What Can A Small Business Do Right Now to Survive --- Read: CA$H?
As you may have heard, The Coronavirus Relief Package passed unanimously. <cartwheels>
Now comes the confusion. How do we, as small businesses, get access to the funds?
Let's get this clear: This is more than a relief package for many of our businesses, it is survival. The package gives small businesses access to a nearly $350 billion loan program to cover monthly expenses like payroll, rent and utilities. Great, but we need cash yesterday.
Let's talk about what we can do NOW to keep cash on hand, and identify how we can GET cash so that your business survives and then thrives... you have some work to do.
Small businesses are the backbone of the United States. There are about 30 million small businesses in the US. Small, non-farm businesses account for about 99 percent all organizations that employ people in the United States. You are not alone in this moment.
1. Keep the cash in your pocket, not theirs. Get creative with all the bills you need to pay.
Call every single one of your creditors now and see what they can do to help you out. Ask to break your payments down. You will still be paying the same amount, but less cash is going out the door right now. Landlords, credit cards, virtual assistants, coaches, vendors, etc. You need the cash in hand now so even a little will help.
2. Economic Injury Disaster Loans
This program is not part of the stimulus package, but this is eligible now for applicants affected by Coronavirus. There will be $10,000 advance available by applying for this loan, while you wait for the additional money. This has not been updated on the SBA website yet.
Cash flow assistance up to $2 million for small businesses as they are experiencing a temporary loss of revenue due to Corona Virus. Small businesses in the US may apply, not limited to businesses with employees. Learn More
These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
3. Paycheck Protection Program >> DOWNLOAD THE COMPREHENSIVE GUIDE HERE
This program was created by the stimulus package, and will be rolled out very soon. I have searched for this and cannot find where to apply for it yet. Treasury Secretary Mnuchin says additional funds from this week’s bill could begin processing by next week.
The Protection Program provides up to $10 million in assistance to small businesses through 100% federally guaranteed no and low interest loans that are eligible for loan forgiveness. Loan forgiveness is limited to: payrolls that include employee salaries, cash tips, paid sick leave, insurance premiums, mortgage payments, utilities, and other debt obligations. Loans will be accessible by applying through SBA-approved banks, credit unions and other lenders.
The program also provides low-interest loan financing through banks and other lenders for mid-size businesses. Lenders participating under the mid-size business program must maintain an annualized interest rate at or below 2%, and assess no interest during the first 6 months of the loan.
Eligibility: U.S. business owners in all U.S. states, Washington D.C., and territories — including sole proprietors, independent contractors, self-employed, nonprofit organization, or veterans organizations — with 500 or fewer employees, which retain their workers, or rehire workers already laid off due to COVID-19, are eligible for the small business cash flow assistance.
SBA Approved banks that are currently taking applications, or forms that will allow you to get information soon (March 29th update) are listed below. The SBA website does not currently have this information available:
3. Express Bridge Loan
In effect as of March 25, 2020. This is in response to the timelines of the above loan availability.
The Express Bridge Loan is an expedited loan of up to $25,000. The intention of this bridge loan is to give access to capital as businesses wait for more information on their Economic Injury Disaster Loans . This is a quicker turnaround time than the EIDL program. If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan. Learn More
4. Florida Emergency Bridge Loan Program
Governor DeSantos activated the Florida Emergency Bridge Loan Program in Florida in direct respond to the Corona Virus. This is not part of the stimulus package, but Florida small businesses with employees can apply for this loan.
The details for this loan are available HERE.
5. In addition to the above loan and cash flow ideas, there are also additional income and payroll tax relief for small businesses.
Income Tax Relief: The tax filing deadline has been changed from April 15 to July 15. The U.S. Treasury and IRS have also extended the due date for certain thresholds of federal income tax payments (including self-employment tax) that would have been due on April 15, to July 15. Small business filers may defer up to $1 million of income tax payments that would have been due April 15. New deductions for business improvements will become available, in addition to increased caps on allowable business interest deductibility and operating losses.
Payroll Tax Relief: Provides two immediately refundable, dollar-for-dollar payroll tax credits for costs associated with providing coronavirus-related paid and sick leave to employees under the Families First Coronavirus Response Act.
So, now comes the work. Start compiling and applying.
There will be a plethora of information released in the coming week as the banks, SBA, government, and businesses learn to navigate this process together. Things will change, websites will be updated. As more information comes to light, I will update this post.