Businessman closes its business activity due to covid-19 lockout. Owner with close surgical mask … [+]
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The billions of federal dollars that have gone or could be earmarked to help small businesses overcome Covid’s pandemic may provide much-needed support to some companies , but not enough for others. Unfortunately, the businesses and organizations that manage get through this worsening coronavirus crisis other challenge – trying to get over it and put the crisis behind them as quickly as possible.
Two-edged sword
For some small business owners, the financial support they have received from the government can be a blessing and a burden.
Carrie Jeroslow owns the Elkin Creek vineyard in North Carolina. “We have been hit hard by the pandemic, as much of our business structure is dependent on weddings and events,” she recalled. Although they got a loan from the Small Business Administration that helped them stay away, ”… we now have a big loan that needs to be repaid. I feel this will have a huge impact on our ability to recover from last year. ”
She believes “… Biden should pardon those loans – if not the full amount, a portion of it. As it stands, we are repaying this loan for many, many years as we try to rebuild our business into the successful destination it once was. ”
More help needed
According to a December study by the USChamber of Commerce, “Most small businesses see the need for more government support to see them through the effects of the pandemic. A majority (56%) agree that all the support they need from the federal government for their business is thriving. ”
For some companies, overcoming Covid-19 could be even more difficult with their weak position. In a research study conducted last month by the nonprofit SCORE association of Small Business Administration, 48 percent of business owners said they were unprofitable in 2020 (compared to 25 percent previous year); 68 per cent had to reduce staff hours / pay or furlough or lay off staff permanently.
Loan payments
The need to repay government loans can put a lot of pressure on the minds – and finances – of business owners. But there are ways for the government to lift or ease the burden.
Different timetable
Patrick Hardy is CEO of Hytropy, a small business disaster management company. He said, “Small businesses run on very different income schedules than their larger peers. Recovery times have been reduced and will continue in line with vaccine distribution, as vaccine levels are likely to reopen for host and other companies. [industries] which requires important interpersonal communication with customers.
“Paying off existing loans will be a big question mark in Q1 and Q2,” he said. “Biden administration should create an additional 6-12 months forbearance, which is better than giving more PPP and reopening the federal coffers.”
Forgiveness or reduction
“President Biden, through the SBA, should immediately establish a loan forgiveness / reduction plan for all SBA-backed loans,” suggested Graciela Tiscareno-Sato, creative officer and publisher of Gracefully Global Group, a course company bilingual education and digital.
She said, “The six months [mortgage] a forbearance implemented in 2020 was a good start, confirms [the government] can do. To lift the huge burden of loan payment obligations when income disappears in the long run, I am advocating for a large, lasting reduction in our key balance sheet.
“Business owners need real forgiveness for our inability to generate pre-pandemic income levels [and] income stream that was used to qualify us for the loan and repayment schedule. By the way, [Biden] they could fund other lenders who funded small businesses in the same crisis to apologize or reduce working capital loans. ”
Complete tax dates
The pandemic has affected the ability of some small businesses to pay their taxes – and in some cases the ability of the federal government to process taxes.
Hardy said, “The IRS is far behind in processing and posting taxes, which has been a headache for small business owners who don’t know what they have for even their 2019 results. . For example, an IRS office in Fresno, California at the beginning of the pandemic sent everyone home without warning.
“This has created a large cluster which makes it difficult for small business owners to operate routinely as standard form processing takes a long time. The administration should do what it has done before and extend the tax deadline for small business owners, ”he suggested.
More education
Small business owners may not have started their companies to know everything they need to know about running a successful enterprise, and getting money from the government may not solve their problems. all related to pandemic. Education could not provide the lasting help they need.
Octavia Conner is the CEO of Say Yes to Profits, which provides meaningful CFO services. She said, “… the current lending to small businesses will only put Band-Aid on the deepest financial problem facing many businesses. I believe that President Biden must encourage or demand that all business owners who are eligible for a loan should complete a course of financial management.
“This course should provide strategies on how they can build the industry to thrive despite economic catastrophes and slow industry seasons. The course could map out how the money would go beyond the norm and use them to further scale the business.
“Additionally, small businesses should get a 30-minute recommendation counseling session with a financial expert who can answer their financial management questions and possibly direct them to an accounting firm for help,” Conner said.
Setting new priorities
Depending on the nature and level of emergency, priority must be given to who will help first and how limited resources are used. While the government can print as much money as it wants or needs, business owners should not expect Biden to give them blank checks.
Not the same thing
Paul Sundin, CPA, tax strategy, and Head of Empire, said, “… the most important step this administration should take is to find out which businesses have been most affected.
“When we talk about the crisis, we always talk about small businesses as one collection unit when the reality is that not every small business has felt the loss in the one size fits all. Some were able to pivot and even still make a profit and some went down and shut down.
He said, “While the administration’s proposals and plans are promising, execution can be challenging and identifying the beneficiaries is, first and foremost, a complex process that needs to be undertaken with great care and diligence. precision. “
Unfortunate precedent
Craig Kirsner, president of Stuart Estate Wealth Planning Advisors, said small businesses should be prioritized in the Paycheck Protection Program (PPP). “It was very fortunate that the first PPP program allowed companies to receive up to $ 10 million. How does that qualify as a small business? Biden should dedicate new PPP loans to businesses with 50 or fewer employees, real small businesses, and allow more generous loans to allow businesses to pay capital and labor costs.
“In addition, they should provide federal funding to states to invest in new businesses located in parts of the country that do not normally attract large equity investments. [The government] they should also focus on women and small-scale businesses that have been particularly hard hit by the Covid crisis, ”said Kirsner.
New tax breaks
Bringing new tax breaks to small businesses now could be another way to ensure they are better prepared to kick back from a coronavirus crisis.
Stephanie Scheller, founder of Grow Disrupt, said, “… the two best steps President Biden can take to help small businesses come out stronger on the other side are creating special tax breaks for small businesses, and opening doors for small businesses to stay open.
“There is a constant fear that there will be enough money to pay taxes or whether everything will be closed again tomorrow, creating additional pressure and anxiety while he prohibiting small business owners from being able to plan for the future. ”
She said, “Too many small businesses are not planning money properly and spending money as it comes in, expecting to pay taxes out of the next batch of money. But with the current situation, there is no guarantee of the next batch of money. I personally know of businesses that had to close because they had no money for the forthcoming taxes and [also] pay the rest of their bills. “
The next crisis
Whatever small businesses need to get through and overcome the pandemic, they should list those needs in their emergency management plans. The sooner these needs are met, the sooner business owners will be ready to ride the rest of this crisis – and prepare for the next one.