Youth Services Law

Surviving A Shut-Down of Your Youth Program

Coronavirus

City, county, and state quarantine orders are impacting many youth-serving organizations, and federal guidance is for those to continue through April. Georgia currently has more child care centers closed than open, and summer programs are trying to figure out what plans to make for the next few months. Here are some ideas that might help your organization survive so that shutting down is temporary rather than permanent.

Take Care of Your Staff

Your staff is your biggest asset.  You don’t want to be in a situation when you do re-open your school that you will have to turn away families who are ready to pay you because you don’t have the proper staff. 

What Should You Do 

Talk to your staff. Have open and honest conversations with your staff about what is currently happening. Determine who is truly essential and what work they can be doing for you and the school even while it is closed. For staff that you must lay off, the DOL is requiring that employers file for unemployment for full-time employees. You can find more information at the DOL website or Taylor English’s summary.

Alternate Income Arrangements. Explore alternate arrangements for income for your staff if you cannot continue to pay your staff in full or in part. Consider letting your families know that you can only pay staff through a certain date, and if they are able to continue with payment to the center, you will direct all funds received to your staff. If you are a 501(c)3 consider offering families a donation acknowledgement for any redirected funds. Other centers have asked parents to consider hiring center staff for child care in the interim. If you want to consider this route, please consult with your attorney to ensure that your agreements with the parents adequately protect your business. Christina Moore (cmoore@taylorenglish.com) or Debbie Ausburn (dausburn@taylorenglish.com) are available to help with these questions.

Recalibrate Your Budget

For many, your only sources of income are tuition and/or subsidies, which may seem uncertain right now. If your school closes for any period of time, use this time to review your school’s budget and get a stronger understanding of your income and expenses. If you planned to spend any funds for on any non-essential improvements or supplies, place a hold on spending those funds and/or doing that work.

What Should You Do 

Evaluate what expenses are reduced or halted temporarily and consider how that money can be re-deployed in a better way to cover other, more significant expenses. Consider planned capital expenditures to determine what is “nice to have” vs what is “must have.” Determine if you can reduce the cost of your debt/capital structure through refinancing or apply for an Invest Atlanta or SBA loan. The SBA website is here. Christina Moore (cmoore@taylorenglish.com) is available to help with the application for any Invest Atlanta or SBA funding. Also, please reach out to Mark Beal with Baer Wealth to inquire about SBA funding offers. Note: Loans to applicable companies through Invest Atlanta are between $5,000.00 and $30,000.00 and interest free.

Evaluate Liquidity

Review how much liquidity you have through cash in checking/savings or other investments in brokerage accounts. Then determine how long that can last you in a worst-case scenario.

What Should You Do 

Resist the urge the use a credit card with higher interest rates, but know what your available limits are. Talk to your banker to explore what other options exist. A line of credit for your business or a home equity line for your residence can be an additional safety net. If you have a mortgage, ask your lender if they are offering deferment of loan payments or interest only payments for a period of time. Consider obtaining funding through the SBA if eligible for either: 1) an EIDL loan, which includes up to $10,000 in grant funds, or 2) a Paycheck Protection Program Loan, which can include 8-weeks for forgiveness for payroll costs, debt expenses and utilities.

Other Changes to Note

The IRS has delayed tax filing and payments until July 15. Check with your tax professional about how these new deadlines apply to you.

Consult your tax advisor to see if you can take advantage of the Families First Coronavirus Response Act (H.R. 6201) and/or the Employee Retention Credit provisions under the CARES Act for employee tax payment credit/refund from the IRS, providing for employers with compensation in the form of a tax credit for pay to employees who are forced to stay home due to quarantining or to care for a family member or to care for a child if the school or place of care is closed.

These are unprecedented times, and teamwork will be essential. Let us know how we can help. 

Mark Beal, CFP®, with BaerWealth contributed to this alert. For additional information on this topic, he can be reached at mbeal@baerwealth.com.

Christina Moore has experience in transactions involving real estate acquisitions and dispositions, including transactions involving apartment complexes, real estate and related-asset secured loans and other complex credit facility transactions. Ms. Moore can be reached at cmoore@taylorenglish.com.

Deborah Ausburn focuses on advising and defending youth-serving organizations. Ms. Ausburn’s experience includes decades of working with youth organizations, dozens of successful jury trials, and successful arguments before the U.S. Supreme Court. That experience has given her a national presence with organizations that serve young people. Ms. Ausburn can be reached at dausburn@taylorenglish.com.

Disclaimer – The information in this alert is for informational purposes only and does not constitute legal or financial advice. No attorney-client relationship or advisory relationship has been or will be formed by any communication(s) to, from or with the alert or authors. The opinions expressed are those of the authors, and decisions relating to the content belong to the authors.

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