COVID-19 Relief : What you need to know
I think we all can agree that 2020 has been quite the whirlwind. We are facing a global health pandemic known as COVID-19. When this health epidemic began in March of 2020 I’m sure none of us knew that seven months later we would still be dealing with this issue. Not only has COVID-19 caused a health pandemic, it has also put the country in economic turmoil. Loss of jobs, record numbers of unemployment, businesses having to shut down indefinitely, some businesses forced to shut down permanently. Whew.. it’s been a lot. In the wake of all of the financial uncertainty for small businesses, there have been several organizations offering financial assistance in order to help keep small businesses afloat during these trying times. There are some businesses that truly need the assistance and this will help them greatly keep their business afloat, but with the good always comes a few bad apples. If you guys have been keeping up with the news you may have seen there are businesses applying for funds and spending it on expenses that have nothing to do with their business. There are even some that have received small business loans/ grants that don’t even have an active business. Crazy right?
I encourage everyone to apply for any type of funds you are eligible for but you definitely want to be clear on what you are actually applying for. There are some key things you need to be aware of before signing on the dotted line to accept any type of relief funds.
1. The Type of Program
You should fully understand the type program you are applying for. Is it a loan or a grant? Typically, grants you do not have to pay back, on the other hand, loans are required to be repaid (unless it’s forgiven which we’ll get into later). Understanding the difference between the two is very important so don’t be afraid to ask questions to the organization that is sponsoring the program.
2. The Terms and Conditions
I know this is something that we tend to have trouble with. Trust me, we all do this. We sign up for something, there is this crazy long document with rules in it and at the bottom of the form it says check here if you agree to the terms and conditions. Does anyone actually read all of that? Of course not... but what do we do? Check that we agree knowing good and well we have not fully comprehended this document. That is something you definitely do not want to do as it relates to these COVID 19 funds. Before you accept any type of relief funds you need to understand the terms and conditions.
Is is a loan or grant? Does it need to be repaid? What is the interest rate? What are the payment terms? When do I have to start making payments? What will my monthly payment amount be? How long will it take for me to repay the loans in full? These are a few examples of things you should be aware of.
3. Forgiveness Options
If you have a loan, there may be an option for your loan to be forgiven. This means you are no longer expected to repay the loan under certain conditions. If your loan has forgiveness options, are you clear on what’s required for your loan to be forgiven. Do you have to spend your funds on specific expenses for your loan to be forgiven? What documents must you submit to prove that you spent the funds on those specific expenses? These are things you want to be clear on because just because your loan has a forgivable option does not mean that it will be automatically forgiven. Let me emphasize this, just because it CAN be forgiven doesn’t mean it WILL be forgiven. You should be prepared for both scenarios so you won’t be overwhelmed or hit with any surprises in the end.
Here is a tip on how to stay organized and keep track of how you are spending your funds. This is especially important if the loan you have requires the funds to be spent on specific expenses in order to be forgiven. Here is what you should do... Get a separate bank account altogether for any kind of COVID related loans. When the funds are released to you, put them in this separate bank account so that’s literally the only thing you have in there. As you spend from the account it will be easier to track what you have spent the money on because the account is solely used for COVID funds. That way if you have to submit documentation to prove where you spent the money, it will be that much easier for you.
You can also check my YouTube channel for more helpful resources.