Welcome to another week of Merchant Maverickâs essential news roundup for small business owners.
This week, JPMorgan Chase announced its own mobile payments reader while a survey hinted that office spaces will shrink in the future. Read on through for the weekâs top five must-know stories for small business owners.
JPMorgan Chase Announced A Mobile Card Reader
In an effort to broaden its business services, JPMorgan Chase announced the launch of a new card reader that can take payments on the go. Dubbed QuickAccept, this mobile payments platform will allow merchants to ring up credit card payments via a mobile app or a contactless card reader — much like tools offered already by Square and PayPal. Unlike those other services, however, Chase’s new platform will deliver merchants the money made from sales on the same day for free (Square, for comparison, charges ~1.5% for instant transfers).
To work alongside the new payments platform, Chase also announced a business checking account called Business Complete Banking. Nothing is really special about this checking account, although you will need to open one if you want to take advantage of QuickAccept.
Why this matters to you: Competition is almost always welcome, and Chase’s new platform could provide some spark to the world of mobile payments. If QuickAccept’s free same-day funding takes off, merchants might wind up with more avenues for taking credit card payments cheaply in the future.
Over 75% of CEOs Expect Office Space To Shrink In The Future
In a survey of 171 CEOs across America, Fortune magazine and Deloitte found that 76% of those polled expect their company will need less office space in the future. Growing acceptance of smaller office space could be because many are finding remote work isn’t so bad after all — 40% of CEOs in the survey said employee productivity has gone up due to remote work.
Interestingly, Fortune/Deloitte’s survey comes on the heels of a different study about returning to work by workplace technology startup Envoy. That survey found that 73% of US-based employees worry about their health and safety at work. So even if some companies are ready to fully return to the office, most employees may be less keen to follow suit.
Why this matters to you: The COVID-19 pandemic will almost certainly shape how humans work together in the future. And while shrinking office spaces will impact commercial real estate negatively, there are some benefits to smaller office footprints worth noting. For instance, Americans are still driving less on the roads, even as more and more places are reopening. Remote work can also help reduce overhead costs.
Facebook Revealed Plans To Beef Up WhatsApp Business
In an effort to squeeze money out of its WhatsApp messaging platform, Facebook is set to make several additions to the business side of the service. To start, businesses will be able to sell products to customers within chats. Facebook didn’t say how exactly the in-chat shopping feature might be implemented, but it is supposed to work alongside businesses’ “existing commerce and customer solutions.”
Facebook is also launching a hosting service in “the coming months” that will include the ability for businesses to manage their WhatsApp messages. Finally, Facebook noted that some WhatsApp services for business customers will cost money, although specifics haven’t been revealed yet.
Why this matters to you: WhatsApp is a messaging platform that reaches over two billion people worldwide. The upcoming features for WhatsApp will especially be a boon for small businesses that sell online — in fact, Facebook says that the in-chat shopping experience is meant to “help many small businesses who have been most impacted in this time.”
Further reading: Has Facebook Finally Broken WhatsAppâRadical New Update Now Confirmed, Forbes
Outlook For Restaurant Isn’t As Bleak As Previously Thought
Despite the damage the pandemic has done to restaurants, there is hope yet. Moody’s moved its outlook rating for the restaurant industry from “negative” to “stable” last week. The investor service predicted that there will be “slowly improving business conditions” during the next 12 to 18 months and that the industry’s operating profit will grow by around 15% in 2021.
However, restaurants aren’t out of the woods yet. A recent Bloomberg report discussed restaurants that have opened up outdoor dining during the pandemic must innovate once again to survive the cold winter months. For many, winterizing an outdoor space may be too expensive — outdoor headers often cost between $1,000 and $1,500 a pop.
Why this matters to you: A glimmer of hope for the restaurant industry shines a beacon across the entire economy — businesses that serve food have been hit hard during lockdowns. Still, it’s important to stay vigilant. COVID-19 remains a deadly virus, and coming up with safe protocols while remaining profitable will be a tall order for many small businesses, including those beyond the restaurant space.
Further reading: Off-Premise Sales and Non-Traditional Payment Options are Top of Mind for Restaurant Franchisees in COVID-19 Landscape, TD Bank
Entrepreneurship Is On The Rise
Alongside a rise in joblessness has come a rise in entrepreneurship. According to data by the U.S. Census Bureau, new businesses filed 1.5 million Employer Identification Number applications in the third quarter of this year — an 82% jump year-over-year. The Midwest and the South both saw steep rises in particular.
MBA applications are also soaring as people look to boost their professional skill set. A survey of the top 25 US business schools by Poets & Quants found that the number of applications is up an average of 22.6%. USCâs Marshall School of Business leads the pack with a 66.4% increase in applications.
Why this matters to you: The drastic unemployment stemming from the COVID-generated recession is almost certainly encouraging more and more to try their hand at running a business. If you’ve recently started your own business, or are seeking an MBA to help with a business venture, you are not alone. There are plenty of others out there who will (hopefully) succeed right along with you.
Further reading: Entrepreneurship Is the Vaccine for Urban Economies, Bloomberg
The Latest From Merchant Maverick
The Paycheck Protection Program and Economic Injury Disaster Loans struggled to adequately help many small businesses during the early stages of the pandemic. Learn what exactly went wrong from our readers’ perspectives:
Top 5 Reasons Why Small Businesses Were Denied Government Funding During The COVID Crisis
A Texas farm has been in the news recently for helping special-needs children play and hang out with animals that require special needs, too.
Run as a non-profit organization called Safe in Austin, the farm is home to over 150 animals who are injured or need some type of additional support. Among the residents include a rescued turkey born with a claw abnormality and a calf with a birth defect that fused its legs and spine together.
“There is something absolutely magical about watching a child with differences come out here and say, ‘Theyâre just like me,’ ” said Safe in Austin founder Jamie Wallace-Griner. She added: “We have animals that are blind or deaf, have diabetes, cerebral palsy, deformities, missing limbs, broken spines â¦ they all become part of our family.”
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post Chaseâs New Mobile Card Reader Takes Aim At Square & 5 More Small Business News Stories You Need To Know appeared first on Merchant Maverick.
The PPP/EIDL funding process upended the small business community these past few months as places scrambled to stay open — and solvent — during the COVID pandemic shutdowns and closures. Since March, Merchant Maverick has been paying attention to reader comments to try and put our finger on the pulse of the everyday business owners’ experiences.
In Early October, Treasury Secretary Steve Mnuchin said in a press release that the government provided 5.2 million PPP loans worth $525 billion to small businesses, which saved 51 million jobs. Congress also added another $20 billion to the Economic Injury Disaster Loans program and made the (up to) $10,000 advance forgivable.
Despite those numbers, the PPP and EIDL programs failed to give a lot of business owners the help they needed. What went wrong? Why were small businesses denied those funds? And what does the future look like in terms of government COVID aid?
Keep on reading to find out the top five reasons why small businesses missed out on government loans during the coronavirus pandemic.
1) Issuing Banks Failed Big Time
The first, and most challenging, hurdle for many small business owners involved problems with the actual banks issuing the loans. It’s important to understand that the Small Business Administration (SBA) itself does not directly lend money; it relies on partner banks and lenders to actually provide the cash. Instead, it smooths out the lending process by guaranteeing all or a portion of the loan, making the process less risky in general.
When the PPP and EIDL programs launched, partner banks were unprepared to deal with the volume of applicants.
Banks were overrun with applications within hours
Funds were depleted quickly
Paperwork was filed too slowly, and without a good system for tracking applications
According to reader comments, Chase Bank and Bank of America, in particular, struggled with serious issues around applicants and applications. But in general, nothing about the rollout of the SBA loans was well-thought-out, and that left many banks scrambling to come up with their own internal policies amid confusion. The general chaos within the banking community meant that many business owners, even when filing applications correctly, missed out on their piece of the PPP or EIDL funds.
Our reader Naomi wrote:
This PPP is such a farce on so many levels. We applied early with Chase, tried to check on the status and was told that they aren’t in charge of approving the loans and don’t even have access to the applications. Essentially, they said that the applications automatically go directly to the SBA and the SBA reviews the applications. When we called the SBA, they told us the exact opposite: That the bank approves the applications and likely didn’t get to ours before the funds ran out — essentially that it was just sitting there for two weeks! … The process generally has just been unbelievably inequitable from the start and not transparent … Shame on the US Government.
Reader Kim replied to Naomi, writing:
Well said! I went through the same thing. Waiting, wondering, worrying… no answers, then BAM the money is gone. Then to hear Chase and the SBA gave millions to businesses that, no doubt, have countless resources at their disposal. Resources that actual small businesses wouldn’t even qualify for. Shame on Chase and shame on the SBA as well.
Chase Bank was not alone in its failure to handle the SBA disaster loans rollout. Bank of America also came under heavy scrutiny for the way they processed their loans, resulting in a lawsuit from four small businesses that allege Bank of America prioritized businesses needing larger loan amounts so they could maximize their own profits. Our Merchant Maverick readers experienced the same kind of forced delays in filing loan paperwork that are cited in the lawsuit.
Our reader Monica said, “Shame on you, Bank of America! All documentation submitted and confirmed. Then nothing! After 30 years as a small business banking customer, we are disgusted. Enjoy the $18 billion you will make while screwing your small business clients.”
The financial toll of COVID has affected all business owners, but it’s been particularly hard on those that provide essential services. Karen, a physical therapist and owner/founder of a clinic in Issaquah, Washington, wrote:
As an essential healthcare business, we’ve remained open and have been providing care to our critical needs patients and many front-line responders in the COVID-19 crisis. Located in King County, we’ve been struggling since the original outbreak in Kirkland, Washington only 6 miles away. We applied through Bank of America for the Payroll Protection Plan within three hours of the process opening online on April 3, 2020. We uploaded our supporting documents within four hours of the email request for them. As of today, we’ve had no response from BOA and can only assume we won’t be receiving any Federal assistance… I’m not sure what future opportunities may arise to fill this critical gap in funding for small businesses, but as a front-line health care provider, I certainly hope some priority will be given to businesses like ours.
Jocelyn, another physical therapist from Redmond, Washington, replied to Karen:
Like you, we applied for the PPP through Bank of America (our business bank for 21 years) on day one and did not end up getting any funds. All along the way, it seemed there were delays on their end. We would jump whenever they requested information, but then days would go by before we would get another email. Eventually, the money just ran out and we were out of luck. There is no one to give us any information. Now learning that BofA funded some larger businesses that used up millions instead of the small businesses like ours makes me really upset. I’m not optimistic about having any chance the second time around either.
2) SBA & Lender Technology Floundered
Another huge complaint about the PPP/EIDL process surrounded the major technology glitches that prevented people from navigating the application process with ease. Errors abounded, the most of common of which were:
Small business owners never received log-in information
Websites were overrun with traffic and timed out
Applications failed to upload at all
Users received error messages during the process and didn’t know how to proceed
Applications were resubmitted due to website error and then flagged as suspicious
Even during the second round of funding, technology issues ran rampant. The SBA’s processing site experienced extreme slowing. In a comment to Fortune, the SBA said: “SBA notified lenders yesterday that pacing of applications into the E-Tran system would occur, meaning all lenders would be able to submit at the same rate per hour. The pacing mechanism prevents any one lender from submitting thousands of loans an hour into the E-Tran system. If a lender goes above the pacing limit they will get timed out.”
A handful of Merchant Maverick readers encountered a similar technology issue: Accidental flagging of potential duplicate applications. If computers timed-out and a small business resubmitted, there was a potential for a double-submission. Or in one reader’s situation, she submitted applications to two separate businesses but it was still flagged as a duplicate. Corina wrote, “I had to call and ask them to reinstate the main application for my larger business.”
A reader named Smith wrote:
Today, I received the following email with the subject line: Multiple SBA Economic Injury Disaster Loan Applications. ‘We received multiple applications from your business for economic injury as a result of Coronavirus (COVID-19). Your earliest application will continue to be processed and we have withdrawn [other] application number from active consideration.‘ Does this mean I’ve been denied? I only submitted one application.
Reader Anne wrote:
My business was initially declined because the system though I’d applied multiple times. Turned out it was because, in the system, my application showed the same numbers for my bank account and routing number. There were a number of people from my bank who made the same mistake when applying, so it showed multiple accounts applying for the loan — which were considered duplicates — when it was really multiple people applying who use the same bank. My guess is there’s a bug in the application software, but no use focusing on that to resolve.
Our reader Valerie ran into similar problems with her EIDL loan after receiving mixed messages from the bank. She wrote:
After I confirmed my identity and approved the amount, it wouldn’t let me review and sign the documents. I received an email saying I was approved for an amount and it gave me the option to select the maximum amount or a lower amount. I checked the [bank] online about 3 hours later, and now the status shows declined and they will email me with the details. I am so confused, because they emailed me and told me that I was approved.
3) The SBA Wasn’t Prepared
News agencies widely panned the rollout of the SBA disaster loans with a slew of adjectives, including chaotic, sloppy, bumpy, flawed, glitchy, messy. An article from NPR outlined many of the problems surrounding the program and some of the questions that small business owners still have about the funds. In general, users found that the SBA guidelines were too vague or they failed to answer questions in a timely manner. Phone lines went down — phone numbers that worked for some didn’t work for others. Misinformation and exhaustion reigned.
Merchant Maverick reader Micah captured the frustration many of our readers encountered during the EIDL process. He wrote, “[I] just received a denial email. After jumping through so many hoops and re-entering my bank info, they just decided to deny me.”
David wrote, “I got an email on 5/10 that my EIDL was being processed and created the account, gave verification and bank info… and today, I went to check on it and the status has gone from processing to DECLINED! It says I’ll get more info by email.. I was really counting on that money, especially when they said it was processing.”
Reader Hollie responded to David’s situation with her own experiences, writing that the same thing happened to her with her EIDL loan:
I got the email from the SBA saying congratulations your application is processing. It gave me a loan amount that I was approved for. I accepted the amount. Created the account, verified my identity, and put in my bank info… Then boom: Next day, Email saying I was denied. It also said it would send via email the reason for denial. Welp, that email never came. I’ve called and sent them emails asking what happened, but have yet to hear back. That was two weeks ago.
4) Unqualified Businesses Snatched Funding Not Meant For Them
Shake Shack. The Laker’s. Potbelly. A handful of successful hotel chains. When the funds were dispersed and the scrutiny started, small business owners who had been left out of the two rounds of funding were irate to learn that some businesses that didn’t seem to meet the criteria were walking away with the bulk of the resources. The backlash, however, prompted many of the larger companies to return the money.
Readers responded with frustration to the news that big businesses walked away with the money that small businesses had been promised. During the first round of PPP loans, reader Lee wrote:
Our government has scammed us. I applied to Chase for an SBA loan during the first week. Our banker walked us through it. A few days later, he finally answered, after texting and calling him constantly. He said the program ran out of money, so our application was in the queue for the next release. Then, today, I heard that Shake Shack got $10 million! They have way over 500 employees. I can’t wait until November.
Reader MC shared a similar sentiment:
I understand that the PPP came with no user manual and is extremely confusing. But it doesn’t excuse some blatant and grotesque approvals of loans to filthy-rich businesses. Take the Los Angeles Lakers as an example. They were approved for $4.6 million although their estimated value is $3.7 billion! Why in the world did they apply in the first place? It’s truly, truly appalling.
Reader D. Hewett wrote:
I work financing small business loans. I’ve been working and following up nonstop on programs to try and help other business owners. I filed end of March… There is no place to check for your loan application. If small business owners don’t die of the coronavirus trying to get promised funds will kill them. Meanwhile, large, large corporations got millions of dollars while little small business owners are getting denied unemployment? No word on EIDL, denied or turned away from PPP. Haven’t received stimulus checks. I am one of those, and this shows me the ineptness of our government in every way from managing the coronavirus to disaster loan programs.
5) Simple User Error
Lastly, another common thread among the denied was good old-fashioned user error. Thanks to hugely mixed messaging, and confusing and conflicting information from banks and the SBA, the process wasn’t smooth to start with. Compounded with technology issues, many small business owners made simple mistakes in the application process that slowed down the process or precluded them from receiving funds at all.
Many readers reported being told to fix issues, only to have the money run out in the meantime. Others had their credit pulled (and their credit score affected by the pull), but suffered from small errors that prevented their applications from fully going through. Faulty log-ins, wrong bank information, missing information — all of those things contributed to loan failure. One reader was frustrated when she accidentally entered zero on her loan amount and was unable to receive help from the SBA to correct the amount.
Some small businesses that were denied because of error were allowed to submit reconsideration letters, although it is unclear how many of those went on to receive funds.
The Future Of Government Aid During COVID
As this article goes to press, more COVID relief is being discussed, but there is no further news about the government’s plans for the small businesses still in need of aid. With the November presidential election mere weeks away, it is apparent that COVID aid is an election issue and a government bargaining chip. However, while Federal aid may be in limbo, small business owners may also want to check out other forms of funding, including what their local governments are offering in terms of grants — as many state, county, and city governments are dispersing funds from the CARES Act to local businesses.
Follow Merchant Maverick on Facebook or Twitter for more news content related to the pandemic. Comment on social or on this article about your experiences or venture on to check out our COVID-19 hub — we’ll also be posting any need-to-know stories there.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post Top 5 Reasons Why Small Businesses Were Denied Government Funding During The COVID Crisis appeared first on Merchant Maverick.
You’d never want to use the word “luck” in the context of something like a pandemic, but the adaptations businesses have made to comply with lockdowns and social distancing have made a powerful case for entrepreneur Larry Talley’s vision.
Talley is the founder & CEO of Austin, Texas-based Everyware, a payment gateway that seeks to address some common pain points in the payment/billing cycle. Talley’s solution is built on an optimistic premise: that many bills, transactions, and customer service inquiries that go unaddressed or unfulfilled aren’t being purposefully avoided. They’re simply getting lost in the shuffle. In other words, have you carefully gone through that pile of mail on your kitchen table? Do you regularly check your spam folder to make sure nothing important is landing there?
If you’re anything like me, probably not.
It Starts With A “Thank You”
Everyware gets around this by sending a text message receipt with every transaction.
âIt can be as simple as a thank you, but what it does is provide a basic communication channel that’s open all the time, 24 hours a day, seven days a week,” explains Talley. “You can always text back your concern or your problem. Or even a positive review.â
Talley, who is a software developer, bootstrapped Everyware and maintains it with a small team of around 25. The company now has customers not only in the US, but in Canada and Mexico thanks to word of mouth and ISO referrals.
âLike most bootstrapped companies, you start with a great idea, but bringing that idea to market is a lot harder than you think,” says Talley, “The idea really goes back to 2015, but it took until about 2017 to really pull it together.â
Saying “YES” To Text-Based Billing
The kind of text channel Everware helps to create can be used for more than just thanks or communication; it can also be used to initiate payments. This can be done through a link in the text or, if the payer has a credit card on file, simply approving the transaction with an affirmative text message like “YES.”
As a freestanding payment gateway, Everywear can be added to most existing merchant account services.
If you’ve interacted with the medical system in the past few years, or have donated to a political campaign, you probably have an idea of how this works. Many healthcare providers will, for example, send you texts reminding you of upcoming appointments. Afterward, they’ll send you a message alerting you that your bill is now available, usually with a link to their patient portal. Similarly, many political campaigns this cycle have utilized “textbanking” to connect with supporters, alert them about events, and solicit donations. As you might imagine, these have been two of Talley’s biggest sources of customers.
Talley expands on how useful text-based billing can be in the medical industry, “When you go to the hospital, you might have five different doctors and different bills for each. All when you’re going through a tough time in life.â It’s not uncommon for patients to get a bill from one doctor or department, think they’ve completely settled their medical payments, and miss the other bills. The hospital misses out on payments, and the patient starts getting calls from collection agencies. Everyware seeks to eliminate this problem by providing better communication with an easily accessed paper trail.
Thanks To COVID, Everyware Is…Everwhere
Everyware’s niche may turn out to be a lot bigger than politics and medicine when all is said and done. COVID-19 has created an enormous demand for contactless payments. While eCommerce transactions can and have been filling the gaps, they aren’t the only way to replace what would otherwise be over-the-phone card payments. A text-based transaction can not only be used to make many of those payments, but it can do so more securely. Think of it as something like two-factor authentication. Not only are you getting the card’s security features, but you’re also getting it via a phone number and device that have a record of belonging to a specific individual for an extended period of time. This creates less room for fraud than most card-not-present transactions. It also leaves a record of the transaction in a place where it can be easily seen and recovered.
“We’ve signed up a few private airports, so now pilots don’t have to get out of the plane to pay for gas. They can just pay from their phones,” says Talley. Talley sees government and municipalities as big growth sectors, particularly where the court system is concerned. While getting a traffic citation by text may not be a thrilling prospect for most people, Talley anticipates savings from reduced paperwork and fewer unpaid tickets.
There are plenty of other businesses that may find a use for text transactions in our new paradigm.
âWith curbside pick-up, pharmaceuticals, online schooling, everything moving toward a model that’s compatible with our platform, it has really accelerated our growth,” explains Talley. “We’re today, a company that’s cashflow positive and high-growth. We’re more or less a platform now rather than just a standalone payment gateway.â
The post Everyware Uses Text-Based Billing To Help More Businesses Profit From Contactless Payment During COVID appeared first on Merchant Maverick.
As a small business owner, odds are you were affected by the COVID-19 pandemic. Whether this meant shutting your doors temporarily, reducing your number of customers, or shifting to remote work, 2020 has undoubtedly been challenging. If you were like millions of other small business owners, you got at least a little bit of financial relief through the US government’s Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL) advance.
So, now, here we are. You’ve received your funding, you’ve spent it, and perhaps you’ve even applied for loan forgiveness. But there’s still a nagging thought in the back of your mind: How does this affect your taxes? Do you have to pay taxes on your PPP loan? Will you be on the hook with the IRS for the funding you received with the EIDL advance?
With tax time right around the corner, this is a pretty common concern for small business owners. Digging through IRS publications or trying to decipher information released by the SBA can leave you scratching your head. In this post, we will break it all down for you, so it’s easily digestible. We’ll cover how PPP loans and EIDL advances affect your 2020 taxes, so you can be fully prepared when it’s time to file.
One thing to note is that laws surrounding these government loans have changed over the last few months. We will continue to monitor these changes and update this post accordingly.
How The PPP Loan Affects 2020 Taxes
The Small Business Administration’s PPP loans gave billions of dollars to encourage small business owners to maintain their payroll and keep their workers employed. According to the SBA, over 5 million businesses received loans through this funding program.
Under this program, small business owners could receive up to two-and-a-half times their average monthly payroll (with a maximum cap of $10 million) to cover payroll and other critical business expenses, such as utilities, mortgage interest, and rent paid under a lease.
When spent on approved expenses, these loans are 100% forgivable, meaning that the funds are not required to be repaid. For expenses that weren’t on the SBA’s list, funds would be repaid with a low-interest rate and long repayment terms.
This program helped millions of businesses by providing over $5 billion to eligible applicants. For many, this funding came at the right time, allowing small businesses to keep their doors open and keep their employees on staff. However, as we approach the end of the year, the program is over, and businesses are now applying for loan forgiveness or calculating how much money is owed. For many business owners, though, the end of the year also signals tax season on the horizon and the looming question: How will PPP loans affect federal income tax returns?
Do You Have To Pay Taxes On The PPP Loan?
How taxes are handled for PPP funds differs based on a number of factors. We’ll look at the different scenarios and how each will affect your 2020 tax return.
For federal tax purposes, loan funds that have been forgiven are excluded from your business’s gross income. In other words, any portion of your PPP loan that has been forgiven will not be included as part of your company’s taxable income. Sounds great, right? However, there is a catch, which we’ll explain in the next section.
PPP loan funds that were not forgiven are similar to other loans. Unforgiven loan funds are included as part of your taxable gross income.
The Catch: PPP Loans & Tax Deductions
The IRS issued a notice that further clarifies how PPP loan funds should be handled for 2020 income tax returns. While the forgiven funds are tax-free, expenses paid with PPP funds can’t be claimed as deductions. This means that you could have a higher tax liability once you complete your tax return.
For example, let’s say you received a $20,000 loan that you used to cover payroll. If your entire loan was forgiven, you will not be able to deduct these funds from your taxable income as you normally would. However, you would still be able to deduct any payroll that was paid with funds that didn’t come from your PPP loan.
Now, let’s say the $20,000 loan you received was not forgiven. In this case, the $20,000 is viewed as taxable income, and you can claim any relevant business deductions to lower your tax liability.
In summary, this is what you should expect from your PPP loan come tax time:
Forgiven loan funds are not counted as taxable income but cannot be deducted from your business expenses
Loan funds that are not forgiven are counted as taxable income and may be deducted from your expenses
How The EIDL Loan Affects Taxes
Another loan you may have taken advantage of during the COVID-19 pandemic is the Economic Injury Disaster Loan, or EIDL. One notable difference between the EIDL for those affected by the coronavirus and past EIDLs is that the Small Business Administration offered an advance of up to $10,000 for qualifying small businesses. This advance allowed businesses to receive funds quickly. While EIDL funds are required to be repaid, the EIDL Advance was a grant that does not have to be repaid.
Funds obtained through the EIDL and EIDL Advance could be used as working capital or to cover any other operating expenses for businesses impacted by COVID-19.
Do You Have To Pay Taxes On The EIDL Loan?
If you received the EIDL loan, taxes on these funds work like any other loan taxation. In other words, funds from the EIDL are reported as taxable business income on your tax return. However, you can lower your tax liability by deducting any expenses covered by the use of these funds.
Funds from an EIDL Advance are also reported as taxable business income. Like funding from the EIDL, qualifying expenses can be written off to lower your tax liability.
How The Employee Retention Credit Affects Taxes
Small business owners may be eligible to claim the Employee Retention Credit. This credit is available to businesses with 500 or fewer employees that also meet the following criteria:
Required by a governmental authority to fully or partially suspend operations as a result of COVID-19, or
Experienced a gross decline in receipts of at least 50% in a calendar quarter in 2020 when compared to the same quarter in 2019
Businesses that received a PPP loan are ineligible to receive the Employee Retention Credit.Â
If you are eligible, you can receive a credit of up to 50% of eligible wages paid per quarter to each employee. Maximum wages per quarter per employee are capped at $10,000. That means you can claim a maximum of $5,000 per quarter per employee. You do not need to wait to claim this credit when you file your 2020 taxes. Instead, credits can be claimed on your quarterly tax return.
If You Received A PPP Loan, Expect A Tax Audit
In recent months, the SBA and the US Treasury have announced that all PPP loans in excess of $2 million will be audited. Loans that are less than $2 million are subject to an audit, and it has been reported that much lower loans have been scrutinized. What does this mean for you? In short, all recipients of the PPP loan should expect to be audited, as there is a higher probability that the IRS will audit you.
“Audit” is a pretty scary word, especially if you’ve never faced one before. However, as long as you have your records in order and used funds appropriately, the audit process should be pretty painless. Here’s how to make the process go as smoothly as possible:
Don’t Procrastinate: Sure, an audit can be scary but ignoring it won’t make it go away. Read over your notice carefully and begin compiling your documentation as soon as possible.
Keep All Records: Receipts, statements, payroll records, and PPP documentation should be kept on file for at least six years after your PPP loan is fully repaid or forgiven.
Make Copies: If you’re sending off documentation, make sure to send copies. Make sure to always retain your original documentation in case you need it at a later time.
Hire A CPA: A CPA, unlike a regular accountant, will be able to represent and defend your business against the IRS, if necessary. A CPA can also offer important advice for tax preparation and future audits.
Did you receive a PPP loan, and you’re being audited? Check out our post, PPP Loans & Tax Audits: What Your Business Needs To Know, so you’ll know what to expect.
Other PPP & EIDL Tax FAQs
Didn’t find the answers you were looking for? Take a look at some of the most-asked questions about how PPP and EIDL loans may affect your taxes.
Does my PPP count as taxable income?
It depends. Fully-forgiven PPP loans do not count as taxable income. However, you will be unable to claim a deduction for expenses paid using your PPP funds.
If your PPP loan was not forgiven, it’s included as part of your taxable income. Deductions for applicable expenses can be made to lessen your tax burden.
If my PPP loan is not forgiven in full, does that mean it counts as taxable income?
All or any portion of your PPP loan that is not forgiven is counted as taxable income. To lessen your tax burden, deductions for expenses covered with these funds can be claimed on your tax return.
How do I get my PPP loan forgiven?
To get your PPP loan forgiven, you must have spent your funds on qualifying expenses, including:
Lease or rent payments
You must also have maintained your employee headcount and salaries to qualify for forgiveness. The SBA offers additional guidance on qualifying for loan forgiveness.
If your business qualifies, you will need to fill out a PPP loan forgiveness application. Borrowers that received a loan of $50,000 or less can use Form 3508S. Borrowers with loans over $50,000 can fill out Form 3508EZ. Once completed, submit the form to the lender that is servicing your loan.
Is an EIDL Advance taxable?
Your EIDL and EIDL Advance are counted as taxable income on your tax return. You can lessen your tax burden by deducting expenses paid for using your EIDL funds.
Can I write off payroll and other business expenses if I used a PPP loan to pay for them?
If you received a PPP loan and your loan was forgiven, you cannot write off payroll and other expenses that were paid for with these funds. Expenses that were not paid using PPP funds can still be written off as usual.
If your PPP loan was not forgiven, payroll and other business expenses may be written off on your tax return.
Can I use my PPP loan to pay business taxes?
No. Funds from your PPP loan may only be used to cover payroll costs, utilities, rent or lease payments, or mortgage interest. PPP loan proceeds can’t be used to pay business taxes.
Can I pay taxes with my EIDL loan?
Yes. While there are a few restrictions on how EIDL funds are spent, there is no rule in place prohibiting you from paying your income taxes using these funds.
Can I defer payroll taxes and receive a PPP loan?
Businesses that have received a PPP loan can still defer payroll taxes through the end of 2020.
Will PPP loans be audited by the IRS?
According to the US Treasury, all PPP loans that exceed $2 million will be audited. The IRS may also audit all other loans, so it is best to be prepared, even if you received a much smaller loan.
Will EIDL loans be audited?
When you receive your EIDL loan, you agree to spend the funds provided for certain business expenses. As part of your loan agreement, you agree to maintain records and provide these records to the SBA to be audited if necessary. While there is a chance you may not be audited, don’t skip over this critical step. Maintain your records and be prepared to respond if an audit occurs.
The post How Will PPP Loans & EIDL Advances Affect My 2020 Taxes? appeared first on Merchant Maverick.
Small businesses now have a helping hand in the fight against COVID-19: Comcast RISE, an initiative launched this week by media and telecommunications conglomerate Comcast.
Comcast’s new program, which began accepting applicants from Black-owned and operated small businesses on Tuesday, aims to boost businesses on Main Street through grants, marketing resources, and tech equipment.
The program is part of a $100 million pledge Comcast made in June to “fight injustice and inequality against any race, ethnicity, gender identity, sexual orientation or ability.” And while Comcast RISE focuses first on helping Black small business owners, businesses run by Black, Indigenous, and People of Color (BIPOC) will be eligible to join starting November 28. Comcast didn’t say how (or if) RISE might be expanded further in the future.
“We see and know firsthand how vital small businesses are in powering economic growth, recovery and innovation. Now more than ever, driving awareness and maintaining a strong digital presence are crucial for these businesses to succeed,” Comcast Business’ senior vice president for digital and customer experience Teresa Ward-Maupin said in a statement. “We created Comcast RISE to give these business owners access to the tools and resources they need to survive the pandemic and thrive.”
Comcast’s decision to first help Black-owned businesses (and then also BIPOC ones) is rooted in data.
According to a National Bureau of Economic Research study cited by Comcast, Black-owned businesses were the hardest hit racial category between February and April of this year, with the number of Black business owners in the US dropping 41% (Latinx and Asian business owners also experienced steep declines of 32% and 26%, respectively). Other studies (which Merchant Maverick wrote about last week) have told similar stories — COVID has disproportionately affected the financials of minority-owned small businesses.
What Comcast RISE Offers Eligible Small Businesses
Comcast RISE features a number of resources to help eligible businesses impacted by COVID.
While not launching with the initial “wave,” perhaps the most tantalizing resource is the grant program. According to Comcast, grants worth $10,000 will be dolled out to US-based diverse small businesses three to five years of age “in the coming months.” Comcast also teased that the grant program will be launched November 28.
Beyond sending money small businesses’ way, Comcast also plans to help Main Street through:
Advertising and marketing consultations with local teams from Effectv, the advertising sales division of Comcast Cable.
A 90-day linear TV media campaign.
Production of a 30-second TV ad spot.
Computer equipment and internet, voice and cybersecurity services for up to 12-months.
Training resources via Comcast’s X1 platform.
According to Comcast, once the first application phase closes in early November, services will start in December and continue on into 2021.
Per the program’s legal rules, 282 applicants will receive marketing help via Effectv (32 will receive a media consultation, 125 will receive a media campaign, and 125 will receive a TV spot/media campaign). 325 applicants will receive equipment and telecommunication services.
How To Sign Up For Comcast RISE
Black-owned businesses are eligible to apply for Comcast RISE’s first wave right now. To apply, visit the application page on Comcast RISE’s official site. Information needed for the application includes:
Applicant’s personal information (name, phone, email, etc.)
Basic’ information (industry, type, products/service, age, revenue, location, etc.)
Business owner’s race
Applicant’s relationship to the business
Business’s website and social URLs
Business’s relationships to Comcast and Effectv
Written responses advocating for why the business should be accepted into Comcast RISE
Applications for the initial wave are due November 7, 2020.
For the first wave, Comcast RISE’s eligibility rules require that businesses are:
At least 51% Black-owned and operated
Independently owned and operated
Registered to conduct business in the US
Older than one year
Located within the service area of Comcast Business of Effectv
To receive a media consultation, campaign, or ad spot, applicant businesses must employ fewer than 100 employees. The equipment and telecommunication services category is open to businesses with fewer than 25 employees.
Applicant businesses must also not operate in one of these industries:
Manufacturer or retailer of drug paraphernalia
Internet service provider
Gun manufacturer or retailer
Fireworks manufacturer or retailer
Tobacco/vape manufacturer or retailer
Illegal products or services provider
Note that these eligibility requirements may change as Comcast RISE enters new waves. For instance, the next wave will target BIPOC-owned business owners starting November 28, instead of solely Black-owned businesses.
Other Programs To Help Small Businesses Survive COVID
There are alternative programs out there for small business owners as well. For example, Facebook launched a small business grant program earlier this year (we wrote about the program’s initial round of applications for Black-owned businesses). Small business owners may also want to check out what their local governments are offering — many state, county, and city governments are dispersing funds from the CARES Act to local businesses.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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A pair of recent surveys highlighted how minority- and Black-owned businesses have shown resilience in the face of COVID-19. But the findings also revealed a racial disparity in government aid disbursal as white-owned businesses reported being more likely to receive federal-backed loans during the pandemic.
These surveys, one by Union Bank and the other by small business network SCORE.org, come at a time when the US is facing the problem of systemic racism head-on — all while combating a pandemic that has no end in sight.
It’s also worth noting that the Union Bank and SCORE.org surveys aren’t outliers. A report released in August by the Federal Reserve Bank of New York concluded that Black-owned businesses have been hit especially hard during the pandemic. More recently, a Crunchbase study unearthed how Black- and Latinx-led startups receive an under-represented share of venture capital funding in the US.
Union Bank Survey Shows Minority-Owned Businesses Are Resilient, Adaptive
The first survey, conducted in late August and early September by Union Bank, found that minority small business owners (which the survey defined as including Black, Latinx, and Asian American) were twice as likely as non-diverse businesses to report that the pandemic had a positive effect on their business. The survey also revealed that 34% of minority small business owners envision “a path forward to how their business can survive” while just 20% of non-diverse businesses can say the same.
Minority-run businesses have also shown greater openness to adjusting their business practices compared to non-diverse businesses.
For instance, 50% of minority-owned small businesses reported changing products or services compared to just 38% of non-diverse small businesses. Minority-owned businesses are also more likely to report tweaks to delivery options (47% to 29% of non-diverse small businesses) as well as online advertising (40% to 26% of non-diverse small businesses).
With COVID still ravaging the economy, minority business owners are also keen to see more government aid — 66% of the respondents in Union Bank’s survey said they want to see more support from the government.
SCORE.org Survey Reveals Sobering Facts About COVID’s Effect On Minority-Owned Businesses
The other survey, run in August by SCORE.org, looked more into the impact COVID has had on Black- and Hispanic-owned businesses.
Per SCORE.org’s survey, only 6.7% of Hispanic small business owners and 8.8% of Black small business owners define their company as “profitable and growing” — numbers that pale in comparison to the 14.7% of white business owners who say the same thing.
Additionally, Black small business owners are 90.7% more likely than their white counterparts to have a direct relationship (such as family, staff, or themselves) with individuals infected with COVID. Hispanic owners are 42.4% more likely than white owners to have COVID-related relationships.
Despite the direct impacts on Black and Hispanic small businesses, government aid winds up more often in the hands of white-run small businesses, according to SCORE.org’s data.
For example, roughly 53% of both Black and Hispanic small business owners reported applying for Paycheck Protection Program (PPP) loans. However, only 36.8% of Hispanic-owned businesses received the full amount of money they requested and just 20.3% of Black-owned businesses did so too. By comparison, of the 47.8% of white businesses that sought PPP loans, 63.7% received the full amount.
Numbers for other government assistance programs show similar sobering stories. For Economic Injury Disaster Loans, Black- and Hispanic-run businesses were more than twice as less likely to receive full funding compared to white-owned businesses. For general Small Business Administration loans, 33% of white business owners reported receiving the full amount, compared to a paltry 8.4% of Black business owners and 13.7% of Hispanic business owners.
The Future Of Minority-Owned Businesses
Just like much of the COVID-stricken world, the future of minority-owned businesses looks bleak. However, beacons of hope still exist.
This year’s social upheaval helped spotlight how America’s problem with systemic racism negatively impacts Black-owned businesses. In response to the protests that began this spring, numerous programs have been created to help Black businesses. Back in June, PayPal pledged $530 million for Black businesses and minority communities. In August, Facebook rolled out $40 million in grants for Black businesses, while Citizen Bank allocated minority-owned businesses $1.5 million of grant funding.
America’s social activism also spurred collective support of Black businesses — a survey by Groupon and the National Black Chamber of Commerce found that 75% of Black businesses saw an increase in business between the beginning of June and the end of July. Hopefully, this summer’s surge for Black-owned businesses can help at least more than a few hang on, especially because immediate government aid is looking less and less likely.
For more direct financial aid regarding minority-run businesses, visit Merchant Maverick’s article on the best business loans for minorities. We’ve also written about the top business grants for minorities.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Even though we are still mired in the Covid-19 pandemic, we know that eventually there will be light at the end of the tunnel, and hopefully sooner than later. However, many experts predict that there will likely be permanent effects in the retail and restaurant industries. The new normal of our Covid world is starting to settle upon us and so are some of the new conveniences and trends born out of forced innovation in response to the global pandemic.
What trends will likely continue after the pandemic and business restrictions are fully lifted? Read on to find out!
80% of workers want to work from home some of the time.
Global Workplace Analytics (GWA) reported in 2019 that 80% of workers would want to work from home at least part of the time, and it is very likely that some of those survey participants got their wish in 2020’s barrage of unexpected events.
Pre-pandemic, the GWA estimated that 5 million adults worked remotely — approximately 3.6% of the workforce. But based on current trends, it is estimated that by the end of 2021, 25-30% of the workforce will be remote workers.
When state shut-downs started in March, the pandemic forced an issue that many companies and businesses have grappled with in recent years: Could remote work succeed for my business? In a survey of CFOs, many plan to continue remote work post-pandemic, shifting as much as 20% of their workforce into remote work to save money.
Cost is a huge reason why businesses might choose to let their employees work from home for good. Kate Lister of the GWA says, “â¦a typical employer can save about $11,000/year for every person who works remotely half of the time.” These savings stem from fewer maintenance expenditures primarily and, oftentimes, in increased productivity from staff.
68% of consumers are likely to continue online ordering after the pandemic.
According to an April 2020 survey by CommerceHub, not only has the popularity of online ordering increased during the pandemic, but 69% of consumers are more willing to do their shopping online than before the pandemic and 75% say they are more likely to opt for curbside delivery. A global survey noted that 36% of consumers are shopping online at least once a week — which is up from 27% pre-Covid.
All of that points to continued growth for eCommerce which already saw a 146% year-over-year increase since April 2020. That means that stores that don’t have an online presence might want to adopt a plan to expand into eCommerce. Many businesses may not even realize how simple it is to start their own online store. Many POS companies even come with either their own eCommerce platform or integrate with third-party companies that can provide the service at an affordable rate. At the very least, stores with a storefront should know consumers are hoping curbside pick-up and expanded delivery options will stick around after the pandemic.
Cashless & Contactless Payments
Contactless sales have increased by 27% since March.
A survey from the Electronic Transaction Association (ETA) said that contactless sales have increased by 27% since the shutdowns began. The ETA’s chief executive Jodie Kelley released a statement that said, “It’s clear that the ‘new normal’ for businesses of all sizes is defined in part by a shift in consumer preference for e-commerce and contactless payments, which can help limit consumer exposure and promote social distancing during the pandemic.”
While not all businesses are on board with shifting over to a cashless business, more businesses added contactless/cashless options during the pandemic, and the result is consumers might prefer this new normal.
One Step Closer to The Singularity: More Robots!
2 million new industrial robots will be installed in the next two years.
A quick search on Google will show you how many think-pieces have been written about the idea that “Robots Don’t Get Sick.” In this world of germs and sickness, the idea of a workforce that cannot, in fact, catch COVID seems dreamy (if not a bit dystopian, as well). The 2 million industrial robots joining the ranks are not all a response to COVID — many are a natural evolution as technology responds to consumer trends.
According to McKinsey and Company’s report on industrial robotics, 88% of businesses worldwide plan to implement increased robotic automations.
The current trend is for “cobots” — robots that work in collaboration with a human counterpart.
Investment In Local Small Businesses
68% of consumers will continue to shop local after the pandemic.
Commitment to small businesses saw a surge of support during the tenuous first months of the Covid pandemic. For businesses wondering if that attraction to shopping local will continue, signs point to yes. A survey conducted by ZypMedia said that 68% of consumers will continue to shop local even after all pandemic restrictions are lifted. And, in fact, many individuals may need to continue or consciously up their support of their favorite local businesses to keep them afloat or back up and running again.
Aman Sareen, CEO of ZypMedia said, “Local businesses are the engine of our economy and it’s reassuring to see that Americans aren’t abandoning them during these uncertain times. How businesses market to their customers is more critical than ever as consumers believe in remaining loyal to their local businesses, while at the same time being conscious of their current economic and social distancing situations.”
How To Get Your Business Through COVID
Small business owners understand there is a lot of uncertainty about the future. Infection numbers keep climbing, future stimulus bills seem in limbo, and not every small business will be able to survive. But while there’s still a long road ahead, there have also been amazing and creative breakthroughs in innovations. Companies that are able to think on their feet and adapt to these fast-moving trends will always have a better chance of success.
Follow Merchant Maverick on Facebook or Twitter for more news content related to the pandemic. You can also check out our COVID-19 hub — we’ll also be posting any need-to-know stories there.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post 5 COVID Business Trends To Keep An Eye On Post-Pandemic: Key Stats, Surveys, & More appeared first on Merchant Maverick.
Here at Merchant Maverick, we’ve covered PPP news for small business owners from day one. But by this point, we’re starting to sound like a broken record: The Paycheck Protection Program (PPP), meant to be a savior for America’s small businesses struggling financially due to COVID-19, has been a fairly unmitigated disaster.
Between the slow application process, the indefensible dolling out of funds to major organizations like burger chain Shake Shack and the NBA’s Los Angeles Lakers, and the outright lack of cash, the US government has been unable to properly support the nation’s small businesses with the PPP. (Even the father of Treasury Secretary Steven Mnuchin wasn’t impressed with his son’s performance.) More recently, Politico reported that not a single small business has yet received forgiveness on its PPP loan — even though the SBA opened the forgiveness portal for banks on August 10.
Despite the incompetency surrounding the PPP, more government funding for small businesses is direly needed as COVID’s economic damage continues to cripple numerous industries. According to an August survey by the NFIB, 47% of PPP loan borrowers anticipate needing more financial support over the next year. The restaurant industry has been particularly affected — for instance, results from a survey released this month by the New York State Restaurant Association found that 63.6% of restaurateurs in the Empire State fear closure over the next four months without additional financial relief.
While prospects may be lukewarm, hopeful murmurs about another round of PPP funding have been swirling around the past few weeks. Let’s take a look at what the government has been doing (and what it hasn’t) regarding a much-needed second stimulus package.
What We Know About The Next Round Of PPP
The PPP closed shop on August 8 with $138 billion left in funding. Since then, stimulus plans have sat deadlocked in Congress.
After the program was extended once, additional suggestions to lengthen the PPP went nowhere before the program fizzled out in August. Other talks also went nowhere.
In May, House Democrats offered up a 3.4 trillion general stimulus plan that roughly matched earlier government aid packages. However, Senate Republicans countered with a $1.1 trillion package towards the end of July. A “skinny” version of the GOP’s bill trimmed that number down to $300 billion, but Senate Democrats blocked that from advancing earlier this month.
By September 10, Republicans signaled a reluctance to negotiate with Democrats by expressing pessimism that COVID relief talks are “dead” until after Election Day. In a Twitter post one week later, President Trump called for Republicans to “go for the much higher numbers.”
“I like the larger amount, Iâve said that,” Trump added at a White House press briefing on September 16. “Some of the Republicans disagree, but I think I can convince them to go along with that because I like the larger number. I want to see people get money.”
The White House later affirmed that a $1.5 trillion package could be the sweet spot in negotiations.
Despite the difficulty facing potential negotiations, the Democrats have forged on with trying to pass a stimulus package. Most recently, party leaders unveiled on Monday a $2.2 trillion proposal dubbed the HEROES Act.
“Democrats are making good on our promise to compromise with this updated bill, which is necessary to address the immediate health and economic crisis facing America’s working families right now,” House Speaker Nancy Pelosi, D-Calif., wrote in a letter to House Democrats. “We have been able to make critical additions and reduce the cost of the bill by shortening the time covered for now.”
Besides helping out Americans with another slate of $1,200 stimulus checks and additional unemployment benefits, the HEROES Act also aims to lend small businesses a hand. Potential aid for businesses includes:
The PPP would be reopened, allowing small businesses to tap into an additional round of funding.
$120 billion in grants would be made available for restaurants, bars, and food trucks.
$436 million for states and local governments, some of which could spill over to local businesses.
At the time of writing, it remains unclear how the GOP will respond to the Democrat’s latest PPP offering. However, the $2.2 trillion price tag may be closer to a number more palatable to Republican legislators.
Government Alternatives To The PPP
A couple of small business aid alternatives to a more traditional stimulus package have cropped up recently. Unfortunately, these plans appear to have low prospects too.
During a House hearing last week, Financial Services Committee chair Maxime Waters, D-Calif., pressed the Federal Reserve to open its Main Street Lending Program to smaller businesses. This program, which has been largely ignored by the general public, is currently only open to businesses needing between $250,000 and $2 million.
While the Treasury’s Mnuchin said he was open to the prospect of lowering the bar to businesses in need of $100,000, Fed chair Jerome Powell shot the possibility down.
“Thereâs very little demand in the facility [for loans] below $1 million,” Powell said. He added: “Trying to underwrite the credit of hundreds of thousands of very small businesses would be very difficult. I think PPP is a better way to approach that space in the market and I think you are well advised to do that.”
This week, the Washington Business Journal reported on a separate proposal spearheaded by Rep. Jaime Herrera Beutler, R-Wash. This proposal, which has been floated as a “discharge petition”, would allow the House to bypass Congress’ deadlocked stimulus talks. Should this piece of legislation pass, small businesses hit with “steep revenue losses” due to COVID could tap into the $138 billion left of PPP funds.
However, discharge petitions rarely pass (the Washington Business Journal noted just two passed petitions, one from 2015 and another in 2002). As such, Beutler’s proposal seems unlikely to go anywhere — it requires at least 218 votes to pass, so support from both sides of the aisle is needed.
How To Stay Up-To-Date On PPP News
Staying current on the latest PPP news can be a daunting and all-consuming task. To help out business owners across the country, Merchant Maverick is keeping our ear to the ground for any PPP rumblings.
Following Merchant Maverick on Facebook or Twitter is a good place to start because we’ll be sharing any of our future PPP-related articles across social media. You can also check out our COVID-19 hub — we’ll also be posting any need-to-know government stimulus stories there.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post Another Round Of PPP? What We Know Right Now About Another Government Stimulus For Small Businesses appeared first on Merchant Maverick.
Hugo Fernandez knows the value of making a sale. The founder and CEO of Just Digital, a creative marketing agency based out of Los Angeles, Fernandez has taken his innate understanding of entrepreneurship and turned it into a thriving company aimed at helping small businesses grow their client base.
Educating businesses about growing and sustaining client leads follows the old adage about teaching a person to fish. Fernandez and his JustDigital team have the tools, but they don’t just want to give them out and hope for the best — they want to teach other business owners how to use them to thrive.
Starting With An Unshakeable Foundation
For Fernandez, business roots — and the know-how to convert a sale — go back to childhood. In his book, The Client Acquisition Blueprint, Fernandez describes his three-year-old self taking people leaving the local church by the hands and leading them to his mother’s food stand. When his family emigrated from Mexico, he carried his small business acumen and those hard-won lessons into his life in the United States by selling Mexican food and candy door-to-door.
Eventually, as he learned graphic design, he became an invaluable marketing tool for his family members by creating flyers and marketing materials to help them grow their own businesses. “I was hustling to help my parents make ends meet. I went into sales by default,” Fernandez said. “I never thought I could turn it into a business or a career.”
But he has.
Giving Businesses A Fighting Chance
Opening his doors in 2012, Fernandez started Just Digital with the intention to help small business owners access their target clients. He knew small businesses were leaving clients/customers, and therefore money, on the table. “My passion has always been helping the little guys, helping small businesses. I want to give small businesses a fighting chance,” he said.
The statistics from the SBA about those fighting chances are sobering. Says Fernandez:
There are 28 million small businesses and 21 million are making less than 60K a year in gross sales. That means 80% [of small business owners] are making less than if they went out and got a job. Regardless of that specific statistic, most businesses aren’t making much money, and I don’t think people start a business thinking they won’t make many sales.
It’s harder and harder when you’re a small business dealing with limited resources and budget. So, Just Digital has an education portion that is really huge. We want to point small businesses in the right direction. Sometimes it’s not, ‘Hey! Hire us to build your website.’ It’s us saying to a business, use Squarespace to build your website. We’ve been doing a lot more on the education side of things.
In his book, Fernandez lays out his plan for success. He wants businesses to have an unshakeable foundation built on a solid understanding of the inherent value of their business. This should be combined with a researched, accurate knowledge of their customer base — and the best way to reach them. Everything from brand identity to a sales strategy is crucial to converting sales.
The book reads like a conversation with a successful mentor at a lunch you were lucky to get; his ideas are attainable, easy to understand and follow, and current. It’s clear that he brings passion and know-how to every client. For his part, Fernandez makes it his job to stay on top of trends and small business needs.
Adapting To COVID…For The Long Haul
And what does the forecast look like for small businesses during COVID-times? The future isn’t clear.
According to Fernandez:
From a small business standpoint, there is an ominous cloud approaching, but this time businesses are feeling more resilient. Some of them now have cash in the bank, and they are okay and growing. Some businesses do think this is the end, but … in general, there is more optimism. Everyone is just adapting. We’re in this for the long haul, so we’ll see what happens. When COVID first hit, no one knew what the disease looked like, and just going grocery shopping was fear-inducing. And now you can go and shop, and it’s not the end of the world.
Like many business owners across the world, when the novel coronavirus hit, Fernandez ran the numbers and prepared for the worst.
“The biggest shock with COVID was how it riled everybody up,” says Fernandez. “Businesses left and right are failing and shutting their doors. If the big guys are struggling, then you can imagine your local barbershop, florist, or coffeeshop is doing when they are really relying on that foot traffic.”
Just Digital’s clients, unsure about their futures, initially scaled back their marketing needs. In the aftermath, his company lost 35% of its gross revenue and had to lay off one employee.
All of March and early April was a rollercoaster. Every single day, opening your inbox, expecting to hear something. Or picking up your phone and talking people off a ledge. That was scary and difficult for the first two weeks. But then I’m like, this is a lot bigger than just me, so I’m not going to freak out.
Then came the government’s EIDL and PPP loans — a stimulus that worked. His own PPP loan was small (several of his employees work in other countries, and the government aid did not account for their employment), but he saw the resurgence in energy from businesses looking to spend the government aid.
Fernandez adds, “By May, we picked back up. The [PPP/EIDL money] did what it was supposed to do; it stimulated the economy. June, July, August, have been some of our biggest months.”
Just Digital’s Tips For Small Businesses Starting Out
Fernandez has a message for small businesses. “You are selling things to people that make their lives better,” he said. He wants businesses to see themselves as adding value to the lives of the people they can reach with their service or their product. Sometimes there is fear or trepidation about marketing and putting oneself and one’s business out there, but Fernandez wants to assist small businesses to overcome those worries.
You are selling things to people that make their lives better.
His quick recommendations for business owners just starting out are succinct and valuable. “If I were just starting, I would get a Square account — I’d want to send invoices quickly. Then I would build a website with Squarespace or Shopify. Next, you have to focus on getting clients.”
For email automation and newsletters, Fernandez recommends Mailchimp. And QuickBooks is still the gold standard if you need something that can manage everything from your accounting needs to inventory management and payroll. While in the past his company has primarily handled marketing professional services, he anticipates the eCommerce growth from the past few years will continue.
While small businesses figure out the future, Fernandez is holding on to his optimism about the future and ready to help. “Businesses at different times will need different things. Anything they need help with, we can help with,” he said.
No one knows what next month or next year will bring, but small business owners understand the hustle only adapts and never ceases. And with Just Digital and Hugo Fernandez’s help, his clients can be ready for the future of small business and to find the clients looking for — no matter what.
The post Marketing Agency JustDigital Continues To Help Businesses Target & Maintain Clients, Even Through COVID appeared first on Merchant Maverick.
2020 has been a brutal year for retailers, but a shopping bonanza brainstormed by a group of retail insiders looks to turn things around.
Christened the 10.10 Shopping Festival by Coresight Research, rewards app Shopkick, and online fashion marketplace Fashwire, the event promises deals from retailers nationwide on October 10 with some sales spilling over to October 9 and 11. According to an introductory brief on 10.10 by Coresight, the upcoming shopping festival is aimed to drive consumer engagement across the US while pulling holiday shopping forward on the calendar.
Besides helping swing the holiday retail season into October, the event is meant to mimic China’s Singles Day, held November 11 and often dubbed “11.11”. That event, spurred on by Chinese eCommerce colossus Alibaba, is known for being the largest shopping day in the world; Alibaba shoppers spent $38.4 billion last November 11, a number that topped Amazon’s online sales earnings the entire 2019 third quarter.
10.10’s”gamified shopping experience” will also aim to entice consumers — participating retailers will be able to offer deals and rewards via Shopkick’s mobile app.
Coresight CEO and founder Deborah Weinswig further claims that kicking off the holiday retail season early will allow sellers to “spread out shipments over time.” Such a tactic will hopefully ensure that packages arrive at customers’ doorsteps on time.
“If we donât pull it forward, then it wonât happen,” Weisnwig told Bloomberg in an article from last week. She added: “There is no capacity. Weâre seeing people who have never shopped online shop online.”
According to Bloomberg’s article, more than two dozen “major retailers” have agreed to participate in 10.10. However, no company has publicly announced plans for the shopping holiday because an element of suspense is crucial to most sales calendars.
Several companies have signaled their intentions to begin the holiday push earlier than in years past, although none have specifically referenced 10.10.
For instance, Home Depot has pegged its Black Friday deals for early November, while Walmart has promised “an all-new Black Friday experience” that includes an earlier start to savings. Other retailers have also gotten in on scheduling a long holiday season; a Wall Street Journal report from September 12 suggests American Eagle Outfitters, Best Buy, Nordstrom, Macyâs, and Target will all have earlier-than-usual sales, with some beginning as soon as October.
Amazon’s delayed Prime Day is also around the corner. A leaked internal Amazon email indicates plans to run Prime Day October 13th and 14th. If true, shoppers will get almost a week’s worth of deals between 10.10 and Prime Day — giving the 2020 holiday shopping season a potentially profitable early jump start.
What 10.10 Means For Small Businesses
At least for 2020, 10.10 is primarily aimed at the online marketplace. When noting reasons for launching 10.10 in the era of COVID, Coresight specifically mentioned how 56% of US consumers are still avoiding going out to shopping centers. Plus — as noted above — Coresight has been very vocal on how a longer holiday shopping season will help ease the shipping crunch many online sellers face.
An early push for holiday shopping will also be key for businesses that rely on making end-of-the-year sales. With a stretched-out holiday shopping season, consumers will have more time to part with their cash — something that may prove pivotal because Americans are pinching pennies more than usual right now.
It’s also possible that some retail businesses may be eligible to be officially included in the 10.10 Shopping Festival (and thus be able to take advantage of Shopkick’s gamifying features). For retailers interested in participating, Coresight recommends contacting [email protected]
If 10.10 proves to be a success in 2020, the event has the potential to become one of the big shopping pushes of the year. With many retailers expressing wariness over Black Friday, Coresight certainly seems keen on making 10.10 either a replacement or an important supplement to the holiday retail season’s traditional start. By offering 10.10 deals, small businesses may be able to engage customers already on the prowl for savings.
Businesses that don’t need to make holiday sales can also take advantage of 10.10 (as well as Amazon Prime Day) by smartly shopping deals during the kickoff event for holiday 2020.
More Sales Tips For The Holiday Season
Keen to up your business’ game this holiday season? Take a peek at some of Merchant Maverick’s tips and tricks to successfully gearing up for the end-of-the-year festivities.
For a general guide on preparing for the holiday season, read 10 tips that will help your business thrive throughout the holidays. eCommerce focused businesses may find help in our suggestions for setting up an online store for the holidays.
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