Articles Posted in Corporate Finance

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Neumann Law Group has a proven track record challenging insurance coverage denials. Today, more and more businesses are suffering extensive losses, either directly from the corona virus, or from governmental action shutting down operations to mitigate the public health risk. Many businesses have paid insurance companies premiums for years to ensure protection in the event of a business stoppage by purchasing business interruption and civil authority policies or riders. Now, when small businesses need the most help, insurance companies are not providing much needed assistance.

Nationwide, almost all insurers offering business interruption coverage or civil authority coverage have denied claims related to COVID-19. The two types of policies are interrelated. Business interruption coverage allow companies to hedge against certain losses when the business suffers physical damage or loss that interferes with its ability to operate. Civil interruption coverage generally allows recovery when a civil authority issues an order closing a business or interfering with normal operations.

First and foremost, if you don’t know whether your business has such coverage, call your agent and find out. Most policies require the insured to submit claims promptly, so making a timely claim is critical. The types of injury upon which business have filed claims include lost income due to business closure, lost income due to public knowledge of infections on premises, costs of sanitization and employee testing, and a host of other claims specific to particular businesses.

Corona-Virus-300x169Neumann Law Group is ready to assist small businesses and self-employed individuals prepare for the anticipated second round of funding to the federal Paycheck Protection Program, as well as helping our clients navigate the application process following Congressional action. Although the content of what is being called an “interim stimulus package” remains the subject of considerable debate, nearly all economists and business leaders agree the measure is crucial to mitigate the shocking unemployment crisis facing the United States.

On April 16, 2020, the U.S. Small Business Administration’s website notified businesses that the agency was no longer accepting new applications for the Paycheck Protection Program. The recently passed CARES Act, otherwise referred to as the third stimulus package, earmarked $349 billion dollars for the U.S. Small Business Administration to distribute to small businesses, defined as having less than 500 employees—calculated by the average number of employees over the preceding twelve months.

The Paycheck Protection Program offers businesses a loan up to $10,000,000. The principal amount of each applicant’s loan is calculated at 2.5 times the company’s average monthly payroll costs for the previous one year. The loans are subject to complete forgiveness if used for qualifying expenses, which include:

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