$1 million is now available for US-based small businesses thanks to a grant program announced today by financial firm The Hartford and Main Street America, a nonprofit focused on revitalizing older and historic commercial districts.
The HartBeat of Main Street Grant Program, as the program has been dubbed, will sponsor grants ranging from $5,000 to $15,000 in size. Brick-and-mortar small businesses with fewer than 20 employees and located within commercial districts are eligible to apply.
Applications are open now through August 23, or after the program has received 500 applicants. Additional funding rounds may be announced later this summer.
The $1 million in funding has been donated by The Hartford.
“The incredible resilience and innovation our small business customers have shown as theyâve adapted to a new normal has been inspiring,” The Hartford’s head of small commercial and personal lines Stephanie Bush said in a statement. “We are committed to providing them with support as they continue to navigate these challenging times.”
The Hartford and Main Street America have also geared this grant program towards helping underserved communities — they’ve pledged that 50% of funds will go towards diverse-owned businesses. This includes ownership by minorities, women, veterans, disabled people, and those identifying as LGBTQ.
Related: Women-led Businesses More Impacted By COVID-19, Survey Says
The HartBeat Aims To Aid COVID-19 Recovery
Like many financial aid programs launched recently, the economic struggles stemming from COVID-19 inspired the HartBeat program.
“COVID-19 has had a devastating impact on small, locally-owned businesses and they need our support like never before,” said Patrice Frey, the president and CEO of Main Street America’s National Main Street Center. “We are thrilled to partner with The Hartford to alleviate some of the financial burden small businesses are experiencing and support the resilience and recovery of older and historic main streets and commercial districts.”
With its focus on COVID-19 recovery, the HartBeat does have a set of eligible grant expenses for awardees. These requirements include things such as physical improvements to meet COVID-19 safety regulations, equipment for public safety, fees associated with launching eCommerce sales, and business plan modifications. The grants may also be used for rent, payroll, and other operating expenses.
The program’s application notes that final awards will be given out based on “a case by case basis” as well as listing a set of criteria for eligible applicants. To be eligible for the HartBeat’s grants, applicants are required to:
Run their business within the same state that it does business
Own a US brick-and-mortar location within an older or historic main street, downtown, or commercial district
Have been in operation since at least January 1, 2019
Employ fewer than 20 employees
Be an owner of the business
Be over 18 years of age
Note that applicants don’t need to be customers of The Hartford to be eligible for funding, nor is an applicant’s relationship to The Hartford considered.
This is far from the first grant venture from Main Street America. In June, the nonprofit awarded $10,000 each to 10 different businesses as part of its Future of Shopping Small Grant Program, which was run jointly with American Express. Earlier in the year, Main Street America doled out $10,000 apiece to eight different small business programs focused on helping local businesses survive COVID-19.
Other Small Business Grants
Beyond the HartBeat program, small businesses have several other avenues to pursue for grant funding.
To get up to speed on the world of small business grants, check out Merchant Maverick’s primer on the topic. Some may also find our article covering COVID-19 relief grants helpful, too.
Women who own a small business may want to take a peek at Merchant Maverick’s guide to the best business grants for women. We’ve also written about grants for minority-owned businesses as well.
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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COVID-19’s destructive wake has damaged small businesses of all kinds, but those led by women have been disproportionately affected, based on a new report.
This report, released earlier this month by Facebook, found via a survey that 71% of women-led businesses in the US are operational or engaging in any sort of revenue-generating activity compared to 83% of those run by men. The survey, which Facebook jointly ran with the Organisation for Economic Co-operation and Development and the World Bank, considered the responses of more than 30,000 small business owners, managers, and employees from over 50 countries.
One reason for the disparity could be the cultural focus on gender roles in domestic settings.
According to the survey, female business leaders were more than twice as likely to spend at least six hours a day on domestic tasks when compared to their male counterparts — 23% to 11%. Facebook also noted that women were 10 percentage points more likely than men to have their work affected by caring for children, homeschooling, and doing household chores.
North America has also been the hardest hit region for closures of businesses run by women.
In the US and Canada, women were 14 percentage points more likely to close their businesses than men due to COVID-19. That’s compared to an 11 percentage point gap in Latin America and six percentage-point gaps in both Asia and Europe.
Micro-business — defined in the report as businesses with no employees — have also been hit hard. Based on the survey’s numbers, 30% of micro-businesses have closed compared to 25% of businesses with one or more employees. Of those surveyed, 37% of female-led businesses were considered “micro” while only 24% of male-led business fell under that category.
You can read Facebook’s Global State of Small Business Report in its entirety via PDF.
Women-Owned Businesses Are Struggling Worldwide
The Facebook report arrived shortly before the International Monetary Fund (IMF) called on governments to support women during the financial fallout caused by COVID-19.
“It is crucial that policymakers adopt measures to limit the scarring effects of the pandemic on women,” IMF director Kristalina Georgieva wrote in a blog post on July 21. “This could entail a focus on extending income support to the vulnerable, preserving employment linkages, providing incentives to balance work and family care responsibilities, improving access to health care and family planning, and expanding support for small businesses and the self-employed.”
The IMF’s blog post also noted the domestic discrepancy — according to previous research done by the organization, women spend 2.7 hours more per day on unpaid household work than men.
Facebook’s findings further echo similar data.
According to a June report commissioned by the National Bureau of Economic Research, the number of self-employed female business owners dropped 25% between February and April of this year. That pales in comparison to the 20% decline male-owned firms saw.
“The disproportionate losses in April 2020 to the number of female business owners will only further increase gender inequality in business ownership and perhaps broader economic inequality,” wrote Robert W. Fairlie, the UC-Santa Cruz professor who led the report’s research. Fairlie also called the number of lost women-run businesses “unprecedented.”
More globally, an impact report published this month by Women in Cloud and sponsored by Microsoft found that women entrepreneurs in the tech sector estimated their businesses will lose an average of $500,000 in revenue over the next year. It also revealed that 100% of the 57 executives surveyed reported that their businesses had lost income due to COVID-19.
Where Women-led Businesses Can Look For COVID-19 Support
Luckily, a number of organizations have stepped up to provide businesses owned by women with financial support during these coronavirus-infested times.
For instance, the Red Backpack Fund (run by The Spanx by Sara Blakely Foundation) will be giving out $5,000 grants to 1,000 female-owned businesses. The next application round is set to begin August 3.
There’s also the Moms as Entrepreneur’s COVID-19 fund, which is giving out grants of $500-$1,000 to mom-owned businesses financially impacted by the pandemic.
Microgrants can additionally be found for Black women who own businesses, such as through the Doonie Fund or Barefoot Wine’s COVID-19 recovery program.
For more general advice, check out Merchant Maverick’s guide to the best business grants for women. We also have an article covering the best business loans for women.
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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If you had “Coin Shortage because of COVID” on your 2020 bingo sheet, you can check that box and keep on hunting for other unique or unexpected consequences of this year’s coronavirus pandemic. A perfect storm between closed coin production and a decrease in moving coins through the banking systems has resulted in a coin shortage, and some small businesses are already feeling the impact.
Last month, the Federal Reserve issued a statement on the coin shortage, with Jerome Powell telling Congress: “What’s happened is — with the partial closure of the economy — the flow of coins through the economy has … kind of stopped. The places where you’d go to your coins and get credit … those have not been working.”
Coins Are Stuck In A Stopped System
Treasury Secretary Steve Mnuchin said in a virtual investment summit, “As it relates to coins, so many businesses shut down, a lot of coins got stuck in the system, so we are a little bit far behind on coins.”
There are several reasons why the COVID-19 pandemic has resulted in coins becoming stuck in the system. One is that on advice from the Centers for Disease Control (CDC), many small businesses stopped accepting cash in an attempt to slow the spread of the virus. The shift to cashless transactions and contactless payment systems resulted in fewer coins moving through the system.
With fewer coins going to the bank, banks cannot move coins back out into circulation. The Federal Reserve Task Force, started June 30, is expected to report on their suggestions to mitigate the shortage in early August. According to the Task Force:
“The primary issue with coin is a dramatic deceleration of coin circulation through the supply chain … While there is adequate coin in the economy, the slowed pace of circulation has meant that sufficient quantities of coin are not readily available where needed.”
Decreased circulation has been accompanied by decreased coin output, as the U.S. Mint has dramatically slowed output in an attempt to protect its employees from contracting the virus.
Coin Shortage Impact On Small Business
Grocery stores, car washes, laundromats, convenience stores, dispensaries, vending machines, and gas stations are all businesses that depend on coins. Some of those businesses are still running as cash-only businesses in a credit world. Underbanked and smaller businesses are most at risk of being disproportionately affected by a cash shortage.
This also affects underbanked households who primarily pay with cash. According to an FDIC survey in 2017, 8.4 million households in the United States do not have a banking account of any type. If places are not accepting cash or offering change, or if businesses lose their ability to give change, the impact is greater among these households and cash-only businesses.
In non-COVID days, small businesses could easily receive change from their local banks. However, as some businesses stopped accepting cash and the U.S. Mint slowed production, fewer coins have found their way back to banks. (Third-party coin systems like Coinstar — which banks depend on for coin circulation — have also experienced fewer deposits since March.)
Many small businesses have resorted to rationing their coins. Jeff Lenard from the National Association of Convenience stores told CBS News that, “Right now cash is a problem. [Small businesses] are only being given a fraction of what they normally get in terms of coin.”
Part of the Federal Reserve’s coin task force mission is to safely increase production, but even that might not mean a quick-fix. According to an interview with the Las Vegas Review Journal, Ted Rossman, an industry analyst with CreditCards.com said, “The mint … is working overtime to try to pump more coins into the system … Iâve seen some projections as far out as November.â Rossman, however, thinks that things will look better sooner than that.
In the meantime, some small businesses are asking for coins from customers, and other places are buying coins. Whether those coins actually get into the hands of the small business owners that need them, however, is a different issue.
Yiming Ma, an assistant professor of finance at Columbia Business School, said in an interview with Forbes that the Federal Reserve can’t just flood the economy with coins and hope for the best.
“It’s not a one day and everything is solved type of problem. We should be thinking about how to allocate distribution so it’s taken back in a way to help communities and businesses that are in the most need of coins. It’s easier said than done.”
How Your Small Business Can Respond To The Coin Shortage
If your small business doesn’t need coins to survive, you should help distribute the coins you receive back to your local banks or into local cash-only businesses.
If you are a small business that relies on coins, however, don’t hesitate to put out a “Coin APB” into the world and on your social media feeds. Most of the coins that typically run through our economy are languishing in piggy banks and sofa cushions. Skip the bank and go straight to the community to see if you can nudge some of those coins back into circulation.
For other COVID-19 related coverage, check out Merchant Maverick’s Coronavirus Hub for more articles about how to navigate the pandemic.
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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Earlier this week, the American Institute of Certified Public Accountants (AICPA) and Biz2Credit announced the launch of PPPForgivenessTool.com, a web platform that aims to help automate the forgiveness process for small business owners who took out Paycheck Protection Program (PPP) loans.
The tool — which is powered by technology developed by Biz2Credit — was revealed via an AICPA press release on Monday. CPA.com, the technology arm of AICPA, also helped launch the tool.
“We are now incorporating our PPP calculation and process recommendations into a dynamic PPP Forgiveness Tool to help drive a simple and effective forgiveness process,” CPA.com president and CEO Erik Asgeirsson said in a statement. “Our broader goal with this tool is to […] help drive a common approach to this process with the payroll and lender communities.”
PPPForgivenessTool.com incorporates the PPP calculator previously released by the AICPA in May. It takes into account all current SBA and Treasury guidance covering PPP forgiveness. Biz2Credit developed the tool using its proprietary Biz2X Platform, which was designed so financial institutions could serve business customers.
This latest effort by AICPA has the potential to become popular; the accounting organization claims that “tens of thousands of firms” have downloaded its loan amount and PPP calculators since April.
A Free PPP Loan Forgiveness Tool For Businesses
Any business approved for a PPP loan can use PPPForgivenessTool.com free of charge.
Borrowers can log into the site’s platform to fill out the PPP forgiveness application. An offshoot site is available for accountants filling out forms on a business’s behalf. According to AICPA, this tool will automatically generate all government-mandated forms related to PPP forgiveness.
After filling out the necessary information, the Small Business Association’s (SBA) 3508 or 3508 EZ forms can be signed by applicants electronically. All other required documents will be bundled into a downloadable file the borrower can submit to their lender.
AICPA promises that the tool will be updated based on final forgiveness guidance from the SBA and Treasury, so borrowers should wait before generating their final and signed form 3508. There’s also the possibility of automatic forgiveness for firms that received a PPP loan of less than $150,000, furthering evidence that businesses burdened by PPP loans may want to wait before going through with the current forgiveness process.
AICPA claims this new tool “will likely save hours of manual work” for those applying for PPP forgiveness.
“This online platform will produce a finalized forgiveness application that a borrower can take right to their lender for submission without any extra work,” Biz2Credit CEO Rohit Arora said in a statement.
Arora also highlighted the tool’s open architecture, which allows AICPA coalition members to integrate data into PPPForgivenessTool.com.
“It is extremely important right now for companies that serve small businesses to come together to help these business owners benefit from the Paycheck Protection Program,” he said. “An open architecture platform like this is an invitation to any company that works with small businesses, including PPP lenders.”
How To Apply For PPP Forgiveness
The PPP has undoubtedly provided much-needed aid for some impacted by COVID-19 — almost 5 million businesses have received its government-backed aid, after all — but the program has been plagued by plenty of problems since introduction. The forgiveness process is no different, although the SBA did release a simpler EZ forgiveness form last month.
Besides filling out paperwork and filing it with their PPP lender, businesses will need to hit a number of requirements to be eligible for forgiveness. Among these stipulations are:
Using funds for qualifying purposes, such as payroll or rent
Spending the loan within 24 weeks of disbursement
Maintaining full-time staff and payroll expenses
To dig deeper into the program’s rules, take a peek at Merchant Maverick’s in-depth guide to PPP forgiveness.
It’s worth noting that most borrowers may not be able to apply for forgiveness, even if they want to. That’s because many banks involved with the PPP simply aren’t ready — as Politico recently reported on July 20, only 20% of banks surveyed by the CBA are currently accepting forgiveness applications, with the SBA’s slowness to provide forgiveness guidance being chalked up as the primary reason for the delay.
Yesterday, the SBA did announce that its forgiveness portal for lenders would go live on August 10 (subject to Congressional amendments), potentially hastening banks’ desires to start accepting forgiveness applications.
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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In a recent installment of her Pivoteers & Pioneers series, Yulia Ovchinnikova invited the founder of Silicon Harlem, Clayton Banks, to speak to a business audience an hour and change north of Manhattan. Banks has been developing Harlem’s technology hub since 1994, a feat Ovchinnikova has been trying to replicate in her area through her business, the OpenHub Project.
Before Silicon Valley came to dominate the industry, another valley on the opposite coast was home to the nation’s burgeoning tech industry. At its peak, IBM employed over 7,000 workers at its plant in Kingston, a small city in New York’s Hudson Valley about halfway between New York City and Albany. Twenty miles down the Hudson River in the City of Poughkeepsie, IBM established laboratories for research and development. While not all of that infrastructure is gone — reports of IBM’s demise have been greatly exaggerated and, in fact, they’re doing some intriguing work on quantum computing in the region — the Hudson Valley’s reputation as a technology corridor has largely been consigned to the past. But it won’t remain there long. Not if Ovchinnikova, who operates out of Newburgh, has anything to say about it.
Ovchinnikova, who holds a Ph.D. in Economics from the Russian Academy of Science and an MA in Applied Mathematics and Computer Science from Moscow State Technical University of Electronics & Mathematics, has made a mission of revitalizing her adopted home’s tech industry. Since 2017, OpenHub, in collaboration with SUNY Ulster, has offered web development boot camps, an afterschool coding program for girls in the City of Newburgh, IT professional certifications, and frequent special events designed to bring existing tech workers together. The group’s mission? Building a strong, accessible technology hub for the region’s businesses, schools, and governments.
In October 2019, with the help of local sponsors, OpenHub held its inaugural HVTechFest, a two-day event that featured talks, panels, and a hackathon (an event where attendees are given a problem to solve, typically with hardware and/or software). The event turned out to be well-received, and spirits were running high.
Along Came COVID
Ovchinnikova and her team were well into the process of developing the second annual HVTechfest when New York became ground zero for the coronavirus outbreak in the US in March. While the Hudson Valley wasn’t hit quite as hard as New York City, it still had some of the highest infection rates in the state. The lockdown lasted longer here than in most of the country, putting significant strain on local businesses. Though the festival wasn’t to have been held until October 2020, the likelihood of being able to hold a successful mass gathering of that kind in 2020 appeared less and less likely. OpenHub needed to pivot.
But as it turned out, so did most other businesses.
OpenHub began to take notice of the other businesses in the area that were not only adapting to a new normal of restricted indoor occupancy but were actually thriving in it. The main difference between the restaurants and companies that were doing well and those that weren’t? How well they applied technology in their day-to-day processes.
Pivoteers & Pioneers
“Forcing people to go remote revealed differences in the availability of tech and readiness,” Ovchinnikova observes. “Addressing that digital divide is very important.”
With that in mind, the Pivoteers & Pioneers series was born. Conceived of as a free five-part webisode series for the age of social distancing, the program has focused on different aspects of the lockdown economy, ranging from restaurants, to banking, to telehealth, to tech groups like Digital Harlem. The fifth webisode, which debuted on July 10th, focused on education and how various school districts tackled the challenge of having to teach students remotely.
“During our 5 biweekly webisode series we reviewed important topics related to our current moment with COVID and closures,” explains Ovchinnikova, “These topics were actively engaging more than 500 Hudson Valley influencers, businesses, and educators.”
Watching these events, it becomes immediately clear that businesses and institutions have reluctantly entered a period of experimentation and rapid adaptation. The cost of failing to adapt to the “new normal” can mean a devastating loss of profits, but those who adapt successfully often uncover better ways of doing things. Many of these new methods and niches will persist long after the coronavirus crisis has ended.
Different school districts, for example, have wildly different ideas about how much remote school work to give children for optimal results. Similarly, viewpoints varied — sometimes strongly — on the potential of free municipal wireless internet to bridge the digital divide in those communities. Banks and credit unions discussed their strategies to make remote banking more effective by offering apps that eliminate the need to physically enter their brick-and-mortar branches to do things like deposit checks.
“These webinars were interactive and allowed people to share their experience and get actionable insights from participants working in the same area or industry,” explains Ovchinnikova. “We tried to define pioneers and pivoteers — those who were finding new approaches, or new ways of doing things in their business, serving their customers, finding new offerings, or discover a new niche.”
While the webinars are regionally focused, the topics they cover will likely be useful to businesses in any area that is struggling to maintain something close to normal operations during a full or partial lockdown. Interested business owners, or anyone else, can register for webinars on OpenHub’s site or view past ones on YouTube. Ovchinnikova encourages anyone interested in future content to subscribe to the YouTube channel.
Ovchinnikova says there’s been a lot of demand to bring the series back for another run, which she is considering, along with how to align OpenHub’s own COVID-related pivot with her longer-term goals of breathing new life into the Hudson Valley’s tech industry. At the moment, she still plans to hold HVTechFest 2020 in some capacity, even if the event ends up needing to be conducted remotely. In that sense, the web series has served as a test drive for how tech-related seminars and information could be presented to the community if an in-person event proves to be impossible by October.
“We saw a need, and we plan to continue with the webinar format,” says Ovchinnikova.
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If lawmakers, small business advocates, and financial institutions get their way, small businesses that have become saddled with Paycheck Protection Program (PPP) loan debt may be able to receive automatic forgiveness soon.
That’s the heart of the Paycheck Protection Small Business Forgiveness Act, a bipartisan bill introduced last month by Sens. Kevin Cramer, R-N.D., Bob Menendez, D-N.J., Thom Tillis R-N.C., and Kyrsten Sinema, D-Ariz. This piece of legislation provides automatic loan forgiveness for PPP loans under $150,000. Qualifying businesses would only need to fill out a one-page form to become eligible for forgiveness.
According to data from the Small Business Administration (SBA), the $150k cutoff represents 86% of the over 4.9 million businesses that took out loans via the PPP. However, those businesses under the $150k threshold only received 27% of the total money administered through the PPP.
Proponents of the bill argue that it would be a time saver for small businesses, as their paperwork needs would drop. Some also suggest that blanketed forgiveness could alleviate the workload for the banks that have processed PPP applications.
In their announcement introducing the Forgiveness Act, the sponsoring senators specifically estimated that automatic forgiveness could retain $2,000 for each affected small business and $500 per loan for the lenders — ultimately saving roughly $9.4 billion in total.
“We can avoid the burdensome cost of superfluous bureaucracy required to arrive at the foregone conclusion of loan forgiveness by implementing a few commonsense changes,” Cramer said in a statement. “The Paycheck Protection Small Business Forgiveness Act would give small businesses peace of mind by eliminating unnecessary bureaucratic requirements and simplifying the process for forgiving smaller loans.”
The PPP Automatic Forgiveness Bill Has Backers
The bill — or variants of it, at least — has received support from numerous parties beyond Capitol Hill.
Perhaps most notably is Steven Mnuchin, the Secretary of the Treasury. While Mnuchin hasn’t thrown his weight behind the introduced bill specifically, he has suggested the need for automatic forgiveness.
“One of the things weâll talk about is should we just have forgiveness for all the small loans? I think thatâs something we should consider,” Mnuchin said during a House Small Business Committee hearing on July 17.
Organizations have also chimed in their support. For instance, over 130 trade associations sent a letter to Congress on July 9 urging for passage of the bill. Among the letter’s cosigners included the US Chamber of Commerce, the International Franchise Association, and the National Restaurant Association.
In a July 17 letter, the American Bankers Association, the Bank Policy Institute, and the Consumer Bankers Association pleaded with Mnuchin and SBA head Jovita Carranza for automatic PPP loan forgiveness of up to at least $150,000 and as much as $350,000.
Most recently, the online payments giant PayPal — which has been processing PPP applications for the SBA — joined the throng of voices urging for forgiveness on PPP loans under $150k.
“As Congress considers proposals for automatic loan forgiveness for PPP loans below a certain dollar amount, we feel it is in our small business customersâ best interest to ensure their voices are heard with their representatives regarding the loan forgiveness process,” PayPal’s Senior Vice President of Global Credit Doug Bland told the Washington Business Journal via email.
Opponents Fear Fraud, Lack Of Data
However, not everyone is on board with a blanket forgiveness bill.
A chief concern is fraud. Currently, the SBA has refused to reveal the companies that received PPP loans under $150k. Instead, the SBA has only shared the names of those businesses that took out larger PPP loans.
Rep. Katie Porter (D-Calif.), a member of the Financial Services and Oversight committees, told Politico:
“Thus, there is absolutely the potential for waste and fraud when awarding and later forgiving these loans — businesses that donât need assistance receiving essentially free taxpayer money, but more importantly, our smallest, most vulnerable businesses being prevented from getting the help they need.”
Liz Hempowicz, the director of public policy for The Project on Government Oversight, added (per Politico) that “we should see the names of [the smaller] borrowers before we talk about automatic loan forgiveness.”
Another critique stems from the idea that automatic forgiveness goes beyond the original intent of the PPP.
“The program is the Paycheck Protection Act to protect payroll and to protect workers,” Sen. Ben Cardin, D-Md., said in an interview with the Washington Business Journal. “To give a blanket forgiveness without even requiring the verification of how the money was spent, to me, goes beyond the extent of the bill.”
How PPP Forgiveness Works Right Now
Currently, PPP forgiveness is a wonky mess. And, according to a survey by the Consumer Bankers Association, only 20% of banks have begun accepting forgiveness applications.
At the time of writing, all businesses that received PPP funding must hit a number of requirements before receiving forgiveness. These requirements include:
Funds must be used for qualifying purposes, such as payroll or rent
The loan must be spent within 24 weeks of disbursement
Borrowers must maintain their full-time staff and payroll expenses
For a more detailed look at the PPP’s forgiveness rules, read Merchant Maverick’s in-depth article on the topic.
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The recession sparked by the coronavirus pandemic has caused brutal financial damage to many small businesses throughout the US.
Some of those affected have been able to apply for federal funds, but often the aid hasn’t been enough. In many other cases, business owners have been outright denied. Such problems have led many small businesses to search for spare cash from alternative streams.
One of the more popular sources for extra money has been the crowdfunding site GoFundMe, which began picking up traffic in early March as shutdowns loomed across the country. By the end of that month, the site had raked in $120 million in donations for pandemic-related campaigns, according to a Bloomberg report. That was the most the website had ever pulled in for a single crisis — beating out aid for Australian wildfires by five times.
Despite the initial gold rush, is GoFundMe truly a wish-granting fairy for down-on-their-luck businesses? Should businesses impacted by the coronavirus pin their financial hope on a crowdfunded campaign?
Let’s take a look at how the service has — and hasn’t — helped small businesses throughout the COVID-19 crisis.
GoFundMe Promises Plentiful Hope For Some
Based on GoFundMe’s own numbers, the site houses over 16,000 fundraisers dedicated to helping small businesses weather COVID-19. Some of the campaigns are intended to be general relief funds for small businesses within specific regions or cities. Apart from those general aid funds, most are set up by owners of single businesses, usually to provide support for staff while the business is shuttered during the pandemic.
These campaigns have been a boon for some downtrodden businesses.
For instance, San Francisco’s beloved City Lights bookstore has raised almost $500,000 via donations from 10,300 people since April 9. This number exceeds the store’s $300,000 goal by astonishing margins.
“What? Over nine thousand people — impossible!” City Lights founder Lawrence Ferlinghetti said via a written update. “Wonderful! We want to open again as soon as we can. We donât want to disappoint them.”
Ferlinghetti got his wish. In June, SFGate reported that the bookstore, the spiritual home for Bay Area Beat poets for 67 years and counting, was able to reopen after the pandemic had potentially shut it down for good.
Elsewhere, La Bonbonniere, a neighborhood restaurant in New York City, has managed to reach its $50,000 goal. The campaign was helped hugely by a neighboring magazine stand, which shared La Bonbonniere’s GoFundMe on its Instagram — generating $15,000 in donations overnight, according to Vogue.
In Charlotte, N.C., Vietnamese restaurant Lang Van doubled its $30,000 goal after patrons stepped up to help the eatery avoid closure. Per the local NBC affiliate, the restaurant’s owners had been working for free while paying staff out-of-pocket — the donations were able to help alleviate the strain.
All told, it’s hard to argue that for some small businesses, GoFundMe can be a place to pick up a much-needed buck or two. However, the odds don’t favor many.
Only 33% Reach Their GoFundMe Goals
In terms of the most bountiful returns, we counted 45 small business relief campaigns that have broken the $100,000 barrier, while another 78 have passed the $50,000 threshold. When combined, those 123 campaigns have raised roughly $16 million for businesses around the globe.
However, when you consider that those 123 campaigns comprise just 0.7% of the total COVID-19 small business relief fundraisers active on GoFundMe, the picture looks rather bleak.
In fact, based on Merchant Maverick’s analysis of GoFundMe’s 468 most prominently listed campaigns for small business relief, only 33% of COVID-19-related small business campaigns have reached their goal (as of July 15). This number is reflective of the overall number of GoFundMe campaigns that have reached their goals historically; a University of Rochester study from earlier this year found that just 27% of campaigns on the site are successful.
There’s also another problem: Not all GoFundMe campaigns make use of donated money honestly.
A prime example occurred within New York City’s Brooklyn borough. The staff of the Jack the Horse Tavern accused the owners of misusing thousands of dollars in GoFundMe donations. One former employee told Eater that staffers were “basically being used as pawnsâ while the tavern’s owners collected donations in a campaign advertised “to help the staff.”
On top of these qualms, GoFundMe struggled to get donated money to businesses during the pandemic’s early stages. For example, the San Francisco Business Times reported the story of Missing Link Bicycle Co-Op, located in Berkley, Calif. After raising over $28,000 in donations via GoFundMe in April, the bike shop was only able to withdraw about $3,000 of the raised funds within two weeks.
Sam Wilson, the organizer of Missing Link’s campaign, told the Business Times that their hope that the “fundraiser would be an immediate cash infusion to help us scrape by has turned out to not quite be the case.” Similar stories can be found elsewhere; an article by Eater highlights several restaurants in Boston and Miami that experienced similar problems withdrawing funds.
Berkleyside, a publication that ran a story about other Berkley businesses with trouble accessing funds, received this emailed statement from GoFundMe: “Our top priority is to balance speed and safety in order to ensure funds arrive as quickly as possible into the hands of those in need. We continue to listen to our community and look at ways we can improve with new resources, product features, and services to alleviate stress and make fundraising more efficient during this difficult time.”
How Crowdfunding Can Help Your Business
Despite the potential negatives to GoFundMe, the platform still provides an excellent opportunity for small businesses to raise financial aid. But when considering GoFundMe for a campaign, it’s important for small businesses to maintain a realistic outlook.
While most businesses won’t be able to generate big bucks through GoFundMe, plenty may be able to at least generate some level of cash. These funds can help your laid-off employees, keep your lights on, or even provide a temporary boost for your family.
Since GoFundMe doesn’t require fees upfront (instead, the site claims 3% of the donated proceeds), it certainly doesn’t hurt it to start a campaign if your business is truly strapped for cash. For in-depth tips on how you can use GoFundMe for your business, visit Merchant Maverick’s guide to setting up a GoFundMe campaign.
If you want to know what other crowdfunding options are out there for your small business, check out our top 10 alternatives to GoFundMe.
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 before the spread of COVID wreaked global havoc, cash was a dirty business. Literally dirty. And the physical dirtiness of cash in the time of COVID has resurrected and accelerated the debate around going cashless.
Most customers already prefer to use a card or other non-cash payment method, and some industries have already gone cashless (including airlines and sports stadiums). Small business options for going cashless have expanded in recent years, making it even easier to accept debit/credit/Venmo/PayPal options from customers with ease.
In April 2017 (back when thinking about germs wasn’t a daily activity), the Washington Post reported on a study by New York University that said the average dollar bill traveling around New York had over 100 different variations of bacteria and viruses lurking on its paper — everything from eColi and strep to bacteria that cause acne to (yep) coronaviruses.
At the start of the pandemic, the Centers for Disease Control (CDC) specifically came out with recommendations to avoid handling either cash or customer’s cards, and said to instead “encourage customers to use touchless payment options, when available.” Many businesses took that advice straightaway and stopped accepting cash altogether.
Commissary Cafe owner Kim Wilson stopped accepting cash in March at her Portland restaurant. Before she made the switch to accepting online payments only, Wilson took all her cash home and put it through a rinse in her washing machine. It simply wasn’t safe to handle any other way.
Are you ready for running your business cashless? The term can bring up confusion or stir up a rant, so check out what the future may look like for you and your business.
The Benefits & Frustrations Of Going Cashless
Many small businesses have already had their hands forced due to COVID-related restrictions and jumped into a cashless model as a necessity. No doubt, when the pandemic is over, some businesses will revert to accepting cash, but others might actually enjoy being unburdened from all those dirty dollars and cents and decide to remain cashless.
For many, however, the notion of a cashless society is an automatic dealbreaker. The concerns range from government overreach to how a cashless system would discriminate against the 8.4 million unbanked households in the United States. According to the Federal Deposit Insurance Corporation (FDIC), cash accounts for 30% of business transactions. (That data does not account for current cash transactions in light of the novel coronavirus.)
Square recently commissioned a survey of small business owners after exploring the data around its transaction histories. While the trends are bending toward a “less cash” society, neither business owners nor customers feel entirely ready to abandon cash entirely. The data from Wakefield research shows that 83% of small business owners say they will never switch to an exclusively cashless business model.
For some small businesses, the benefits of switching to a cashless economy make sense from a practical standpoint. Cashless businesses can reduce or eliminate all of their cash handling costs, including the labor/cost it requires to safely deliver cash to the bank. Automating payments and eliminating cash also improves and integrates bookkeeping and sales receipts, and provides fewer opportunities for theft or error. Face it: cash is slow and clumsy. It’s dirty, too.
The arguments against going cashless including serious equity concerns regarding cashless operations as most of America’s unbanked households belong to minority families. Asking families to purchase cash cards or ask for their payroll to arrive in the form of a debit card could impose an undue emotional and economical burden.
Some businesses and individuals simply don’t want corporations and big banks to singularly have access to their funds and worry about their privacy and their money’s accessibility. Convincing, or pushing, the masses toward a cashless society may be an impractical expectation — even amid a pandemic.
How To Ready Your Business For A Cashless Economy
Going cashless does have its benefits even in non-COVID times. Determining whether it’s the right call for your small business will involve weighing the risks and calculating how much you might save vs. lose by switching to a cash-free model.
According to the Electronic Transaction Association, contactless sales increased by 27% in March 2020. Based on customer preference and the current pandemic, the desire for cashless options is increasing. If you are thinking of making the leap, ask yourself the following questions:
What are the demographics of my business clientele?
What percentage of my sales are paid for with cash?
Can I predict whether my customer base would appreciate or dislike the change?
How much money can I save by eliminating cash handling fees?
How much money will I lose from the addition of more electronic transaction fees?
What clients am I willing to not serve? The very young and the very old, plus 8.4 million households, do not have access to non-cash options. Can you afford not to serve these communities? (Ethically and financially?)
Are you located in a place required by law to accept cash? (While there are no Federal requirements to accept cash as a legal tender, some cities — Philadelphia, San Fransisco, West Hollywood — and states — New Jersey — have banned, or are in the process of banning cashless businesses. )
While going completely cashless is either terrifying or exciting, the reality is that cash, in some capacity, is here to stay. However, if cash payments amount for very little of your business income, switching over to a fully cashless and contactless payment system could be a good choice.
Opportunities for contactless payment are increasing. The most recent advancement is Near Field Communications (NFC) technology which is vastly more secure than traditional debit and credit payment processing. For an introduction into NFC contactless technology and why it might be a good fit for your business, check out the video NFC Explained: Small Business Tech Tips on our YouTube channel.
Businesses will need to make the best choice based on individual circumstances and preferences. Even if your small business never stops accepting those grimy dollar bills, the technology will continue to advance and the number of customers wanting a cashless option will increase.
Those looking into cashless payment options will want to read our article on the 4 POS Systems For A Cashless Economy or read our 8 Insights on the Cashless Revolution At The Portland Food Carts.Â To read up on all of Merchant Maverick’s pandemic coverage, head on over to the Coronavirus (Covid-19) Guides and Resources hub.
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Small businesses hurt financially by COVID-19 can no longer take advantage of one federal aid program intended to dish out emergency cash, as billions in funding has run dry.
The Economic Injury Disaster Loan (EIDL) Advance program — which delivered this source of quick income for business — has stopped accepting new applicants, the Small Business Administration (SBA) announced in a weekend press release.
The program had been allocated $20 billion in funds by Congress through the CARES Act. It allowed small businesses, non-profits, and agricultural firms to apply for forgivable cash advances from the SBA in $1,000-per-employee increments. Businesses could request up to $10,000 in total from an EIDL Advance.
Because of their forgivable nature, these cash advances acted effectively as emergency grants issued by the government.
While advances can no longer be requested through the EIDL program, the SBA is still accepting EIDL loans for businesses impacted by COVID-19.
EIDL loans feature a 3.75% interest rate for small businesses and 2.75% for non-profits, as well as a 30-year maturity and an automatic one-year deferment before monthly payments begin.
In a written statement, SBA head Jovita Carranza said the advance program aided almost six million small businesses that collectively employed 30.5 million people.
Carranza added: “This program, built from the ground up in less than two weeks, assisted millions of small businesses, including non-profit organizations, sole proprietors and independent contractors, from a wide array of industries and business sectors.”
In April, the government doubled the war chest for emergency EIDL grants. This precedent means that it is possible the program may be brought back at some point in the future. However — at the current time — the SBA is not legally permitted to issue more funds through the EIDL Advance program.
It’s worth noting that this program had a rocky ride, despite any self-praise chimed by the SBA. Initially, the SBA was supposed to deliver funds to approved applicants within three days. However, in some cases, businesses owners had to wait weeks before the aid arrived as the deluge of applications overwhelmed the government agency.
With such a high demand for EIDL funds, the SBA began in early May to only allow applications from agricultural businesses. The program was then eventually reopened to a wider array of small businesses last month.
The EIDL’s latest stoppage comes at a crucial crossroad for the US during the coronavirus pandemic.
The New York Times recently reported that businesses are once again closing up shop while COVID-19 cases rise across the country. Meanwhile, the state of California just announced the rollback of its reopening plans, causing the closure of bars, indoor dining, gyms, and more.
With such uncertainty going forward, more and more businesses may struggle now that emergency funds from the EIDL Advance program are no longer available.
Still, small businesses can at least take advantage of EIDL loans. These loans allow eligible businesses to apply for up to $150,000 in funding. And, as mentioned above, they offer solid rates and repayment plans.
The government also just extended the Paycheck Protection Program (PPP) — another federal program meant to help cash-strapped small businesses — meaning that businesses can apply for aid to cover payroll until August 8.
Unlike the EIDL Advance program, there is plenty of PPP funding available — $130 billion in funds remained at the end of June. Lawmakers are also reportedly working on improving and tweaking the PPP (or whatever the next economic relief package may be) into the future.
Federal Funding: Where Else To Go
If your business is struggling financially due to COVID-19, learn how to apply for an EIDL loan. Applying for a PPP loan may also make sense for your business; check out Merchant Maverick’s article on the PPP basics to learn more.
Should your businesses have been denied EIDL or PPP funds, visit our article on how to find alternative funding routes.
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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Six feet (or less) apart, for fifteen minutes. That’s the definition of “close contact” used by contact tracers to determine if someone has been exposed to the novel coronavirus. Contact tracing is a critical part of the public health response to coronavirus, and it’s just as important for reopening the economy. As a business owner, contact tracing can help you protect your workers and customers from COVID-19, and even prevent your business from getting shut down in the event that an employee tests positive.
What Is Contact Tracing?
“Contact tracing” sounds high-tech and cutting edge, but it’s nothing new, and it’s basic enough that it can be accomplished with just a pen, paper, and a telephone. Historically, the practice of contact tracing has been critical in controlling numerous epidemics and pandemics, including smallpox and tuberculosis. By definition, contact tracing is the practice of identifying individuals who have an infectious disease, and alerting other individuals with whom the infected person has come in close contact with so that they can self-quarantine. By identifying cases of infection and alerting contacts who may have been exposed, the spread of disease can be limited. Contact tracing can also provide epidemiologists with important information about how a disease spreads.
COVID-19 contact tracing is generally conducted by public health departments, which, in the United States, follow the CDC’s COVID-19 contact tracing guidelines. However, businesses also have an important role to play in contact tracing.
When & Why You Need To Care About Contact Tracing
The second wave of COVID-19 is upon us (or at least the second wave of business closures related to COVID-19) and certain types of businesses are especially vulnerable to COVID-19 outbreaks. In particular, businesses that involve close contact with others or indoor spaces with limited ventilation can be especially conducive to the spread of this disease. This could include bars, restaurants, salons, spas, office buildings, and others. Though implementing social distancing practices at your business can help prevent the spread of coronavirus, your responsibilities as a business owner do not stop there. In the event that an employee or customer gets sick, having a contact tracing system in place can help you comply with local health authorities and limit the impact on your business.
During COVID-19, contact tracing is a tool for businesses to do the following:
Limit outbreaks at your business
Keep your workers safe
Keep your customers safe
Stay compliant with the law
Protect your business against potential liability
Prevent your business from being shut down
Though the bulk of contact tracing work is done by health authorities, business owners can play their part as well, particularly by tracking employees’ activities, and by keeping a customer log of who has visited your business, if feasible. It will be easier for businesses in certain industries to keep customer logs — appointment-based businesses such as mechanics or hair stylists will automatically have a log of all their customers — but maintaining a customer log could prove more difficult for a bar, restaurant, or retail store.
Contact Tracing Requirements & Guidelines For Businesses
Currently, there are no nationwide contact tracing requirements or official guidelines for businesses in the US. However, it’s important to check your local city, county, and state laws, which may have their own COVID-19-related policies for businesses. Here are also a few other things to keep in mind.
Depending on your area, there could be a requirement for your business to keep a customer log, though this is not currently a widespread requirement by any means. One city where this is required is in New Orleans, where businesses of all types are now required to keep a daily customer log for contact tracing purposes. Washington state briefly instated the same guidelines, but Governor Jay Inslee quickly lifted them after receiving public backlash. Most states and cities currently do not have any contact tracing requirements or guidelines for businesses, but this may change as the pandemic drags on.
OSHA & CDC Guidelines
Generally, businesses should follow CDC guidelines to stay OSHA-compliant. This means that if the CDC issues business guidelines related to COVID-19 contact tracing, you will need to adhere to them, along with any other CDC policies regarding COVID-19 (such as those involving social distancing) — as well as to any local health ordinances related to businesses and coronavirus. If any employee tests positive for coronavirus, you do have an obligation to report the infection to the rest of your staff and to OSHA. In the (hopefully rare) event that an employee sues your business because they catch coronavirus at work, you will want to show you are OSHA-compliant and did everything you could to keep workers safe.
Communicating With Local Health Authorities
Though most businesses have no legal obligation to create a worksite contact tracing plan, having a plan in place (or at least keeping good records) will still help your business in the event of coronavirus transmission related to your business. If any employee or patron of your business tests positive, you will likely be contacted by your local health department’s contact tracing team to assist in their contact tracing investigation. Having your own plan in place can help health authorities with their investigation, as well as potentially preventing a full-on outbreak that could result in your business being shut down.
Considerations When Making A Contact Tracing Policy
There are several aspects businesses need to think about when creating a contact tracing policy. Try to incorporate some or all of these considerations into the creation of your business’s contact tracing plan.
If you have a customer-facing business such as a store, restaurant, or salon, you will likely want to incorporate customer tracking into your contact tracing plan. As mentioned, keeping a daily customer log is one way to do this, though these logs may not be practical or appropriate for every business. Here are a few other ways to track who visits your business:
Require reservations for in-person dining
Require appointments to shop at your store
Use a cloud POS system with customer profiles that link customers to transactions
If you don’t want to require customers to leave their personal information or make appointments/reservations, you might consider having a completely voluntary customer log where customers can leave you their information only if they would like to be notified in the event that they were exposed.
Employee tracking is another important aspect of contact tracing, particularly if you have more than a few employees. In addition to keeping track of their schedules to see who is coming in when, larger businesses with a lot of employees might even have employees sign in and out every time they visit a different location within the business, such as the warehouse or kitchen.
HR software or a POS system with an employee timeclock and scheduling functionality will help you keep good records of employees’ schedules. Most cloud POS software also has employee profiles/logins, which can also be useful to see who accessed the cash register, and when.
Contact Tracing Apps
COVID-19 contact tracing apps are being developed to use digital technologies such as Bluetooth, GPS, and QR codes to track individuals’ movements within the community, including visits to businesses. As of yet, there isn’t any leading contact tracing app for business use that’s been widely adopted in the US, though there are various employee management programs businesses can use to track employees’ whereabouts within a business using Bluetooth or geolocation. These apps, which include ReturnSafe, PwC Check-In, and others, are generally intended for larger businesses such as manufacturing and enterprise-level businesses.
As far as contact tracing apps to track customers, the United States again comes up short. By contrast, in New Zealand, the national government has released a mobile contact tracing app consumers use to scan QR codes at businesses they visit, creating a digital diary of their activities. In the event of an outbreak at a business, contact tracers will automatically contact any customer who may have been exposed. Singapore’s government has also rolled out a mobile contact tracing app that works by exchanging Bluetooth signals between phones of other app users that you come in close contact with. Participation in either of these programs is voluntary, but encouraged.
It’s not clear if or when such a widely implemented digital contact tracing solution might be available in the US, but Google and Apple are currently working on a COVID-19 contact tracing mobile app for public health use (though 17 states have already said they won’t use it), and the CDC says, regarding digital contact tracing, that they are currently, “Generating preliminary tool recommendations for piloting tracing in areas with limited introduction of COVID-19.”
Businesses must notify local health officials and staff if one or more of their employees tests positive for COVID-19. However, business owners still need to maintain the employee’s confidentiality in accordance with the Americans with Disabilities Act (ADA).
Customers and clients may also have confidentiality concerns about giving you their personal information. If you do collect this information for contact tracing, you’ll need to make sure to get customers’ consent, and only use the information for the purpose for which it was given —to contact the customer in the event that someone at your business tests positive. Don’t sneak that information onto a mailing list.
There are some legitimate privacy concerns with contact tracing technology as well, as this technology may track individuals’ movements and other activities. If you use a contact tracing app for employees, the software needs to have strong security systems in place and be compliant with privacy laws and other relevant laws.
Contact Tracing Templates
You may be able to find contact tracing templates for business online or as part of a business software package. For example, business software provider Zoho has a contact tracing form for business owners to track employees who are in danger of being exposed to the virus, offered via their Zoho Survey product. You might also consider working with an HR specialist to create your own contact tracing template to use at your business.
Additionally, the CDC has a contact tracing workflow that businesses might find beneficial when crafting their own policy.
Keep Your Employees & Customers Safe With Contact Tracing
The importance of contact tracing in battling coronavirus cannot be understated. Both from a public health standpoint and from a business standpoint, contact tracing can help mitigate the damage caused by this pandemic. Businesses can do their part to protect employees, customers, and themselves by putting in place their own contact tracing plan. Even if your policy just involves keeping good records and having a basic game-plan of what to do and who to contact if an employee tests positive, you’ll be ahead of many other businesses. By taking proactive measures, you may be able to prevent a single positive test from turning into an outbreak at your business.
Here are some more resources on COVID-19 and small businesses; check out our COVID-19 hub for even more coronavirus small business content:
Is Your Business Ready For A Second Wave Of COVID-19?
How To Safely Reopen Your Brick-and-Mortar Business As Pandemic Measures Are Lifted
The Business Owner’s Retail Guide To Surviving The Coronavirus
Social Distancing For Small Business: How You Can Adapt & Survive The Coronavirus
Coronavirus Survival Guide For Restaurants
Salon Survival Guide: Coronavirus Edition
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