Documentation Business Owners Should Gather to Establish Loss Due to COVID-19
We are in the midst of the public and private response to the COVID-19 pandemic. Many states are proposing legislation to require insurance companies to pay business interruption claims related to COVID-19 through their existing policies. Insurer groups have stated that most business interruption policies exclude coverage for losses related to infectious diseases, such as COVID-19. However, there may be government relief on the horizon based on the amount of loss actually sustained by businesses as a result of COVID-19.
It is uncertain the type and amount of financial relief that may become available. In the interim, business owners should accumulate the necessary information to establish the financial impact of COVID-19, including:
- Develop a timeline of events including dates in which the business was impacted by restrictions (i.e. production was halted, work was stalled, doors were closed to public, etc.), and the date the restrictions were released (i.e. date production began, business opened or increased, etc.)
- Previous five years historical tax returns, financial statements and general ledger reports
- Forecasts and budgets prepared prior to COVID-19
- Budgets prepared after the onset of COVID-19 (i.e. company stress test)
- Monthly profit and loss statements for the three months prior to COVID-19 and continuing monthly until the business recovers, including bank statements and general ledger reports for same time period
- Records supporting any revenue reductions
- Records supporting any additional costs incurred as a result of COVID-19 such as implementation of a remote workforce, change in cost of product as suppliers are unable to produce, etc.
- Details of additional loans effectuated or increases in lines of credit borrowings
- Details of any assistance received as part of the CARES Act and any forgiveness of the same
- Details of any other federal or state government assistance received during the period