Struggling Personally or Need Money for Your Small Business?
- Author: Michael Bordonada
- Posted: 2024-02-23
Here's the information you need to know before you go to the bank and ask for that higher-interest loan.
The Paycheck Protection Program
This is probably the most important piece of legislation for you if you own or manage a small business. Rather than just let businesses sink who didn't have enough "rainy day" money, the federal government is stepping in to encourage these businesses to remain open, even if it wouldn't make fiscal sense to stay open.
This provides a forgivable loan to most small businesses through the Small Business Administration (SBA). There are a few non-negotiable terms. First, the loan may be up to $10 million, but the SBA will need to investigate before giving you an exact amount. You also must apply through a private bank that is a partner of the PPP.
At first, it is a standard loan with an APR of whatever APR you would ordinarily qualify for. However, it can be "forgiven", or just wiped out, only if you keep your entire payroll on normal salary and the loan money is only used for purposes enumerated by the SBA. You must keep everyone on normal payroll for not less than 8 weeks to qualify for this. This is essentially free money as long as your small business follows the rules.
Personal Grants
COVID-19 bills bent over backwards to assist businesses, but they only have minimal personal assistance contained in them. Perhaps the most commonly-discussed portion of all the legislation is the economic stimulus that most Americans who filed returns in 2018 or 2019 will get, either via direct deposit or an actual check in the mail. Most people will get $1,200 and $500 per child they have. This grant is not considered taxable income for both FICA purposes (this includes Social Security and Medicare taxes) and federal income tax purposes. There's no prohibition on states taxing it, and some states will likely subject it to their standard income taxes.
If this isn't enough, almost every state has partnered with the federal government at this point via unemployment programs. Even contractors and gig workers now qualify for the "boost" to unemployment of about $600 per week in addition to whatever state the individual resides determines to pay them. However, the amount usually cannot be greater than what each person was already earning.
If you still have unmet fiscal needs that would have been met if COVID-19 wouldn't have happened, there are still far more options out there. For example, you can sign up for a discounted loan in almost every state as either a "sole proprietor" of a business or just as yourself. These loans are given out with little scrutiny of credit and are usually interest-free, with a few outliers, like North Carolina, who charges 5.5% interest for a four-year term.
You can also go the private route. Similarly to how a student looking for financial aid for college would, you can search for Coronavirus grants provided by individual companies or entities. Remember, these companies are there to profit and will likely require you to appear in some form of sponsored content in exchange for their assistance. However, you should also remember that accepting charity at a time when your funds were artificially cut off by government entities carries no shame.
Wrapping Up
There are several options regarding COVID-19 funding that both small businesses and people can get. Although many news outlets report the bills passed as more pro-business than pro-person, almost every "business" bill is also applicable to "sole proprietors" (including people such as previous Instacart workers) and others who are self-employed. Even for those who were not, most states have opened up the coffers to pay out a fair amount of unemployment money and have even frozen or forgiven debt held by lower to middle income individuals. In short, regardless of your personal situation, there's a grant for you!
