Being a business owner comes with unique challenges. Even if you’ve made the best-laid plans, the unexpected can occur, which is why you should consider relief programs. Most business owners and practitioners are unaware of the assistance plans they qualify for. These programs are continuously changing to adapt to the shifting environment, so it pays to do your research.
Here are six ways relief programs can help your company.
1. Cover Overhead Expenses
Whether you have one customer or 100, your business is still responsible for covering overhead costs. Consider using relief programs, like the COVID-19 Economic Injury Disaster Loan (EIDL), to cover expenses.
You can use this loan to pay for your company’s rent and utilities. The purpose of the loan is to meet financial obligations and operating expenses that would have been paid if the worldwide disaster had not occurred. If you’ve received the EIDL, then the funds must cover regular operating costs and working capital. You are not to use the money to grow your business or start another company.
2. Pay Employee Salaries
This is a scary and uncertain time for employees across the country. As the economy suffers, workers know their jobs and finances are on the line. During this time, as an employer, it’s your responsibility to demonstrate transparency and accountability with your staff.
When the Coronavirus, Aid, Relief and Economic Security (CARES) Act passed in March 2020, the Paycheck Protection Program (PPP) was authorized. This program provides help to businesses with less than 500 workers, as well as private nonprofit and veteran organizations. Some self-employed individuals may also be eligible to receive assistance from this program.
The U.S. government prioritized small businesses and their employees by authorizing $659 billion for job retention and related expenses. If your organization received PPP and you’ve used the money to pay employee salaries, the program may transform the funds into a grant. Additionally, depending on your company, you may also be eligible to participate in other relief programs besides PPP.
3. Receive Compensation for COVID-19 Expenses
If you are a health care provider, your business may be eligible to receive assistance from additional federal relief programs. The Provider Relief Fund (PRF) grants offer payments for health care related-expenses and lost revenue due to COVID-19. Even if you have received funds from the PPP, it does not preclude a practice from being eligible for PRF.
To determine your practice’s eligibility, review requirements and be sure to apply. Many relief programs work in phases, so it’s worthwhile to submit an application even if you missed the initial stage. In fact, the government may prioritize your payment if you hadn’t been part of previous distributions.
Additionally, as a provider, the COVID-19 Uninsured Program reimburses expenses relating to the uninsured’s testing and treatment for the virus. Make sure you keep detailed records of patients you are treating during the pandemic.
4. Refinance and Pay off Debt
These relief programs can help your business refinance loans and pay off existing debt. Besides the programs already discussed, the CARES Act also established the Small Business Administration (SBA) Debt Relief program. This is not available to those who already received the PPP or EIDL, but it will help other borrowers in need.
If your company qualified for EIDL, you could use those funds to make fixed debt payments. The business owner can use the money at their own discretion. In comparison, the SBA Debt Relief Program covers six months of principal, interest and associated fees relating to specific loans.
5. Manage Inventory
The only way to keep your business afloat is if you have inventory to sell or manage. However, if all your money is tied up in stock, it’s challenging to liquidate quickly. Let relief programs cover the additional day-to-day costs while you manage your inventory situation.
You can use those EIDL funds as working capital to cover inventory costs. However, research in advance what is covered because company improvements — even those relating to COVID-19 — can cause business owners to default on their loan. Be sure to review what materials you’ve listed as collateral for the relief program. You’ll need SBA approval before selling any of the property or inventory you’ve used as collateral — even if you intend to buy a newer product.
6. Reprioritize Existing Funds
By utilizing these relief programs, small businesses and medical practices can reprioritize their existing funds. While government loans cover overhead costs, companies can look for ways to improve their economic outlook.
For some people, this may mean going to banks and other providers in search of additional loans to keep their business afloat. Others may use this buffer period to move their business online and strengthen their marketing plans. Remember to do your research if you plan to restructure or put up collateral with a bank. These changes could cause you to default on your other loans accidentally.
Weather the Storm
Business owners face unprecedented challenges, and the future isn’t clear. For now, you should concentrate on weathering the storm. Reflect on the six ways relief programs can help your company. Evaluate strategies to bring in new revenue and decrease expenses. If possible, focus on creating an online presence for your company. Someday, this too will pass, and hopefully, your business will emerge stronger than ever.