COVID-19 Financial Relief Resources for Your Small Business

This post was contributed by our partners at Bench.

If your small business has been impacted by COVID-19, you have financial options. From federal loans to local grants, here’s a walkthrough of available resources to help your business stay afloat. 

For any loan or grant application, we recommend getting your 2019 bookkeeping and taxes completed. This will put you in the best position to secure funding, and be eligible for loan forgiveness where applicable. 

Have any questions at all about financing, bookkeeping, or taxes? Reach out to Bench and learn more. 

  1. Federal government relief 

Paycheck Protection Program

Weren’t able to get funding during the first round of the Paycheck Protection Program? Good news: an additional $310 billion of funding has been approved by the federal government. This newly updated bill makes additional guarantees that at least $60 billion must be granted by small banks, community financial institutions, and credit unions to ensure that truly small, local businesses get a chance at funding. 

The highlights: 

  • The funding is meant to help retain workers, maintain payroll, and cover rent/mortgage/utility expenses.
  • Small businesses, sole proprietorships, independent contractors, and self-employed individuals can all qualify.
  • The loan covers expenses dating back to February 15, to June 30, 2020.
  • The loan can be forgiven and essentially turned into a non-taxable grant.

Further Reading: The Paycheck Protection Program and Health Care Enhancement Act: What You Need to Know

EIDL Program

These low-interest federal disaster loans for small businesses quickly ran out of funding in its first round. The newly approved bill provides an additional $60 billion to the program, including $10 billion to the EIDL emergency grant. 

The highlights: 

  • The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million.
  • You can use this loan for typical day to day expenses such as mortgage payments, payroll, accounts payable, utility payments, or vehicle payments.
  • You cannot use this loan to refinance existing debt, to replace lost sales or profit, or fund purchases of equipment, vehicles, and supplies.
  • Loans that exceed $25,000 must be secured by collateral. The SBA will not decline a loan if you don’t have enough collateral but will ask for whatever collateral is available, which may include real estate owned by a business’ principals.

Further reading: How to Get an SBA Disaster Loan

SBA Express Bridge Loans

Applied for an SBA disaster loan but need cash, now? The Express Bridge Loan Pilot program authorizes SBA Express Lenders to provide emergency loans in amounts up to $25,000 while your small business applies for and awaits long-term financing through SBA’s direct Disaster Loan Program. 

There is a catch, though—your small business must have an existing business relationship with an SBA Express Lender. Check with your banking institutions to see if they offer SBA Loans.

The highlights: 

  • The small business must have an existing relationship with the funding bank prior to March 13, 2020.
  • Up to $25,000 in funding.
  • Fast turnaround.

Further Reading: The Express Bridge Loan Pilot Program (A Simple Guide)

Employee Retention Tax Credit

You can be eligible for payroll tax credits if you keep your employees on payroll, if you paid COVID-19-related sick leave for employees, or if you had to suspend operations.

The highlights: 

  • Employers with fewer than 500 employees are eligible for payroll tax credits, if they keep their employees on payroll throughout the COVID-19 crisis.
  • These tax credits can significantly lower your tax bill.
  • You cannot qualify for these tax credits if you’re also applying for the Paycheck Protection Program.
  • Relief is available for qualified wages paid after March 12, 2020, and before January 1, 2021.

Further Reading: Employee Retention Credits: A Simple Guide

  1. Regional funding

If you’re unable, or not eligible, to receive federal funding, make sure you check your local chamber of commerce, economic development office, or nonprofit for relief programs.

Further Reading: COVID-19 Resources, State by State

  1. Explore alternative resources

If you’re unable to receive funding from the federal or state government, there are alternative resources available. Many large companies and industries have stepped up for the small business community, and we encourage you to look within your professional network for available grants. Here are some options we recommend: 

Facebook Small Business Grants Program

Facebook is providing cash grants and ad credit to small businesses with 2–50 employees.

  • Applications will be open to cities on a rolling basis. Visit the site to see if it’s open for your city.
  • Must be a for-profit company that has been in business for over a year. 

You can apply here. 

The Photographer Fund

CERF+ Emergency Assistance

Google Ad Credits for Small and Medium-sized Businesses

Further Reading: The PPP and EIDL Are Closed. Now What?

Bench can get your books caught up and your finances organized—so you can get funded and take back control of your business. 

Use this link and you’ll get 20% off your first six months of bookkeeping and record-keeping support.

How to Reduce Your Expenses (Sustainably and Effectively)

In the time of COVID-19, many of us are understandably anxious. With doomsday headlines about record unemployment numbers and businesses closing their doors, it’s difficult to escape feelings of uncertainty. 

Most of us know somebody who’s lost a job or had a salary cut, whether or not we have personally been impacted. So it’s understandable that many people are thinking about how to make more money or spend less of it.

Even if your income has not been impacted by COVID-19, boosting your savings account is never a bad idea. Reducing expenses can also put you in a place to more freely help others who may have been more severely impacted by the pandemic. 

Fortunately, reducing expenses doesn’t have to be complicated. We’ve put together some simple steps you can follow to effectively spend less money.

Understand Your Cash Flow

To effectively cut your expenses, you need to understand money going out and money coming in. If you are an avid budgeter, then you probably understand this pretty well. But if not, you’ll want to take some time to assess your finances over the last few months. 

Money Going Out 

We recommend compiling and sorting your expenses for the past 3 months to get an accurate picture of how much you actually spend in a typical month. Of course, the more data you have the better. If you use a tool like Mint or if your bank has built-in charts and categorization features, this step should be pretty easy. 

If not, there are lots of ways you can start to understand your expenses from the last few months. The easiest approach would be to download your bank statements, transfer them to a spreadsheet, and add categories as needed. 

However, if your bank does not provide itemized statements or you use cash regularly, you’ll want to supplement this data with a tool like Shoeboxed. With Shoeboxed, you can easily digitize and organize paper and e-receipts by categories. 

Money Coming In

Determining how much money you have coming in should be more straightforward for most people. Salaried workers with no additional income sources simply need to reference their paystubs. 

However, if you are a freelancer or have a variable component to your income (think tips or commission), you’ll want to work off of your worst-case scenario, or lowest possible income. If you receive tips or commission, the most straightforward way to get this figure is to work off of your base pay. For freelancers, we recommend working off of your lowest income month in recent history (think 6 months – 1 year). 

Of course, if you have recently lost your job or otherwise had a dip in income, you need to work off of your new reality. It won’t help you much to assess based on your prior income. 

Once you have completed both of these steps, you’ll have a snapshot of your financial patterns. For some people, the math may not add up, meaning they spend more money than they have coming in. If this is the case for you, you know you either have to make more or spend less.

Either way, you now have a better understanding of whether you’re operating at a net gain or loss and can take the appropriate course of action. 

Define What is Truly Essential

Once you understand your cash flow, you need to define how many of your expenses are truly essential. If you’ve ever saved up for an emergency fund, you likely already have a calculation for what your bare-bones expenses look like. 

If you haven’t, make a list of your MUST PAY categories. Think of things like monthly bills, utilities, minimum payments on credit cards, a realistic but lean food budget, etc. This will help you understand how much money you need to live on and how much of your money going out is nonessential. 

While sticking to only essential expenses would be the fastest way to bulk up your savings account, that’s not always realistic. If you are bringing in more money than what you absolutely need to live off, you have some wiggle room for spending.

If you’re having a hard time determining what is truly essential, take a look at this guide from Ellevest. 

Ask For Flexibility Where You Need It

Once you have a clear understanding of how much money you really need to live on, you can start looking for wiggle room within those essential expenses. For example, if you are a homeowner, research your options for mortgage relief. You may also consider calling your credit card company and negotiating your interest rate for long-term savings.

Whether you’re dealing with rent, student loans, or credit card debt, research relief options or consider negotiating where possible. While you may find it difficult to pick up the phone and ask for help, the reality is that many landlords and lending institutions would rather make adjustments and meet you where you are than risk having you default on your payments completely. 

Cut Where You Can

Once you have a true understanding of your cash flow, know what expenses are truly essential, and have negotiated as many of your expenses as you can, it’s time to start making some cuts. 

Hopefully, you’ve identified excessive or unnecessary expenses that can be easily reduced or cut and can start there.

However, it’s not always that straightforward. For example, many people struggle with keeping their food budget under control. You obviously can’t completely cut out your food spending, so you’ll have to adjust some other way. 

Here are some simple ideas for shifts or reductions you can make in common problem areas. 

  • Clothing and home decor – Take advantage of resale apps like Poshmark or Depop to purchase clothing or home decor that’s new to you. While this won’t help you curb your shopping habit completely, you can rest assured that you’re saving some money. You may also be supporting people who make a full-time living off of these apps, and bonus points if you boost your income by becoming a seller too! 
  • Food – Food is one of the most common areas where people overspend, especially when it comes to eating out. You may find it helpful to set some ground rules for how often you’ll let yourself order in or go out to eat. Alternatively, you can put on your chef hat and figure out how to make your favorite takeout dishes at home.
  • Bulk purchases – It’s no secret that you can save money on items you purchase frequently when you buy in bulk. If you take this approach, make sure to do the math (by comparing unit costs) on whether or not you’re actually saving money. You also don’t want to break the bank just to save a few bucks, so we only recommend this approach if you truly can afford the upfront cost associated with bulk buying. 
  • Implement a sinking fund – If you know that you won’t be able to truly resist spending in certain areas, you can try starting a sinking fund. A sinking fund is typically made up of known but irregular expenses, like trips or car repairs or clothing. You may know that these expenses will eventually come up, but you don’t know always know when. However, that doesn’t mean you can’t plan for them! Putting aside a little bit of money every week or month in a separate account for when these expenses come up can help soften the blow. This tactic can also help you prepare to purchase the things you want without having to feel guilty when you indulge. 

For problem areas where you tend to overspend, consider giving yourself a spending or frequency limit to shoot for. Maybe you will only allow yourself to spend $50 on clothing a month or to eat out once a week.

If you have a budget, you may already have many of these rules established. Even if you don’t put together a formal budget, setting these types of parameters will give you something specific to work towards as opposed to simply “reducing spending.” 

And if you find that there isn’t enough you can reasonably cut and still make ends meet, make sure you’re taking full advantage of all relief options available to you or seeking new ways to increase your income. 

Conclusion 

Whether or not your income has taken a hit in light of COVID-19, reducing your expenses is probably not a bad idea. It can help you boost your savings in case of emergency, or put you in a place to help others who have been financially impacted by the pandemic. 

Regardless of your motivations, it’s critical that you understand your expenses before you can make cuts in a sustainable way. These simple steps can help you determine where you can afford to make cuts that will hopefully give you some peace of mind.

Learn more about how to understand your expenses with Shoeboxed.

Learn More

4 Steps to Getting Your Business Through COVID-19

Our partners at Bench are here with some action items that you can implement right now to help your small business confidently face whatever comes next.

With the effects of COVID-19 rippling through the economy, it’s easy to feel overwhelmed. Many businesses are being forced to shut their doors temporarily. What should you do first? How can you protect your finances in a volatile economy?

1. Understand your business’ current financial position

It’s always a good idea to have a handle on your numbers, but this becomes doubly important during times of economic uncertainty. 

A clear understanding of your company’s financial position lets you immediately see where you can cut costs, what expenses you can justify, and what debts might need to be renegotiated or deferred. Evaluate current assets and loans and see what can be leveraged during this time. 

A clear understanding of your company’s financial position lets you immediately see where you can cut costs, what expenses you can justify, and what debts might need to be renegotiated or deferred.

Bookkeeping in times of recession is more important than ever—having financial statements on hand is often necessary for payment deferrals or loan applications. If you’re behind on your bookkeeping and you’re not sure how you’ll get financial statements together, Bench can help. 

2. Apply for disaster loans or financial relief

Nobody was ready for the heavy-hitting impacts of COVID-19, but the government has stepped up and is rolling out new programs and loans to help you stay in business. 

Here are some of the latest options to take advantage of: 

SBA Disaster Relief Loan 

The U.S. Small Business Administration (SBA) has approved low-interest federal disaster loans for small businesses suffering substantial economic injury as a result of COVID-19.

The highlights: 

  • The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million.
  • You can use this loan for typical day to day expenses such as mortgage payments, payroll, accounts payable, utility payments, or vehicle payments.
  • You cannot use this loan to refinance existing debt, to replace lost sales or profit, or fund purchases of equipment, vehicles, and supplies.
  • Loans that exceed $25,000 must be secured by collateral. The SBA will not decline a loan if you don’t have enough collateral but will ask for whatever collateral is available, which may include real estate owned by a business’ principals.

Further reading: How to Get an SBA Disaster Loan

SBA Express Bridge Loans

Applied for an SBA disaster loan but need cash now? The Express Bridge Loan Pilot program authorizes SBA Express Lenders to provide emergency loans in amounts up to $25,000 while your small business applies for and awaits long-term financing through SBA’s direct Disaster Loan Program. 

There is a catch, though—your small business must have an existing business relationship with an SBA Express Lender. Check with your banking institutions to see if they offer SBA Loans.

The highlights: 

  • The small business must have an existing relationship with the funding bank prior to March 13, 2020.
  • Up to $25,000 in funding.
  • Fast turnaround.

Further Reading: Express Bridge Loan Pilot Program Guide

Paycheck Protection Program

The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This program is intended to provide American small businesses with eight weeks of cash-flow assistance through 100 percent federally guaranteed loans. 

The highlights: 

  • The funding is meant to help retain workers, maintain payroll, and cover rent/mortgage/utility expenses.
  • Small businesses, sole proprietorships, independent contractors, and self-employed individuals can all qualify.
  • The loan covers expenses dating back from February 15, to June 30, 2020.
  • The loan can be forgiven and essentially turned into a non-taxable grant.

Further Reading: What is the Paycheck Protection Program? (A Simple Guide)

The CARES Act (Coronavirus Aid, Relief, Economic Security)

The government just passed one of their biggest financial relief bills yet—the CARES Act (Coronavirus Aid, Relief, Economic Security). $350 billion is being dedicated to preventing layoffs and business closures while workers have to stay home during the outbreak. 

The highlights: 

  • Expanded Family and Medical Leave Act benefits for employees who are unable to work due to COVID-19.
  • Forgivable loans and tax credits for businesses that keep their employees for the duration of the crisis.
  • Deferment of an employer’s 6.2% share of Social Security taxes based on employee wages.
  • Expanded write-offs for improving property for retailers, restaurants, and hotels.
  • Expanding unemployment benefits for small business owners, self-employed individuals and gig workers.
  • Option to carry back net operating losses to offset taxable income in prior years.
  • Extension of time to file and pay 2019 taxes.

Further Reading: The Coronavirus Relief Bill: Every Benefit for Small Businesses

3. File your taxes sooner rather than later

If your tax filing deadline is April 15, good news: the IRS has officially extended this deadline to July 15, 2020. This extension includes making payments on any taxes owed, so you can defer without penalties and interest. 

But just because you can put off filing your taxes, doesn’t mean you should. If you’re owed a refund, the IRS is encouraging taxpayers to file as soon as possible. Most tax refunds are still being issued within 21 days, which could mean some much-needed cash back for your business.

If you’re owed a refund, the IRS is encouraging taxpayers to file as soon as possible. Most tax refunds are still being issued within 21 days, which could mean some much-needed cash back for your business.

Even if you owe money, it’s still in your best interest to file sooner rather than later. A lot of lenders or relief programs want to see an up-to-date business tax return. By filing now, you’ll have this important document on hand and ready to go—and you’ll still have until July 15 to make a payment for any taxes owed.

If you’d rather have someone else handle your federal income tax filing, check out BenchTax. It’s optimized for remote working conditions, and gives you the support you need to navigate changing deadlines and tax environments.

4. Consider pivoting your business strategy

Even if you’ve made all the right moves for your business during COVID-19, there are still some things that are out of your control. A dip in sales is one thing, but what if your customers or revenue disappear altogether? 

Loyal customers are eager to help out their favorite small businesses if they can, so staying connected and empathetic to your customer base right now goes a long way. 

Consider an alternative, temporary revenue stream. Create an e-commerce site for your brick and mortar store. Or, if you run a fitness studio, stream live classes. If you run a salon or spa, sell gift cards for future services. Loyal customers are eager to help out their favorite small businesses if they can, so staying connected and empathetic to your customer base right now goes a long way. 

Further Reading: Leading a Small Business Through a Recession: Five Best Practices