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Two Things Small Businesses Must Do Today

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Our partners at AALU & GAMA shared two key actions small business should do today.

First: Take advantage of payroll tax deferment. As a small business, you can defer payroll taxes through the end of 2020, starting now, essentially acting as a no-interest loan. 50% of your 2020 payroll taxes will be due at the end of 2021, and 50% due at the end of 2022. Small businesses should contact their payroll processor to activate the deferment. 

Second: Get familiar with the SBA loan products available to small businesses, and attend our webinar to learn more about these products, which amount to $384 billion in loans and assistance for small businesses. You should contact your lender or banker to understand this more completely as it relates to your individual business.

  • Paycheck Protection Program (PPP). This is a brand-new loan product for the Small Business Administration. PPP allows small businesses, nonprofits, sole proprietorships and independent contractors to obtain eight weeks of operational expenses as a forgivable loan to cover payroll up to $10 million. Bankers who are SBA 7(a) are still getting up to speed on this new product, but you should reach out to learn more about what they can do for you. Here is a list of the 100 most active 7(a) banks, if you are unsure if your bank has SBA approval to make these loans. 
  • Economic Injury Disaster Loans (EIDL). EIDL loans aren’t new to the SBA, but there are new benefits to them. Small businesses can apply for loans up to $2 million in assistance, with a 3.75% interest rate, and nonprofits can apply at an interest rate of 2.75%; terms are as long as 30 years. Sole proprietors and independent contractors are also eligible to apply during the crisis. There is also a new EIDL emergency grant process that allows small businesses to receive a $10,000 advance on their loan when they apply, before they are approved. If the application is denied, the $10,000 does not need to be repaid. In other words, the government is giving small businesses $10,000 with no strings attached. You can find more information and apply here
  • You can pair these two products, as long as you don’t use them both for the same purpose. For example, a small business can’t use an EIDL loan to pay payroll, if you have obtained a PPP for payroll. However, you could use a PPP for payroll and an EIDL for lease payments or other business expenses.