It is no secret that over the past year businesses have suffered in many ways due to the many tolls COVID-19 has taken on the economy. Our communities and businesses are starting to mend; however many small businesses are still struggling financially.
Over the past year, it has been difficult to keep up with the various funding programs as they have been modified to provide additional support as the COVID-19 pandemic has lasted longer than many probably expected from the initial shutdowns in early March of 2020. Those changes continue to develop even today.
Early in the new administration (February 2021), significant changes were made to the Paycheck Protection Program (PPP). This change significantly affected sole proprietors, independent contractors, and self-employed individuals, and allowed them to receive more financial support. In the initial launch of the PPP, many small business owners were excluded from the PPP or were approved for as little as $1 because of how PPP loans are calculated. To address this problem, the Biden-Harris administration revised the loan calculation formula for these applicants so that it offers more relief.If you were not previously eligible for the Paycheck Protection Program due to a financial loss in 2019, now is the time to revisit your banker. Using this new calculation will help you to receive funding when you may not have qualified in the past.
The U.S. Small Business Administration also released information about current Economic Injury Disaster Loans, according to a release issued on March 12, 2021, all SBA disaster loans made in the calendar year 2020, including COVID-19 EIDL, will have the first payment due date extended from 12-months to 24-months from the date of the note. For all SBA disaster loans made in the calendar year 2021, the first payment due date will be extended from 12-months to 18-months from the date of the note. This is great news for borrowers who are still having cash flow issues due to COVID-19 and other economic setbacks such as the recent closures due to inclement weather in February 2021.
The need for support is still greatly felt and this has resulted in new changes to the programs that are being offered to support small businesses including the American Rescue Plan Act of 2021 which was passed by the 117th United States Congress and signed into law by President Joe Biden on March 11, 2021. This $1.9 trillion economic stimulus bill is also referred to as the COVID-19 stimulus package.
Updates provided by the White House on this bill focus on a continuation of financial support programs and extended relief plans that will allow small business owners to remain focused on keeping employees safe while still working to revitalize their business.If you would like additional information on these updates, please visit with a Certified Business Advisor at the ASU Small Business Development Center. Our team is keeping up with these updates in real-time and is ready to answer any questions you may have about how your particular business is affected or can benefit from these continuous updates.
“Business Tips” was written by Dezaray Johnson, Business Development Training Coordinator, of Angelo State University’s Small Business Development Center.For more information on the topic of this article or the services of the ASU • SBDC, contact her at Dezaray.Johnson@angelo.edu