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Back Cover Story: Priorities

Moving Forward

Continued from page 44 next COVID phase or closing shop.
in the present environment wants to lose a Personnel decisions have been tough for
single tenant it can retain. businesses. Utilizing contract (1099 or
This is the time to approach your land- staffing agency) employees, rather than
lord, even if you’re making your rental hiring permanent employees may be
payments easily. Landlords MUST give to advisable.
hold on to their tenants in this market. If This is an important time for many busi-
you are willing to extend your lease term, nesses to market and advertise, as the per-
exercise an option or take any other action son-to-person marketing opportunities,
to make your landlord more secure as such as trade shows, are on-hold indefi-
other business tenants go broke, you can nitely. Paying for the marketing efforts on
surely negotiate new and better terms. The a business card is likely not a wise idea,
same if you own a building. This is unless the business has a great lead on PPE
because the cost of borrowing is so cheap at a discount. However, business loans for
right now, not only for you, but for businesses which are holding firm or
lenders. A business which borrowed at 9% growing are loose and inexpensive.
to buy a building at not too long ago can Although risky, quickly growing business-
save several points on a refinanced loan. es are “factoring receivables”-which is a
For many businesses, that can be the dif- high-cost and terribly risking situation to
ference between closing and staying open. avoid, unless on the verge of bankruptcy.
Likewise, a bank is borrowing that same Bankruptcy filings are increasing and
money at less than 1% from the Fed, so expected to continue to do so at an accel-
lending at 5 or 6 or 7% is a great proposi- erating pace into the indefinite future.
tion for a lender. There is now a new small business reor-
Many companies are heavy on equip- ganization provision which will streamline
ment contracts. Whether financing the the process for many and many will utilize
purchase of a piece of expensive equip- chapters 7 and 11. Often, bankruptcy is
ment or the lease of a fleet vehicle, these either the only choice or is a preferable
transactions are secured with collateral. specific choice, but the law of priorities
The Federal Reserve has pledged to keep applies to bankruptcy law. The secured
its lending at virtually free to banks for the obligations get paid first.
indefinite future. If your equipment or fix- For most businesses, these times are
tures were purchased a few years ago at 8% challenging. For the readers, you’ve sur-
interest, the bank had best be ready to refi- vived. Great, but take inventory of what
nance at a lower rate to avoid a default. has worked so far. Likely, you’ve priori-
Imagine all of the breweries which have tized to make things work. Moving for-
opened in the past 5 years with large loans ward, assess what needs to be paid in what
for equipment. They’ve been selling no order and what can be refinanced with
beer for a half a year, except for shipped cheaper money. Nobody knows what lies
items. If opening shop required a $1 mil- ahead, but these simple tips can only help
lion equipment loan 3 years ago and there you to survive COVID round 2.
is a 5 year interest-only balloon loan on all
of that equipment, refinancing the remain- Michael Liss, Esq. can be reached at
ing obligation to 5 or 6% may be the dif- ml@integritycounselpa.com or (561) 981-
ference between making it through the 2507, located in Boca Raton.

Cannabis News Florida cannabisnewsflorida.com October 2020 33