Did the coronavirus impact your business? More than likely, yes. Navigating through the pandemic has been a tough time for businesses and workers alike. But as they say, when life gives you lemons, make lemonade—with the help of a little sugar (aka government COVID-19 relief).
What the heck am I talking about? Read on to learn how you can use coronavirus-related government assistance to grow your business.
Growing your business with COVID relief
The government passed numerous emergency pieces of legislation to help stimulate the economy throughout the pandemic. Examples include the CARES Act, Consolidated Appropriations Act, and American Rescue Plan.
Have you taken advantage of the aid available for businesses? If not, take a look at these five ways you can grow your business with COVID-19 relief.
1. Apply for a Paycheck Protection Program loan
The Paycheck Protection Program (PPP) lets small business owners take out forgivable loans to cover payroll and certain non-payroll expenses.
If you take out a PPP loan and spend 60% on payroll costs and 40% on qualifying non-payroll costs (and meet other applicable requirements), you could walk away with a fully forgivable loan. That means free money to help get your business through this trying time.
Established under the CARES Act in March 2020, the PPP has been the golden child of COVID-19 relief. The government has since passed numerous acts to replenish and/or expand the program.
If you haven’t yet applied for your first (or second) PPP loan, there’s still time. Thanks to the Paycheck Protection Program Extension Act of 2021, you currently have until May 31, 2021, to snag one of these loans…
…Just remember to spend it on qualifying expenses and, if you take out a loan of more than $ 50,000, to keep your employee levels and wages up to maximize PPP forgiveness.
2. Invest your stimulus check in your business
Did you qualify for a stimulus check under the American Rescue Plan? Have you touched it yet? You might consider investing the money in your business.
First, figure out what area of your business could use a little love. And, consider the best way to get the most bang for your buck.
Here are just a few ways you could invest your stimulus check to grow your business:
- Buy new equipment
- Pay off a business loan
- Purchase new tools (e.g., accounting software)
- Improve marketing efforts (e.g., pay-per-click)
- Hire a contractor
- Take a valuable online business course
3. Claim the Employee Retention Credit
The Employee Retention Credit (ERC) is a fully refundable tax credit employers can claim if they keep employees on their payroll.
Originally established under the CARES Act, the ERC recently got a boost from the Consolidated Appropriations Act and American Rescue Plan. Now, you can claim the ERC through December 31, 2021.
The credit is worth 70% on the first $ 10,000 of qualified wages per employee (per quarter). That means you can claim a credit of up to $ 7,000 per employee, per quarter.
Before the Consolidated Appropriations Act, you had to choose between taking out a PPP loan and claiming the Employee Retention Credit. Why? Because both programs encourage employers to keep employees on payroll in exchange for financial assistance. But now, you can take advantage of both the PPP and ERC.
4. Take out an Economic Injury Disaster Loan
PPP loans aren’t the only type of loans you can take out to help your business stay afloat and grow through the pandemic. You also have the option of taking out an Economic Injury Disaster Loan (EIDL).
EIDLs are available through the Small Business Administration (SBA) for small businesses impacted by a declared disaster, including COVID-19. An EIDL has a 30-year term at an interest rate of 3.75% (businesses) or 2.75% (nonprofits).
Unlike a PPP loan, an EIDL is not forgivable. However, an EIDL Advance (of up to $ 10,000) is forgivable.
5. Claim the paid leave credits if you offer COVID leave
Although offering paid sick and family COVID leave is voluntary in 2021, you can claim a tax credit if you choose to offer it to employees.
The Families First Coronavirus Response Act (FFCRA) established coronavirus paid leave and corresponding tax credits to encourage employers to give employees paid time off when dealing with the virus. Like other types of coronavirus aid, other legislation has extended the paid leave credits.
Currently, you can offer coronavirus paid leave and claim the tax credits until September 30, 2021. That gives you some time to take advantage of the tax incentive if you offer employees paid time off to deal with the virus (e.g., getting the vaccine, quarantining, etc.).
So, how can this help you grow your business? Number one, you can grow your employer brand by giving employees their wages while they deal with the coronavirus. And number two, you can offset the costs of offering the paid leave with the tax credit. It’s a win-win.