Small Biz Update: Roundup of Funding Sources

TWO FACEBOOK LIVE EVENTS

Please join me for one of two Facebook Live events next week

Tuesday 1pm EDT/10am PDT: my own Facebook Live

Update on funding sources and tips for long-term business survival. Go here to join or to watch after the event.

Tuesday 4pm EDT/1pm PDT: Facebook Live with LocalIQ

“Retaining & Gaining Customers in Uncertain Times.” Go here to join.

And if someone forwarded you this newsletter, you should sign up here.

SMALL BUSINESS SURVIVAL TIP: FIND WAYS TO LOWER AND/OR DEFER PAYMENTS

In addition to finding ways to get financing, now is also the time to try to reduce your expenses. Don’t wait for your vendors or landlord to come to you—reach out to them to start the conversation to see whether you can come up with new payment arrangements and terms. Recognize that they may be in the same boat as you—especially other small businesses and small landlords. But they don’t want to lose your business, either—not in the long run. Go through your bills for ALL your fixed expenses—telecommunications, online services, equipment leases, credit cards, lines of credit. Contact all of them to see if you can reduce what you owe or come up with a payment plan to spread out payments over many months. Don’t be embarrassed, reluctant, or too confrontational. Just do it. Also, figure out what you might be able to do without. If your lease is up or you are on a month-to-month, perhaps you can use less space, move, or give up space entirely. Tighten your belt—if you still have a belt.

ROUNDUP OF FEDERAL FUNDING PROGRAMS

Here’s a brief rundown of the key programs in case you’ve had a hard time keeping them straight. Please do take advantage of all programs you’re eligible for.

PPP: Paycheck Protection Program

Eligibility: self-employed; businesses & nonprofits with fewer than 500 employees; hotel/restaurant businesses with fewer than 500 employees in one location
Amount: 2.5 times your average monthly “payroll costs”—includes salary, wages, commissions, group health insurance, retirement, state and local employment taxes for payroll employees and self-employed; limited to maximum annual salary of $100k; maximum of $10 million
Can be used for: payroll costs, rent/mortgage on business property; utilities
Terms: 1% if not forgiven; 2-year term; no payment for six months
Forgiveable: if at least 75% of funds are used for payroll costs in the 8 weeks after receiving loan
Apply through: banks, PayPal, Square, Intuit, other non-bank lenders

EIDL—Economic Injury Disaster Loan

Eligibility: self-employed; businesses & nonprofits with fewer than 500 employees affected by Covid-19 crisis
Amount: up to $2 million
Can be used for: working capital, payroll
Terms: 3.75% businesses; 2.75% nonprofits; 30 year term; no payment for one year
Forgiveable: NO
Apply through: SBA

$10,000 “Grant”: apply as part of EIDL

Eligibility: $1000 per payroll employee up to $10,000
Cannot be used for: same payroll costs as PPP or reduces that amount of PPP forgiveness

Unemployment Insurance

Eligibility: self-employed, gig workers, as well as employees
Amount: $600 week for four months in addition to any eligible state unemployment
Can be used for: anything
Apply through: state unemployment agencies

Main Street Lending Program

This is a new program from the Federal Reserve (not the SBA) that might be of interest to larger small businesses and mid-size companies, both for-profit and nonprofit businesses. These are large loans (minimum $1 million, maximum $25 million) and a company must be in “good financial standing” before the current crisis. The loan term is 4 years; interest rate is based on 2.5%-4% ABOVE the overnight financing rate (SOFR), and there are a variety of fees. There is no prepayment penalty. These are NOT forgiveable.

Remember sole proprietors, self-employed are eligible for most of these programs—including the PPP and EIDL.

I will discuss all this further during my Facebook Live session—Tuesday, April 21 at 1pm EDT/10am PDT—and future Facebook Live sessions. Go here to join or to watch later. Learn more in future newsletter updates as well. Sign up here if you are not already on my mailing list.