for damages related to a pandemic or virus. That being said, there are plenty of exceptions. Some business interruption policies will cover coronavirus damages. If you are a Georgia small business owner who was forced to close because of COVID-19 and you have business interruption coverage, make sure you carefully review your rights and options. Do not assume that your claim will be rejected.
- Options for Restructuring of Contractual Obligations
If your small business has suffered financial disruptions as a result of the COVID-19 outbreak, you may be able to get some additional breathing room through the voluntary restructuring of a contractual obligation.
For example, in some cases, small businesses that have been forced to close may be able to get some form of financial relief from their commercial landlord. In other cases, Georgia small businesses may be able to renegotiate agreements with their vendors/suppliers to ensure that all parties are in the best position to move forward beyond the coronavirus.
Ultimately, the renegotiation of contracts is a very fact-specific, case-by-case issue. It will require some level of cooperation and creativity. Still, it is an option that businesses facing coronavirus-related financial disruptions should consider.
- Operating/Reopening in Safe and Legal Manner
As we move towards the summer, more and more businesses are reopening in Georgia and throughout the United States. During this time, it is crucial that small businesses develop and implement a plan that effectively:
- Complies with state and local public health regulations;
- Protects the health and safety of staff members;
- Protects the health and safety of customers/clients; and
- Promotes a positive customer/client experience.
What exactly this entails will depend entirely on the specific nature of the business. Some small businesses may want to consider implementing requirements that customers wear masks or facial coverings while in a store. Other businesses may want to consider reducing their total capacity to ensure adequate social distancing. No small business wants to face sanctions from public health officials or litigation from an employee/customer exposed to the virus. By taking proper safety precautions, you can best protect your business, your staff, and your customers.
Contact Our Georgia Attorneys for Immediate Assistance
At MG Law, we are committed to being leaders in the courtroom and the community. If you need legal guidance, please do not hesitate to contact our law firm for a free, completely confidential initial consultation. From our offices in Covington, Conyers, and Atlanta, we represent clients throughout the entire region, including in Rockdale County, Newton County, DeKalb County, and Fulton County.
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