It is not news that the COVID 19 pandemic has left a lot of small business owners searching for relief for businesses to help them stay afloat. When most people hear about relief for businesses they think about how will businesses buy supplies, pay workers, and be able to continue to provide services during a pandemic.
While it is true that keeping employees on the payroll and being able to purchase supplies are critical activities, there is another problem that small businesses are facing because of the pandemic. Maintenance activities that can keep a business up and running can also take on a critical role in whether a small business can survive. How can you find relief for businesses that can help you to make critical repairs?
Payroll Protection Program
There are several government-funded programs that can help small business owners find relief for businesses that can reduce some of the financial strain. The Payroll Protection Program (PPP) is the most popular of these programs.
This competitive lending program managed by the Small Business Administration allows businesses to take a loan that can be turned into a grant. As part of the CARES Act passed in March, $349 billion was earmarked for the Payroll Protection Program.
Many small businesses took advantage of the program, but, unfortunately, many did not. Many small businesses did not submit an application because they believed that the reason for the loan/grant was to pay employees and guarantee that they would not be laid off. The fact is, 60% of the loan proceeds had to be used to cover payroll, but the other 40% could be used for the upkeep of the business, which means if you need to you could have used it for plumbing repair service or other business-related repairs.
Yes, the backbone of the PPP is to keep “America” working which means that if you accepted the relief for businesses you would have to keep all your employees working. It also means that you could use some of the money for commercial air conditioners repair if it meant keeping your doors open.
By October the SBA (Small Business Administration) was accepting the single page waiver application to wipe out the debt that was incurred with the PPP loans. By December many business owners were already cleared, and their loans were converted to grants.
If you did not take advantage of the program the first go-round, there is good news. You may not have to try to scrape up the money that you need septic services, help may be on the way.
Second Round of PPP Loans
New funds have been added to the PPP as part of the new pandemic relief package signed into law at the end of December 2020. The new package includes a generous $284 billion for the PPP. You may be able to get that trailer repair done after all and keep your employees working.
There is good news for any small business owner that is looking for relief for businesses. Relief for businesses through the PPP will be focused on reaching those businesses that did not receive any aid from the program the first go-round.
Applications started being accepted on January 11, 2021. If you want to take advantage of this program, you should move quickly. When the funds are all doled out, the program will shut down again until when and if Congress does something to add more funding.
What Are Some of the Expenses the PPP Will Cover?
Relief for businesses from the PPP does come with some caveats. While you can feel good about calling in the commercial fuel services to fill up the tanks if gas helps to keep your business growing, there are some things that you may want to consider before you use the money to pay for it.
According to the SBA website, some of the things you can use the cash for are “cloud computing software, essential expenditures to suppliers, and the cost of worker protections and facility modifications necessary to comply with COVID-19 safety guidelines.”
So what does this all mean? Facility modifications can mean hiring commercial glass contractors to erect partitions in the workplace to keep workers safe within the COVID-19 safety guidelines. It may also mean that you can pay for the necessary repairs that will help to keep your doors open.
You will probably have to pay for the beer for the company picnic out of pocket, but you may be able to get the water heater repair that you need. Employees need to wash their hands, and you cannot expect them to wash their hands in ice-cold water. A water heater can be an essential modification to comply with COVID 19 safety guidelines.
The Ground Rules for This Type of Relief for Businesses
There was a lot of backlash about large businesses taking advantage of the PPP during the launch of the program. The large corporate entities made sure to get their giant share of the pie and it left small businesses out of the pool.
This time the SBA says that the focus of the funding is a lot more narrow and is designed to help those businesses that have really felt the pinch of the pandemic. Some of the businesses that can expect an easier go of things are non-profits, restaurants, minority and women-owned businesses, and hospitality.
Relief for businesses this second round of PPP does not exclude those businesses that did receive funding before, however, only businesses that have 300 employees or less, that have spent the funding, and that can prove significant losses are eligible for consideration.
The initial maximum loan was $10 million and this time around the maximum loan amount is limited to $2 million. As with the first round of lending, maximum loan amounts are 250% of the 2019 average monthly payroll. It is increased to 350% for hospitality businesses with NAICS codes that start with 72.
Are you eligible for this type of relief for businesses? The most basic of the eligibility requirements is that you have to have employees. You have to have under 500 employees. Of course, there is more. Here are some of the other eligibility requirements
- Business needed to be established before February 2020
- The loan must be necessary to support ongoing operations
- Those that are self-employed, independent contractors, and sole proprietors are also eligible. You must have documents to prove your claim
The real goal of the program is to help small business owners find relief for businesses to help them get through this pandemic. Ultimately the split of how you spend the money should be about 60/40. That means about 60% of the funding should go to employees to cover payroll expenses and 40% can be spent on things that help to keep your business up and running.
Tips for Managing a PPP
There are several things that you can do to help ensure when it comes time to file that one-page form trying to convert the loan into a grant that you do not get denied. Keeping good documentation of how you are spending the money is important. While it is highly unlikely that the SBA will be going around auditing all the small businesses that take part in this relief for businesses, you should always keep records as it could happen.
Let’s say you decide to use part of the money for asphalt paving. Your parking lot is in disrepair and it has become a hazard. You will need to document the what’s and why’s. Why did you need this particular expense to keep your business going? The easy answer is because it was hazardous to employees. You get the idea. Keep really good records just in case.
Here are some other tips to apply for the PPP:
- Make sure your application is complete. Leaving blanks on an application never bodes well. Answer all the questions.
- Make sure you have all your documentation ready. Before you submit the application, be sure that you can back up everything that you wrote on the application.
- Follow the timelines and guidance. If you are going to do this on your own, be sure that you read and re-read the instructions to be clear what you are doing.
Honesty is the best policy when it comes to dealing with any of the government programs for relief for businesses. You do not want to fudge on the number and you do not want to make any statement that you cannot back up.
Again, it is imperative that you keep good records of how the money is being sent. If you need asbestos removal to keep your business open and to keep it safe for your employees, keep every document that you have that is relative to the expense.
You want to proceed with caution when it comes to companies that are offering to help you file for the PPP. Unfortunately, scammers are ready to strike and take advantage of your desperation. If you need help with the application process, consider a community-based organization that is established.
Scammers will make promises and guarantees that they likely cannot uphold. They will also charge you a hefty fee to file the application for you which defeats the purpose of taking the PPP.
SCORE chapters are a great place to find help. SCORE is an organization that mentors small business owners. You can find help with finding relief for businesses through local chapters and help with the application process.
Which Businesses Are Not Eligible for Relief for Businesses Under the PPP?
There are some business types that are not eligible to apply for the PPP. Those businesses include:
- Lending businesses, investment groups, banks, and other financial businesses.
- Household employers. Multi-level marketing businesses, businesses that are religious promoters, marijuana base businesses, gambling type businesses.
- Businesses that restrict patronage. For example, a woman’s only health club would not be eligible.
Other business types that are barred from applying include businesses that produce sexual materials that are considered prurient. Government lobbyist groups are also prohibited from applying.
How Do You Convert the Loan to a Grant?
The PPP starts out as a loan for everyone. You have to apply to have it converted to a grant. For example, on the last wave of PPP, the application date for converting the loan to a grant was October 2, 2020.
This is a very simple process. The one-page application can be filled out in minutes and submitted electronically right to the SBA to be adjudicated. The odds of getting your PPP loan converted to a grant are nearly 100%. As long as you paid your employees as you promised, and used the funds to keep your business open, you will be fine.
What Other Options Are There?
Let’s say you are leery of taking anything from the government or you just do not make the cut after putting in your application. What else can you do? Where can you find relief for businesses to keep your business up and running and get the maintenance done that you need?
Some states have taken the bull by the horns and come up with their own small business programs. You may be able to find relief for businesses right in your own state. For example in North Carolina, the Carolina Small Business Development Fund (CSBDF) was providing grants to small business owners in underserved areas. Other states have their own initiatives to help small businesses get through the pandemic.
Check with your local commerce chapter, state small business administration, and other state agencies to see what programs there are available in your state. You may be surprised to find that there are programs that can help you get through this pandemic.
Most service providers offer financing programs that can help to reign in the cost of repairs, maintenance, and new installations. You can usually find a reliable service provider that has a financing program that will fit your budget.
The important thing is to keep looking around until you find the program that will work for your business. There is relief for businesses but you have to be proactive and knock on a few doors to find it.