If 2020 was your first dive into entrepreneurship, then from the depths of our hearts…we’re sorry.
Obviously, the impact of Coronavirus has absolutely disrupted the status quo and turned what was normal on its head. An unprecedented event we haven’t seen in over a century, responding to this has been quite an uphill battle. And if you’re a small business owner that just got on their feet, then there are some resources for you to consider to stay afloat through these hectic times. Here are a few of our favorites:
For how unprecedented the times we’re in, there’s also been noteworthy solutions to help with impacted businesses. For most business owners, the biggest consideration you should have is the lending programs, particularly with The Paycheck Protection Program, or PPP established through the Small Business Administration.
What’s rare about PPP is that it is forgiven after two months as long as it’s used primarily for payroll purposes, with other auxiliary factors like rent and utilities put under consideration for forgiveness as well. To calculate the amount of the loan, an approved SBA lender will look at your documentation for average revenue per month (primarily, from 2018 tax returns unless you’ve already filed 2019), then multiply it by 2.5 and allocated over a two-month timeframe. The maximum loan amount is $100,000, which for most small businesses will be plenty.
Of course, it’s best to read up and walk through the loan application with an expert to avoid any errors that could make you lose eligibility for forgiveness. Although not an incredibly stringent process, it still is something you want to do your due diligence on.
Finally, another resource from the SBA to consider is the Economic Injury Disaster Loan, which is a great program as well.
If you feel as though you still might need access to additional capital beyond what the SBA can offer, then going with a private lender isn’t a bad option right now. As the Federal Reserve slashed rates down to 0-1.25% interest last month in response to Coronavirus, it’s a buyers market when it comes to looking for a loan. And for your business, that might not be a bad option.
Tax-wise, the interest you pay can be deducted from your business income, which can help with a little bit of breathing room later on. While rates are low, be mindful of the fiscal responsibility and feasibility of what you’re trying to borrow, with the hope that this provides either a bridge to change directions or stay afloat for a short period of time. Check around to see what lending options might be available to you, as this year can also be an excellent time for a reset.