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Q&A: Business Financing During COVID-19

March 30, 2020

Q. What are the biggest concerns you are hearing from your clients around financing in this age of coronavirus?
Segall: A lot of credit facilities have gone into default overnight because of our economy being shut down. Clients are concerned that lenders will not be flexible in crafting extensions, modifications and forbearances to enable businesses to get through this crisis. Other businesses are concerned that capital sources with have their own liquidity issues and will be forced to tighten their purse strings with respect to extending new capital.

Q. During the 2008 financial crisis, the Federal Reserve provided $350 billion in commercial paper short-term loans to companies and will once again make this source of funding available. How can companies take advantage of this resource?
Segall: As I am answering this question,it was just announced that Congress has passed a $2 trillion stimulus package. I am hopeful this will be targeted at the thousands of small businesses that make up the heart of this economy, and that they will be able to receive long-term low interest rate loans, forgivable loans or grants to help these businesses survive.

Q. What other loans, restructuring or financing tools should businesses be considering during this crisis?
Segall: Businesses need to look at the state level as well as the federal level for such programs as the SBA loan programs. There will also be private lenders who will step in at more aggressive rates and terms. But again, I hope this stimulus package will provide the capital needed.

Q. Is the Small Business Administration and their disaster relief loan program prepared for this current pandemic? What advice are you giving to your small business clients to help them stay afloat?
Segall: The SBA will be deluged with requests and we don’t know if they are staffed up to handle this. I am advising my clients to file the requests and diligently advocate for themselves to the extent they can. Make some noise to save your business. Reach out to your state reps and your attorney. Of course, anything we can do to assist our clients, we stand ready at their side.

Q. What is the one thing you think every company needs to know right now about financing and surviving through these challenging times?
Segall: For every small business, and some large companies, the stimulus package could literally be a life saver. Go on-line, call your attorney or state legislator and look in to these historical rescues package. As a business you also need to have multiple crisis management plans that demonstrate to your lender that you are making the right decisions, you are planning not reacting and you will survive and they should support you during this time.

Q. Are there any bright spots on the horizon?
Segall: Our economy is fundamentally strong. We are a resilient nation and we can point to the past when this country has faced adversity and emerged stronger for it. I am confident history will repeat itself and we will emerge from this crisis better and stronger.

Frank A. Segall leads Burns & Levinson as part of its Executive Committee and as Chair of the firm’s Business, Finance, Restructuring and Venture Capital & Private Equity groups. Known for his business savvy, thoughtfulness and legal expertise, Frank has helped build the firm’s practice and focus on the needs of growing companies. Highly networked and capitalizing on his business acumen along with lawyering skills, Frank has helped his clients create, develop, and build synergies, negotiated highly complex and sophisticated transactions, secured billions of dollars of financing, brokered strategic partnerships and expanded revenues for his clients. He can be reached at fsegall@burnslev.com or 617.345.3684.