Florida lawyers step up to assist struggling businesses
Florida lawyers are becoming a lifeline for businesses hoping to qualify for government aid in the wake of the COVID-19 pandemic.
Miami sole practitioner Jane Muir is keeping up with the latest state and federal guidelines, and helping her clients get their books in order.
“Mostly, it’s a translating job,” Muir said. “I try to digest the extensive and conflicting information, and turn it into something that a lay person can deal with and process.”
Restaurant and beauty shops that Muir represents have pivoted to takeout or producing online styling tutorials just to stay afloat or maintain visibility.
A catering company she represents is creating box meals so customers can enjoy “restaurant-grade” food, she said.
Muir’s clients typically generate about $1 million in annual revenue, and also include a security firm, a property manager, a fire safety equipment company, and a heavy equipment company.
“I wouldn’t call them mom and pop, but they are small businesses and family businesses, and I serve as their family counsel and troubleshoot for them whenever possible,” she said.
Time is running out for many of them since the pandemic brought the economy to a screeching halt, Muir said.
“Most businesses maintain only enough cash to handle two weeks of operating,” Muir said. “With a situation like this, their cash flow has stopped.”
On March 27, Congress passed a $2 trillion Coronavirus Aid Relief and Economic Security Act, or “CARES,” after 3.2 million U.S. workers had already filed for unemployment. By April 9, 10 million Americans had applied for unemployment.
The legislation included a one-time, $1,200 payment to taxpayers, $260 billion in enhanced unemployment benefits, and some $400 billion in loans and guarantees for businesses with fewer than 500 employees.
The Small Business Administration is overseeing, through participating lenders, the Paycheck Protection Program, which offers loans as an incentive for businesses to keep workers on the payroll.
The loans can be forgiven, and the money may also be used for rent, mortgages, and utilities.
“The Paycheck Protection Program is the most talked about CARES Act type of relief,” Muir said. “It gives you two and a half times the payroll for an average month, and it’s forgivable for up to two months, and that’s really exciting to small businesses because it might be sufficient to carry them through the shutdown.”
But some large financial institutions have been hesitant to participate in the program, mostly because of the risk they would have to assume for defaulted loans and because low interest rates make the loans less profitable, Muir said.
So far, Muir is not aware of any businesses receiving PPP money.
The State of Florida began offering emergency bridge loans of up to $50,000 to small businesses through the Department of Economic Opportunity in March, and that money has already begun to flow.
The Small Business Administration is also offering “EIDL,” or economic injury disaster loans, said veteran Central Florida business lawyer Philip Calandrino.
“In the past, if a hurricane swept through Florida and your business was destroyed, you would be able to qualify for a disaster loan because you had physical damage to your property,” he said. “This creates economic injury disaster loans, meaning you don’t have physical damage to your business, just economic injury.”
EIDL loans are attractive, Calandrino said, because applicants can receive a $10,000 bridge loan that is forgivable, even if the underlying loan is denied.
Calandrino’s clients are “small but established” and run the gamut from tiny startups to companies with 500 employees and $20 million in gross revenue. Most of his clients employ between 10 and 50 workers.
One client, a pizza restaurant chain owner, switched to delivery only, and has seen his business take off, Calandrino said.
But that’s far from typical.
“A lot of my clients are in survival mode,” he said. “Fitness centers and other places, social gathering kinds of businesses, are in dire straits.”
Some clients are wondering if their workers would fare better on unemployment, Calandrino said.
“The other part of the federal stimulus package allows for $600 a week for 39 weeks in benefits, added to the $275 a week for the Florida benefit, so it’s equivalent to (about) $21 an hour.”
Stimulus money is on a first-come, first-serve basis, and like many business lawyers, Calandrino has been calling his clients, blasting emails, and posting website notices to urge them to apply.
The SBA guidelines are evolving, and its unclear when it comes to calculating such things as part-time workers, Calandrino said. Yet failure to comply could result in the loans not being forgiven when the program expires.
“With the ambiguities in these laws, you’re forced to make judgement calls that require a legal mind,” he said. “That’s something that these business owners are not usually equipped to do on their own.”
Brett Trembly, the founding partner of the Trembly Law Firm in Miami, said government relief didn’t come soon enough for a few of his clients.
“Some event and travel companies basically went from very profitable to out of business, almost overnight, which included issuing a lot of refunds and 90% of their events being canceled,” he said.
Trembly said he and his legal team are thoroughly versed on the relief programs. He is also urging business clients to apply for government help, when appropriate.
“If you’re facing total economic devastation, then you should just go ahead and furlough your workers,” he said. “But if your business has slowed anywhere from 10 to 35 percent, if you can, hang in there, grab the loan.”
Instead of panicking, most clients are exploring all options and hoping to weather the storm, Trembly said.
“The mood is, well, it’s unfortunate, but there’s nothing that we can do about it but lean on each other to make it through,” he said. “This is the first time in our history that the entire world is on the same team.”