The impact of the COVID-19 / Coronavirus pandemic on the daily lives of Americans cannot be understated, with problems for small business owners and employees alike. In these unprecedented times the United States Government has launched a few different schemes from business loans, to a debt relief program and incentives to bolster individual American's personal finances too.
For many sectors of business such as airlines, travel, and the hospitality sector the effects of Coronavirus have been huge. For these sectors, the US government has looked at ways these businesses can be supported. For example, the airline industry will be receiving a $50 billion dollar bail out as a part of the overall Coronavirus (COVID-19) package that the US government has unveiled.
Some of these government schemes for employees and business are as follows:
Coronavirus stimulus payment and Unemployment Schemes - One of the ways the US government has tried to help both business and the individual is to create the Economic Impact Payment scheme. this is where Americans will receive up to $1,200 as a one-off payment. Not all individuals qualify for the payment and the payment is based on your total income in 2019 and 2018. You need to be living and working in the US and have a social security number to be eligible. How much you earn also influences how much you might receive. Head over to the IRS web site to check on the status of your payment. Individuals who have been made unemployment can also get some additional unemployment insurance assistance. Families First Coronavirus Response Act (FFCRA) has been created for this additional support. Head to the Department of Labor web site to find out more about the Cares Act
Expansion of paid sick leave and emergency paid leave - Another change the US government has made is by expanding the mandated paid sick leave and emergency paid leave. The goal here is to support both businesses and employees who are sick whilst the pandemic is continuing. There are a few exceptions, businesses with over 500 employees are not covered by this scheme and smaller businesses with under 50 employees may be able to apply for exemption.
State Aid and Local Government Assistance - There has been money set aside for both local and state government. It is worth checking your own local resources to see if anything has been made available to you that might be of benefit and support.
Small business loans - there are $350bn set aside for small businesses emergency advance loans which also forms a part of the Coronavirus Aid, Relief and Economic Security (CARES) Act. This scheme is designed to offer a business loan of up to $10 million to an existing business. This is open to companies who have fewer than 500 employees. One of the benefits of this scheme is that the loans may be forgiven if a business meets a certain set of conditions, such as the funds being used for salary payments. Loans over a certain size are exempt from this forgiveness. Companies should not lay off workers in this period, and the loans can be applied for and come directly from the businesses current banking provider. Ultimately the goal of these loans is to help support businesses by improving cash flow whilst maintaining employee retention across the Coronavirus pandemic. You should visit the government web site for the finer detail and terms and conditions of these loans.
U.S. Small Business Administration (SBA) - There are a number of schemes available here for small business. Visit the SBA.gov site to find out what is available.
The paycheck protection program - To help pay employee wages
The EIDL loan advance - this SBA loan program can give up to $10,000 of economic relief.
SBA Express Bridge Loans - for those with a business relationship with an SBA Express Lender.
The SBA Debt Relief Scheme - This Coronavirus relief scheme is a small business debt relief program that can help with existing loan payments and some deferment options.
Low cost loans for midsize companies - for companies that employ between 500 and 10,000 people, then there is a scheme for loans with a low interest rate (not higher than 2 percent annually). Loan payments have deferment for six months. There are some restrictions on outsourcing and offshoring jobs however, so this may not be an attractive option for some businesses who rely on these kinds of independent contractors to carry out work for them.
Some small businesses may prefer to deal with their own banks and look for small microloans, refinance existing loans, use overdraft options or rely on credit cards. These relief options are not necessary the best way forward and are dependent on your credit score. You should ensure that you have exhausted all the other options to generate working capital that may be available to you before you go down this route.
For certain sectors, your trade body or support body may have a funding program in place to help your business. This tends to be in areas such as non-profits, or the creative sector. However, there might be something available here too.
Along with the government schemes and benefits that they are offering, another option to consider is to look for other forms of help from angel investors. There are a number of good reasons to go down this route. The first is that investment in your business can come quite quickly via an angel investor. Another good reason is that an angel investor will be looking to invest in businesses that are viable. This means that if an angel investor chooses to invest in your business when the Coronavirus pandemic is going on then you know that there is a good chance that your business is still viable and worthy of investment in for the long term. This can help and be beneficial if you are currently struggling due to Coronavirus and are wondering whether it is worth carrying on in the current climate.
Financial investment aside, there are many other benefits to partnering with an angel investor. If you pick an angel investor that is familiar with your own industry, then you can get additional insight and support from the investor. Many of these angel investors are experienced in building and expanding businesses and making them accelerate. Since angel investors are looking to make a profit, you will find that this additional support is very often there for you to make us of. In addition to this, most angel investors have a wide portfolio of businesses that they work and invest in, meaning that their contact list is big. They can connect you with other businesses and individuals that can help you grow your business and to help ensure it is a success.
Of course, Angel Investors do not work for free, and they will expect to receive a certain amount of equity in your business for the financial and business support that they offer. However, in many cases it can work out better to partner with an investor instead of saddling yourself with extra loans, monthly payments and borrowing options to try to support and grow your business. One of the reasons for this is that you will have to pay interest back, and banks and loan companies have no real interest in supporting you outside of your repayments to them.
In the current climate it is not easy running any business, let alone a small one. However, with the US government's financial aid program to support small business and employees through this difficult time, along with other options such as banks and angel investors, there is still plenty of ways you can ensure that your business not only survives, but thrives in the future.
Even in these troubling times there are still many angel investors out there that are looking to invest in great small businesses. Join the US Angel Investment Network and find out more today.