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Opinion: How to navigate COVID-19 with your banker

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Similar to most businesses throughout the country, Springfield companies are facing challenging economic times in the midst of the COVID-19 outbreak. Truthfully, there are few events in our lifetime that will have the wide-reaching financial and societal impact as what we are facing right now.

In unprecedented and unsettled times like this, it’s helpful to find solace in the fact that we have weathered storms like this before and we will do the same this time. And we will do it together.

As financial professionals, we have a responsibility and strong desire to help businesses through these challenging times. One of the ways to do this is to communicate and then over-communicate again with each other, especially as we navigate quick-changing legislation and other factors that impact businesses of all sizes. Here are several questions and conversations that you should be having with your banker about your business, the impacts of COVID-19 and what the future holds.

Start a conversation
Now is the time to be communicating with your banker if you haven’t already. You should be talking with them about how you are dealing with this uncertainty and your potential contingency plans. Ideally, your banker already has reached out to you. Part of this conversation with your banker should center around your business plan during this time. What are your cash-flow projections? How are you dealing with staff and benefits? What will you do if revenue starts to decline?

These conversations will help you get prepared for the future and have a plan in place if the time comes to make critical business decisions.

Understand the CARES Act
The Coronavirus Aid, Relief and Economic Security Act was signed into law by President Donald Trump on March 27. Its goal is to provide relief for individuals and businesses negatively impacted by COVID-19. For businesses, this assistance comes in several forms, including:

• Enhancements to Small Business Administration programs: The CARES Act offers expanded SBA benefits to enable more companies to qualify for larger loan amounts at more favorable terms. There are several options available, including the Paycheck Protection Program, the Economic Injury Disaster Loan program, the Express Bridge Loan Pilot Program and standard 7(a) loans. Your banker can help you understand and navigate which programs are right for your business. You also should consult your tax and legal advisers in those decisions.

• Tax relief: There are multiple provisions in the CARES Act to provide business tax relief, including refundable tax credits and deferred payment of employer payroll taxes. Your banker and tax adviser can help you understand the relief measures.

•Modification of charitable contribution limits for 2020: The act increases the limitation on charitable contribution deductions. For corporations, the “10% of taxable income limitation” is increased to 25% of taxable income for 2020.

Ask for help
Bankers are risk managers by design and should be prepared for all environments, including this one. Most larger banks have the capital and liquidity built up to meet the needs of businesses and individuals during this time. Some relief measures that are currently available include:

• increased mobile deposit limits;

• individualized, flexible credit card repayment and payment deferral options, as well as a balance transfer opportunity;

• access to additional credit lines extended on a case-by-case basis;

• six-month term loan payment deferral option for current small-business customers;

• counsel on SBA disaster assistance and other state and local programs; and

• a 90-day moratorium on initiating foreclosure activity on all mortgages and home equity lines and loans.

I have no doubt there will be much more coming down the pike in terms of new legislation and economic relief measures in the months ahead. In the meantime, I encourage you to stay proactive and in touch with your banker. We are all here to help you navigate the uncertainty that is ahead of us and, as always, prepare for your best future. I also firmly believe brighter times are ahead. Together, we can work our way through the current environment and enjoy what’s on the other side when we come out of this.

Byron Pierce is senior vice president and commercial team lead for UMB Bank in Springfield. He can be reached at byron.pierce@umb.com.

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