Many businesses were caught off-guard by COVID-19. With the average business having less than a month of cash reserves at hand, it’s understandable that many companies are hurting. But as this has been a tumultuous time, there are also many grants, loans, deferments, and other resources available.
The Stimulus Package
For companies, the stimulus package set two things in motion: EIDL and PPP. EIDL loans were SBA loans for working capital for established businesses that were affected by the pandemic. PPP (the Paycheck Protection Program) was a program meant to pay payroll costs, in order to keep more people employed. Small businesses could apply for EIDL or PPP in the first round of the stimulus — and the second round of stimulus has brought back more funding. In addition to this, another EIDL advance is going to be opening up on January 17th, for companies in economically-disadvantaged areas.
Both EIDL and PPP funds are limited, so it’s extremely important for companies to get themselves in line as soon as possible. Otherwise, they may not have their applications processed before the funding is exhausted. Businesses will also need to show that they were economically impacted by COVID-19, which requires having thorough records. The PPP, as an example, requires income and expense statements, prior year tax returns, and other methods of verifying prior year income.
Federal and State Grants
Federal and state grants have been available throughout COVID-19 and are opening sporadically; it’s important to keep track of your local board of commerce. The Small Business Administration has a general list of programs open for COVID-19 relief — and for other purposes. Locally, there are likely some state grants or city-wide grants for businesses — or grants for small businesses within specific industries (such as restaurants). These grants often have a limited window for applications, so you need to check regularly to see whether there are new options available.
Many landlords are offering rent deferments with the understanding that if their tenants go out of business, they won’t be able to pay rent regardless. If you have a good relationship with your landlord, consider discussing a rent deferment with them. They may be able to give you some time to pay your rent — or they may even be able to cut your rent and reduce it for you. There may also be deferments for other bills available, but you won’t know until you ask.
During COVID-19, many companies turned to community support through GoFundMe and other fundraising platforms. For businesses that are keyed into the community, fundraising can be the best way to make the money that is necessary to survive. There are also cash advances through point-of-sale options such as Shopify or through payment processors such as PayPal; these cash advances make it possible for you to draw on your future sales and to pay the loan back through a percentage of those sales.
The Next Steps
If your business is currently experiencing financial issues due to COVID-19, you’re not alone. Your first step should be to get your books in order and to determine which bills need to be paid first. By prioritizing your bills and negotiating the rest, you should be able to reduce the problems you’re experiencing with your cash flow. It may not be possible to increase income during COVID-19; it may instead be necessary to reduce expenses. Some businesses have shut down during COVID-19 to reduce costs moving forward. Others have worked to plan for the eventual re-opening of the economy — a time of growth that will undoubtedly present opportunities, as much of the competition may not remain.
It’s important to understand that banks and creditors are also caught in the throes of COVID-19 — they can’t afford to pursue everyone legally. Because of this, most are amenable to adjustments and forgiveness. They would rather work with you than have you default and they understand that these are unprecedented times. Reaching out to your creditors is the best way to address any issues with your business and to potentially put your debts into forbearance.
For more information on strengthening your business for 2021, contact the pros at America’s Preferred Payroll for services including Federal & State Compliance, HR, Payroll, and more.