Photo of a business owner who is coping with changes and shutdowns amid coronavirus.

5 ways for businesses to cope with a coronavirus shutdown

Updated July 16, 2020

Like business owners everywhere, Brian Snyder had drastically different plans for his concrete contracting firm before the coronavirus pandemic struck.

Snyder, president and co-owner of Architectural Concrete Solutions Inc. in Columbus, Ohio, had just reactivated his staff of 18 from their routine seasonal winter break. One crew this week has been pouring concrete at the city zoo—even though the zoo is closed to visitors, as institutions of every kind shut down to encourage social distancing and stop the spread of COVID-19.

“Many people, many small businesses are literally month to month, week to week,” Snyder says. “The devastation of this—you can’t calculate it.”

Businesses with fewer than 500 employees—such as Snyder’s, a Principal® 401(k) client—represent 47% of private sector jobs (PDF) in the United States. Since 2000 they’ve generated 65% of net new jobs.1

The pandemic’s potential disruption to the entrepreneurial frontlines of America can’t be understated, with a record surge of tens of millions of unemployment claims.

But the federal government has fast-tracked measures to support businesses and try to prevent the pandemic’s worst economic side-effects. Business owners can use the help; the endless variety of logistics they normally juggle suddenly has been magnified.

The federal government has fast-tracked measures to support businesses and try to prevent the pandemic’s worst economic side-effects.

5 ideas to help you navigate COVID-19 social distancing and shutdowns

“There are so many unknowns right now that I have to deal with,” Snyder says.

He’s not alone, as our nearly 200,000 business clients of all sizes worldwide could attest.2 Here are five ideas to help you and your business navigate the complications of the coronavirus shutdown and tap into new U.S. government programs:

1. Make your business operations safer.

There are so many unknowns right now that I have to deal with.”

Brian Snyder, president and co-owner of Architectural Concrete Solutions Inc.

Nearly every company—Principal included—has restricted business travel and access to offices and established a widespread work-from-home policy. Even a construction company that can’t avoid on-site work can take precautions: Snyder and his company have enforced stricter handwashing, removed communal water jugs, and required each worker to carry an independent water supply.

2. Pivot to more of an online or alternative business model.

The restaurant industry with its national workforce of 15 million, on the frontlines of the first wave of shutdowns and layoffs, has been a model of ingenuity. Many restaurants whose revenue had been focused on dining rooms have shifted to curbside take-out or home delivery. Other businesses may need to make a similar move appropriate to their sectors. Snyder and his concrete company are adjusting their business plan to rely on less of a residential market, as individual’s budgets leave little room for decorative concrete for their backyard patios. 

3. Tap into emergency savings or collateral.

Snyder, now age 49, years ago was forced to sell his first construction business at a loss in the wake of a family medical emergency. That motivated him to build up substantial savings for his current business to help buy out competition, earn vendor discounts through bulk purchases, or weather an emergency such as this pandemic.

“It’s extreme,” Snyder says of his cash savings. “You don’t really get it until something catastrophic happens to you.”

Mark West, national vice president of business solutions for Principal, says that enduring the 2008 financial crisis spurred many businesses to build up larger cash reserves. Others were able to borrow from their cash value life insurance and use their policies as collateral to “help get bank loans or lines of credit to get them through a rough spot”—a strategy that could help now.

4. Turn to surprising sources of emergency cash, such as Facebook.

The social media giant has dedicated $100 million in grants that it will divide among as many as 30,000 businesses across the 30 countries. An emergency cash infusion—maybe even crowdsourced from appreciative clientele—could be feasible for some local businesses.

5. Stay up to date on how the government is trying to help you and your employees.

Think of the new emergency federal assistance to businesses and workers in multiple phases:

  1. ​The $100 billion Families First Coronavirus Response Act passed and signed March 18 is focused on employees of companies with 500 or fewer workers.
    • It provides free COVID-19 testing and expands food assistance.
    • It extends two weeks of paid sick leave (up to $511 per day) for those suffering from the virus themselves or seeking a diagnosis.
    • If caring for an individual who’s sick, the benefit must replace at least two-thirds of the employee’s wage (up to $200 per day).
    • It also adds up to 12 weeks of family and medical leave for an employee with a minor in the event of the closure of the child’s school or place of care paid at two-thirds the usual rate (capped at $200 per day).
    • Employers providing leave are reimbursed by the government within three months through payroll tax credits. And employers with fewer than 50 workers can apply for an exemption if the additional expense would threaten the viability of their business.
  2. The Coronavirus, Aid, Relief, and Economic Security (CARES) Act, created several sources of emergency help, including advance rebate checks for many taxpayers, and low interest loans and tax credits for employers. For example, one payroll tax credit is designed to offset the costs of the emergency sick pay and paid family leave you may need to provide employees. It also includes:
    • The Paycheck Protection Program (PPP) (PDF): This offers a potentially forgivable loan if used for specified purposes (generally payroll, rent, mortgage interest, and utilities for the eight weeks following the date of the loan).
    • Emergency Economic Injury Disaster Loan (EIDL): This low-interest loan from the SBA is available for up to $2 million and can be used to cover sick leave, maintain payroll, make rent and mortgage interest payments, and service debt obligations. Prior to July 11, 2020, EIDL borrowers could also apply for a grant of $1,000 per employee, up to $10,000. If you received the grant, it doesn’t have to be repaid, even if you’re ultimately denied a loan. It can be combined with PPP as long as the funds are used for different purposes. But note that the EIDL grant also reduces the amount of forgiveness available from the PPP loan.
  3. The federal government approved additional funds in April for popular programs such as PPP and EIDL, and congressional experts anticipate yet more phases of stimulus in the months ahead.

This federal government response to the COVID-19 economic crisis is being quickly assembled piece by piece, West says, “and hopefully all of this comes together as a complete puzzle without any missing pieces.”

Among other resources available to business leaders, the U.S. Chamber of Commerce has its own list of “8 things your small business needs to do.”

Graphic of a thumbtack. A note on pay and benefits

Businesses also should consider how they may want or need to adjust their benefits package offered to employees to weather an economic downturn or a shutdown. For instance, if all employees are placed on unpaid leave, that doesn’t require you to continue to provide employer contributions to a retirement plan. But paid leave does. Meanwhile, a shutdown in operations doesn’t necessarily mean you have to freeze your plan. Every company’s circumstance can be unique, particularly in such a volatile crisis. Reach out to your financial professional with detailed questions.

What’s next?

  • Visit our “Navigating business now” page for our latest resources for businesses.
  • Are you a Principal business client with a retirement or benefits plan? Reach out to your financial professional or Principal representative for answers about your specific situation.

1 U.S. Small Business Administration, September 2019.

2 Principal reporting as of December 31, 2019.

Architectural Concrete Solutions Inc. and Facebook are not an affiliates of any company of the Principal Financial Group.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.​

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