The SBA has been hard at work coming up with new programs to keep small business owners going during the pandemic. The next round of stimulus programs, bailouts, and loans for 2021 will come with more stipulations than the last round. The SBA was criticized in the last round for allowing businesses like Shake Shack and the like to take advantage of SBA loans and programs when they should have gone to businesses that could not absorb the sudden financial shock of the government shuttering them.
Small business owners who are still financially struggling are eager to see what the COVID-19 COVID-19 Economic Injury Disaster Loans or EIDL will do for them this time around. What should they know before they rush to sign up for this round of programs?
While small business owners consider what a change in administration means for their small businesses, the financial concerns do not go away while they are waiting. A COVID-19 Economic Injury Disaster Loan would be a boost as they try and recover financially. Is taking an SBA disaster loan a good idea right now? What should small business owners know about the stipulations of these programs before they get involved in the application process?
Not All Small Business Owners Will Qualify For COVID-19 Economic Injury Disaster Loans
The first point to make is short. You have to have your small business in an area impacted by an economic downturn to qualify. It is not enough to be a struggling small business as a qualifier in this go around. Your small business will have to be located in an economically disadvantaged area.
Secondly, you will also have to prove that your small business had an economic impact of a 30% reduction in revenue for at least an 8-week period to be considered. This is not an either-or point. Both the first qualification and the second must be met to qualify. This may frustrate many small business owners who meet one but not both of these criteria. Nevertheless, this program is not available to them.
Another point of consideration is this; if you received the full amount of the last round you are not qualified for this one. Only small businesses that received just a portion of the last round, or that applied but did not receive any funding will be eligible for the 2021 COVID-19 Economic Injury Disaster Loans. For many small businesses that struggled to stay open last year, this year is no different. Even if your small business meets the first two stipulations, if you received funding last year, you aren’t getting any this year.
The Amount Of The Loan Won’t Make Much Difference
COVID-19 Economic Injury Disaster Loans or EIDL are only $10,000 loans. If your small business has been struggling all this time, chances are you need a whole lot more than $10,000. If you are deciding on keeping your business open over a $10,000 loan, it not likely to the savior you are looking for. Small business owners will have to shift their minds to long-term sustainability over the short-term loan and bailout funds.
Staying in business has a lot to do with making the decisions that plan for a financial upset. All small businesses have them. What can small business owners do besides see if they qualify for COVID-19 Economic Injury Disaster Loans?
Good Budgeting And Smart Cost Cutting Will Save Small Businesses
If there is anyone thing that will sustain a small business over time, it is good budgeting. Every business needs a budget. Having the right forecast for sales and spending with realistic budget goals keeps everything financially in check.
The best way to prepare a budget is to make sure you are only spending what you need to on expenses. Many small business owners are working with the same vendors year after year without considering another vendor who can offer a more competitive price. Small business owners who are budget conscience are always looking to save. Most of that starts with making sure you are getting the most for your money.
Small business owners also spend most of their income on employee expenses. Payroll, payroll taxes, payroll processing, HR consulting, and small group health plans are an enormous cost to small business owners. Where can they save on these necessary expenses?
If You Won’t Qualify For COVID-19 Economic Injury Disaster Loans
PEOs are where small business owners can win in the employee expense department. Where small business owners can save the most in this area is by working with a PEO. PEOs take on all of these roles for a small business with one cost to their customers, saving valuable time and money.
One phone call is all it takes to see if you qualify to work with a PEO. It could be that PEOs are the financial lifesaver you have been looking for as you recover your small business in 2021. Contact us today for a free consultation.