The coronavirus pandemic has had and continues to have an incredibly negative economic impact and public health impact on the United States, and, unfortunately, these challenging times look as though they will persist well into next year. Despite being months into the pandemic, social distancing requirements and lockdowns designed to limit the spread of COVID-19 continue to force businesses to close their doors or scale back their operations. Meanwhile, the reopening plans of state and local governments continue to adjusted as the situation develops and new guidelines on disease control are issued by the Centers for Disease Control and Prevention (CDC) and other government agencies. As such, it is important that businesses continue to plan for decreased revenues and cash flow and make the necessary operational adjustments.
At Biz2Credit, we continue to provide support to the United States small business community through articles and webinars designed to keep small business owners up to date on the latest development surrounding the pandemic and how businesses can best respond. On Thursday, October 15, Biz2Credit hosted an online webinar to discuss the current status of COVID-19 relief, particularly PPP loans, current congressional comments on the status of relief, and the next steps businesses can take to shore up their finances during these uncertain times. We also spoke about our current partnership with AICPA, which we formed to help assist small businesses during this time.
In this post, we will be recapping everything that was discussed in the forum. If you missed the forum and would like to watch it now, please be sure to visit the online posting.
What Is the Current Status of COVID-19 Relief?
The initial timeline for the Paycheck Protection Program (PPP) loans originally offered by the federal government through the U.S. Small Business Administration (SBA) has ended. Following the CARES Act and the PPP loan program extension and booster, it expired on August 8, 2020. However, there are still roughly $135 billion dollars remaining in the fund, which currently cannot be accessed by the United States small business community and which are sitting on Congress’ balance sheet. The program itself was designed to provide small businesses with cash flow and working capital in order to increase their liquidity and enable them to pay their employees. While the SBA managed the program, the loans themselves were provided by various financial institutions and lenders across the United Sates who were able to assist in getting the money to small businesses in a timely and efficient manner.
At this time, Congress is still gridlocked along partisan lines as they seek to reach a deal, possibly before the election on November 3, though at this time it looks like a deal will not be by then. Unsurprisingly, given that the United States is in an election year, the COVID-19 crisis relief bills have become an object of political posturing on both sides of the aisle. Naturally, since Congress controls the United States’ money and spending, also known as the power of the purse, they have been the center of attention with regards to passing stimulus bills and helping the millions of Americans and their small businesses that are in need.
While the economic recovery has been better than many of the more grim outlooks originally posed, there are still a great deal of needs of American small businesses that have gone unaddressed, and there is always potential for another drastic downturn. This is important to keep in mind, as small business owners should continue to prepare for the worst. It is always better to be over-prepared than under-prepared, particularly as the impact of COVID-19 continues to play out.
Meanwhile, businesses have not been impacted equally across the board. Some states have not faced as severe of outbreaks, enabling local business to reopen and resume operations more quickly.
Congressional Comments on COVID-19 Relief
As Congress has become gridlocked over the next set of COVID-19 relief initiatives, information on the past programs and what still remains of them has dropped out of the news cycles, particularly as the media shifts to focusing on the upcoming election and topics like the Supreme Court, healthcare, taxes, and more. As such, small businesses have been having a harder time getting up to date information. At Biz2Credit, we continue to post the most up-to-date information on our blog and on our website to help businesses stay informed.
During our October 15 webinar, we spoke with U.S. Representative Kevin Hern, a Republican representing Oklahoma, and U.S. Representative Adriano Espaillat, a Democrat representing New York. They gave us an idea of where Congress is currently at in their progress toward another COVID-19 stimulus.
U.S. Representative Kevin Hern
Congressman Hern, who has been a small business owner himself over the last 30 years, explained that he has been working toward opening the $135 billion dollars remaining in the PPP fund to small businesses owners until December 31, 2020 or whenever the funds run out. While a number of U.S. representatives have introduced such a bill, it is currently being held up as negotiations continue. This money would still be available only to businesses that meet the original PPP loan eligibility standards as overseen by the Small Business Administration (SBA).
Hern also spoke about additional efforts to clarify the loan forgiveness eligibility standards, which may change if the money is released to be used by small businesses in the future.
At the same time, Hern spoke about a provision of $25 billion that a number of representatives in Congress have been working at getting passed which is designed for small businesses, including nonprofits, with 10 employees or less. This money would be able to be used or an expanded list of items, including software, cloud accounting, cloud computing, property damage, PPE, and more.
Additionally, Hern reported that loans under $50,000 accounted for 75% of the loans given out under the PPP program, while 85% where $150,000 or less, indicating that the PPP program has been effective in helping America’s true small businesses during the COVID-19 outbreak.
Hern also noted that he would like to get the money out before the holiday retail season that is quickly approaching, so that businesses can have the money in hand and maintain their operations throughout what, despite the COVID-19 pandemic, should be a better period of sales for retailers and other small businesses throughout the United States.
Hern also acknowledged the partisan nature of election years, and mentioned how difficult it has been for Congress to get past politics. However, he also noted his desire to split certain bipartisan initiatives, particularly the PPP money, from the rest of the pandemic stimulus that is currently being debated so that programs that have bipartisan initiatives can be passed by the House and Senate and signed by the President at an earlier time, since right now a few points of disagreement in the large stimulus bill have been holding up the many bipartisan points of agreement.
Lastly, Hern mentioned how grateful he and other Americans are for the continued efforts of small businesses cross the United States to continue to serve their communities and make it through what has been an incredibly challenging time.
U.S. Representative Adriano Espaillat
Congressman Espaillat, a U.S. Representative from New York, spoke about the push for Main Street, smaller lenders to have the ability to provide loans to small businesses during the original bill. This can most likely be expected to be continued in any future bill extending and/or expanding the PPP.
Espaillat, like Hern, emphasized the current push to get the $135 billion back open and available to small businesses who were not able to get a PPP loan during the initial PPP period.
Espaillat also spoke about the desire of a number of Congressman to start a grant program, which would remove the burdens of a loan, which has to be repaid. This would be a different program than the original Emergency Injury Disaster Loan (EIDL) grants that went out in the sum of $10,000 to any and all small businesses that applied for a EIDL at the beginning of the pandemic. He explained that he believes such a program would enable economic development and recovery.
In terms of the recovery process itself, Espaillat spoke a little about how the United States needs to continue to prepare to assist in the recovery process once the United States is able to begin moving away from the consequences and lockdowns of the pandemic. At the same time, he discussed the need for small businesses to try to innovate and find ways to make sales, such as restaurants offering take-out service and curbside pick-up and delivery, for the remainder of the pandemic.
During our webinar, we also took some time to talk about our current partnership with the American Institute of Certified Public Accountants (AICPA). At Biz2Credit, our main goal is to assist small businesses throughout America in any way possible, and given the confusing and challenging nature of applying for and receiving forgiveness for PPP loans, we thought that there would be no better way to help small businesses during this time than to develop a cloud based solution for processing loan forgiveness application.
The number of requirements that go into the PPP program are truly astounding and we have tried to simplify the process. In particular, these requirements include eligibility criteria, loan amount rules, fairly strict application processes, restrictions on the use and allocation of PPP funds, forgiveness writers, forgiveness criteria, documentation requirements, and more. In fact, the act includes over 500 pages of guidance. Naturally, this information is dense and can be confusing, and, as such, small businesses need tools and advisors to support them as they navigate the PPP process.
Thus, as part of our partnership with AICPA, we launched a new platform that provides small businesses with cloud solutions for managing their PPP loan forgiveness. The PPP loan forgiveness tool, which can be found at PPPForgivenessTool.com, allows small businesses to calculate their forgiveness eligibility, produces all the government forms required by the PPP program, makes calculations based on your payroll and various other business expenses, and aggregates a master report that can be delivered to your lender when you formally apply for forgiveness. The tool also enables businesses to upload required source documents. Overall, it makes the loan forgiveness process significantly easier.
At this time, the online tool has been used by over 30,000 borrowers and more than 5,000 CPAs and other financial professionals have made use of it in their work for their clients or as small business owners themselves. The success of the tool that we have seen since its launch has truly be astounding.
The tool itself is free for small businesses. At the same time, we have also developed two subscription tiers with enhanced functionality for CPA firms specifically. This functionality allows them to support clients in a much more efficient manner, enabling them to track progress on loan and forgiveness applications and more.
The important roles that CPAs have played during this time cannot be understated, and given the complex nature of the PPP loan program, assuming that it is eventually extended and businesses are able to access additional funds, we expect this tool to continue to be a valuable resource for both small businesses and CPA firms alike.
Remember, it is extremely important that your business continues to leverage the tools available to small businesses and create defined plan of action for the future. This will enable you to weigh your relief options and make well-thought-out decisions. In particular, it is important that you are ready when the time comes to seek forgiveness for your PPP loan.
What Else Has Biz2Credit Been Doing for Small Businesses?
During our webinar, we also spoke about the many other things we have been doing to support small businesses. In particular, we joined the AICPA-led coalition for small business funding back in March of 2020. As part of this, we advocated for the passing of the original CARES Act and Paycheck Protection Program (PPP) when the COVID-19 outbreak first began. We also advocated for greater simplification and flexibility surrounding what was originally, and to a certain extent still is, a very complicated process for obtaining PPP loans and receiving forgiveness.
At this time, we, along with the coalition, continue to advocate for the release of the remainder of the $135 billion worth of PPP funds currently on the federal government’s balance sheet but which is inaccessible to small businesses.
What Else Can Your Small Business Be Doing Right Now?
There are a number of things your small business can continue to do right now. In particular, make sure you are keeping very close track of your business’ expenses, particularly if you are using PPP loan money. For those who don’t have a PPP loan but are interested in getting one program is extended and you receive a loan, you will also want to keep careful track of your expenses. This will make it much easier when you apply for forgiveness, and it will also make using our online tool much easier. The better records you keep, the more prepared you will be.
In particular, make sure to familiarize yourself with the documentation requirements for applying for loan forgiveness, as you will need to be able to backup and support your claims if necessary and provide proof of how you spent your PPP funds.
Your small business can also continue to look at other funding options, such as short-term loans. If you do decide to take out a long, make sure to always shop around to ensure you are getting the best possible interest rate.
Innovation is a core trait of entrepreneurship, and there have never been a more important time than now for small businesses to innovate. Regardless of whether you are a relatively new start-up or a well-established business, now is the time to makes changes. Whether that means hosting online events in real-time to engage your customers, starting a curbside pickup option, or delivering to people’s homes, make sure you are doing everything you can to drive business and revenues during this time. Plus, if you have a lot of spare time on your hands on account of the pandemic, consider updating your business model to reflect the current state of your business. And don’t forget about the importance of keeping customers engaged on social media. You want to make sure they remember you when the pandemic ends and life returns to normal.
There is no doubt that this has been one of the most challenging times for small businesses in the United States in decades. Hopefully, as the American people, small businesses, and groups like our coalition for small businesses, continue to put pressure on Congress, they will respond by passing additional stimulus measures to support small businesses, Americans, and the U.S. economy. As the representatives we spoke to noted, there is some progress being made and they are actively considering how they can best get stimulus money to small businesses in need.
At the same time, be sure to look into our small business PPP loan tool. We can’t stress enough how important it is for small businesses to utilize tools and resources that will enable them to efficiently and effectively navigate the PPP process. It is not a simple process, and anything you can do to mitigate the burden imposed by it will help both you and your small business in the long-run. If your expenses are particularly complex, consider reaching out to a CPA. Remember, if it is extremely important that your business gets as much loan forgiveness as possible, paying a CPA for a little assistance may be incredibly worthwhile when all is said and done.
As always, Biz2Credit continues to monitor the situation, actively reporting on development and supporting our small business community. So, be sure to check back for more information as we continue to post essential information on the pandemic and how your small business can best respond to the challenges presented by it.