Coronavirus-related debt mounting? These steps can help reduce it
For a number of businesses, the issues won’t resolve entirely once local economies reopen, either
Creditcards.com industry analyst Ted Rossman discusses how coronavirus has added more credit card debt for millennials and shares advice on paying it down.
Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
Small business owners across the country are struggling to make ends meet amid the coronavirus pandemic, which has either reduced or completely shuttered operations for many since mid-March.
For a number of businesses, the issues won’t resolve entirely once local economies reopen, either. Social distancing guidelines are expected to remain in place, which will change how many businesses operate, including everything from cleaning protocols to employees’ shifts.
Expenses associated with these unforeseen circumstances can add up – and many small businesses may find themselves spending more than they are taking in.
Here’s a look at some options for business owners finding themselves saddled with debt, as compiled by Intuit.
CORONAVIRUS AID: IS AN ECONOMIC INJURY DISASTER LOAN RIGHT FOR YOU?
Apply for government loans
The federal government has aid options available for small business owners, including the Small Business Administration’s Paycheck Protection Program and economic injury disaster loan program.
The PPP is designed to incentivize business owners to retain employees throughout the period of economic tumult, whereas economic injury loans are not specifically associated with coronavirus but are broadly for businesses that have suffered substantial economic injury rendering them unable to pay ordinary and necessary operating expenses. The point of the loan is to help a business ride out a disaster period until normal operations can resume – it applies to situations where there is no physical damage.
Do your research to see whether either, or both options are applicable to your specific situation.
Tax credits
Business can also look into the employee retention tax credit, which is a fully refundable tax credit equal to 50 percent of qualified wages – including certain health care costs – paid between March 12 and Jan. 1, 2021, up to $5,000 per worker.
Paid family and sick leave has been extended under the CARES Act, and business owners can receive a tax credit for the required sick and family leave.
CORONAVIRUS RELIEF: WHAT TO KNOW ABOUT EMPLOYEE RETENTION TAX CREDIT
Look into SBA debt relief
The SBA is offering automatic deferral of payments for its home and disaster loans, but it will also pay six months of principal, interest, and any associated fees for all current 7(a), 504, and microloans in regular servicing status as well as new 7(a), 504, and microloans disbursed prior to Sept. 27, 2020.
For more on its offerings, check here.
Consider crowdfunding
As noted by Intuit, some crowdfunding sites – including GoFundMe – have small business relief initiatives designed to get business owners free cash. You can also apply for a matching grant from the small business relief fund, whereby GoFundMe and its partners will issue $500 to businesses that raise at least that amount on its platform.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Follow-up on past-due invoices
Contact customers with past-due obligations, and consider adding heftier penalties or accepting online payment transactions.
Reach out to lenders
For those unable to make regular payments – like rent and utilities – experts have repeatedly advised people to immediately contact their servicers.
Businesses without the resources to make their payments can get relief, but communication is essential.
Keep revenue streams open
Many industries have been forced to make adjustments to their business models in order to make some money. For example, some bars have begun offering delivery services.
Some ways you might consider bringing in some extra cash include shifting services online for sales and selling gift cards.