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.
There are several key components that contribute to the success of your business — hardworking employees, identifying and marketing to your target audience, and providing high-quality goods and services. However, one of the most important components that contributes to the success of your business is bringing in and maintaining a healthy cash flow.
Let’s face it: Without capital flowing in and out of your business, your doors aren’t going to stay open for long. Maintaining a healthy cash flow will help your business stay afloat and make it profitable and successful.
In this post, we’re going to look at different ways to manage your cash flow. Now, this article won’t be centered on improving cash flow (you can read more about that here). Instead, we’re going at ways you can manage and maintain a healthy cash flow. In other words, we’re going to help you more strategically work with what you’ve got. Let’s jump in.
Cash Flow Basics
Before we break down ways to manage and maintain a healthy cash flow, it’s important to understand what cash flow is and what it means for your business.
Simply put, cash flow is the cash that comes in and goes out of your business. Cash flows in from things like sales, business loans, and returns on investments. Cash flows out to cover expenses like operating costs, inventory, supplies, and payroll.
Cash flow can be positive or negative. This means:
Positive Cash Flow: The amount of cash that is coming into your business is more than the amount of cash going out of your business.
Example: This month, your business brings in $20,000 through sales, investments, accounts receivable, and financing. Your total liabilities, expenses, accounts payable, and payroll total is $15,000. In this example, your cash flow is positive.
$20,000 – $15,000 = $5,000
Negative Cash Flow: The amount of cash that is coming into your business is less than the amount of cash going out of your business through things like payroll, expenses, and accounts payable.
Example: Last month, your business earned $10,000 through sales, investments, accounts receivable, and financing. Your total liabilities, expenses, accounts payable, and payroll are $12,000. In this example, your cash flow is negative.
$10,000 – $12,000 = -$2,000
If your cash flow is positive? Great! That’s exactly what you want to see. But don’t sit back and think you’re completely in the clear. Your cash flow can be impacted positively or negatively from month-to-month — or even day-to-day! This is why it’s so important to always keep an eye on the numbers and take steps (like those we’re about to dive into) to manage and maintain a healthy cash flow.
What Is Cash Flow Management?
Cash flow management means tracking the cash that is coming into and out of your business. Utilizing cash flow management within your business helps identify where money is coming from and how much is coming in. It also helps you identify the outflow of money and where it’s going.
Not only does this give you an idea of how much cash you have on-hand at this moment but it can give you insight into your cash flow in the future. By tracking your company’s cash flow, you can spot trends, changes, and potential problems that can be corrected sooner rather than later.
How To Manage Cash Flow
Managing your cash flow — tracking cash that flows in and out of your business — is imperative to the success of your business. The good news is that there are a variety of tips and tools at your disposal that make it easy to manage your cash flow.
Open A Business Bank Account
A common mistake that many new business owners make is mixing their business and personal finances. This can get complicated over time, making it confusing to track business income and expenses, and can be a nightmare come tax time. Keep your business and personal finances separate by opening a business bank account.
Your business bank account can be used for your incoming payments and to pay your business expenses. You can link this account to your accounting software (more on that later) to easily track your cash flow. As a bonus, most lenders require a business bank account if you seek financing, so it’s good to go ahead and get your account set up as soon as possible.
Build A Cash Reserve
Even if your cash flow is positive now, things can change in an instant. It’s best to be prepared for these potential setbacks with a cash reserve. Having a cash cushion at the ready can help you navigate unexpected financial challenges — seasonal slowdowns, an emergency expense, or a pile of unpaid invoices, for example.
A general rule of thumb is to keep at least three months’ worth of expenses as a buffer. This number may be adjusted up or down based on your specific cash flow situation and the needs of your business. While setting your own funds aside for this purpose is best, you may also choose to add a business credit card, revolving line of credit, or bank overdraft protection in the mix to further boost your reserves.
Keep Track Of Money Owed
Do you invoice your customers immediately, or do you tend to procrastinate? Once you’ve sent the invoices, do you stay on top of payments by sending out statements and reminders … or does this typically fall through the cracks?
Keeping up with money owed to you and actually collecting it is critical to maintaining a healthy cash flow. Sure, you may be working with a positive cash flow now, but what happens next month when those invoices remain unpaid? Accounting software makes it easier than ever to create professional invoices, send invoices to clients, collect payment, and even set up automated reminders or recurring invoices to repeat customers. Which leads us to…
Choose The Right Accounting Software
Accounting software is a must-have for any business. There’s a long list of reasons why you should be using accounting software, but one of the most important is that it allows you to track money that’s coming in and out of your business — often, in real-time, depending on your software’s capabilities. You can also send invoices, statements, estimates, and payment reminders. Additional features offered by your software may include inventory tracking, payroll, and other helpful tools to help you maintain and grow your business.
If you’re new to accounting software, take a look at our software reviews and our top picks, and give a few programs a try. Some are free to get started, while others offer free trials. If you already use accounting software, evaluate its features to determine if it’s offering everything you need to manage your cash flow.
Stay On Top Of Your Accounting
Finding the right software for your business is only the first step. To efficiently and effectively manage cash flow, it is up to you to monitor and maintain accurate accounting records.
Sure, your software will automate a lot of processes that you don’t have to perform manually (for example, automatically updating transactions through live bank feeds). This doesn’t mean that you can set it and forget it. Make a habit of looking over your transactions, checking in on unpaid invoices, and performing other tasks to ensure your cash flow is stable.
Another way to track your cash flow both now — and in the future — is with reports. Remember that accounting software we talked about? Most programs can (at the very least) pull basic financial reports, giving you an overview of your current cash flow situation. You may even have access to advanced reporting that allows you to look at future cash flow projections based on current and previous trends. You can use these reports to determine where you’re falling short (i.e., unpaid invoices or an expense that can be cut) and make changes to maintain your cash flow.
Know Your Risks & Be Prepared
Running your own business can be, well, risky business. A number of challenges can affect your cash flow — from a slow-down in customers to a more widespread crisis. In the 2000s alone, we’ve already faced the Great Recession of 2008 and the COVID-19 pandemic of 2020 — and no one knows what the future holds. However, you can assess risk and be prepared for these situations.
Since every business is different, the risks and challenges you face will be unique to your business. Think of possible scenarios that may have a significant impact on your business (and your cash flow). Use your accounting software or reports to look over the numbers and experiment with different scenarios. For example, what would happen if you lost one of your biggest clients? What would happen if you were forced to shut your doors for a week … or longer? Knowing the numbers and running through various scenarios can help you determine factors like how much money you need to bring in to continue to operate, where you could cut expenses if absolutely necessary, and could help you plan for the future — no matter what it may hold.
Getting A Handle On Your Business’s Cash Flow Management
Managing your cash flow doesn’t have to be difficult, especially when you’re willing to put in a little time to track the numbers, analyze your cash flow, and use software and tools that are at your disposal. Looking to improve your cash flow? Check out our post on 10 Strategies To Improve Cash Flow. Want to boost your cash flow? Take a look at our article The Best Cash Flow Loans For Small Businesses In 2020.
For now, though, focus on strategizing, planning, and tracking your cash flow to keep your business more secure now and in the future. Good luck!
The post How To Maintain A Healthy Cash Flow For Your Business 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.
The Paycheck Protection Program (PPP) was created to provide financial relief to businesses suffering from the effects of the devastating coronavirus pandemic. Between the program’s creation and August 8th, 2020 â the day the program closed to new applicants â $669 million in forgivable SBA-backed PPP loans was distributed by lending institutions participating in the program.
If you received a PPP loan for your business, you can have the portion of the loan you used for qualifying purposes forgiven by the SBA. (Read our PPP loan forgiveness guide for details on how loan proceeds must be used to qualify for forgiveness)
Of course, to get your loan forgiven, you’ll first have to apply for forgiveness and have your forgiveness application accepted. While it’s true that legislation has been proposed in Congress that would make forgiveness of PPP loans under $150,000 nearly automatic, this legislation has not been passed by both houses of Congress, and there’s no guarantee that it will become law anytime soon. That’s why you may want to apply for forgiveness now, especially if you’ve spent the entirety of your PPP loan.
You’ll need to apply for forgiveness through the lender that serviced your PPP loan, not the SBA itself. To do this, you’ll need to submit one of the two available forgiveness application forms, depending on your circumstances: SBA Form 3508 or SBA Form 3508EZ.
I should point out that you’ll need to submit more than just a completed application form to qualify for loan forgiveness. Depending on how your loan funds were spent, you may also need to submit payroll documentation, bank statements, account statements, tax forms, receipts, and/or canceled checks in order to support your forgiveness claim. However, this article is exclusively dedicated to the two forgiveness application forms available.
In this article, we’re going to discuss the circumstances that call for using PPP 3508 vs 3508EZ.
As the name suggests, the 3508EZ application is the easier of the two forms to complete, as it doesn’t require you to fill out a Schedule A form or a Schedule A Worksheet (forms used to calculate total eligible payroll costs incurred). However, you have to meet certain criteria to use the easier form; otherwise, you’ll have to fill out the longer 3508 form.
When To Use The Regular 3508 Form
The 3508EZ PPP forgiveness form is shorter and easier to fill out, so, it will require less of your time than the standard 3508 form. However, if you don’t meet the requirements of the EZ form, you’ll have to take the time to fill out the longer 3508 form.
You’ll have to fill out the regular 3508 form if both of the following conditions are met:
When you originally applied for a PPP loan, you were not a self-employed borrower, an independent contractor, or a sole proprietor with no employees.
You reduced the salary or wages of employees earning less than $100,000/year by more than 25%.
If, on the other hand, you’re not self-employed/an independent contractor/a sole proprietor with no employees and you did not reduce the pay of employees earning less than $100K/year by more than 25%, you’ll still have to use the regular 3508 form if both of the following are true:
You reduced your number of FTE (full-time equivalent) employees.
You were still able to operate at the same level of business activity as before February 15th, 2020.
When To Use The 3508EZ Form
If you’re eligible to use the 3508EZ form when applying for PPP loan forgiveness, congrats! You’ll get to save some time and energy. However, you’ll have to meet at least one of the following three criteria in order to be eligible to use the 3508EZ form:
You are a self-employed individual, an independent contractor, or a sole proprietor who had no employees at the time you applied for a PPP loan
You didnât reduce salary or wages of employees making under $100K/year by more than 25% and you didn’t cut any FTE employees (other than employees you were unable to rehire and unable to replace with similarly-qualified employees)
You didnât reduce the pay of employees making under $100K/year by more than 25% and you were unable to operate at the same level as you had on February 15th, 2020, because of COVID-19 health and safety restrictions imposed by federal agencies.
Summary: Regular VS EZ Form
Here’s our final word on the PPP forgiveness 3508 vs 3508EZ comparison:
The 3508EZ form was conceived as a way for businesses to reduce the amount of paperwork required to apply for forgiveness of their PPP loan. However, only certain businesses are eligible to use the simplified form. While anyone who is self-employed, an independent contractor, or a sole proprietor who had no employees when they applied for a PPP loan is eligible to use the EZ form, it gets more complicated from there.
If you reduced the pay of your employees by more than 25%, use the regular 3508 form. If, on the other hand, you didn’t reduce the pay of your employees by more than 25% and can meet one of two other conditions (you didn’t cut any FTE employees or you couldn’t operate your business at the same level as you had back on Feb. 15 due to federal COVID-19-related restrictions), you can use the simplified 3508EZ form.
More On PPP Forgiveness
PPP EZ vs regular, Schedule A, etc. â it’s enough to give you a headache. We know this process is more complicated than it ought to be. Unfortunately, the current legal state of play requires businesses to navigate a complex web of considerations when trying to get a PPP loan forgiven by the SBA.
For more on getting your PPP loan forgiven, read our PPP forgiveness guide. You should also check out our COVID-19 hub as it gives you a base from which to explore all our content related to guiding your business through this pandemic.
We’re always here to help, so don’t hesitate to leave us a comment if you have any questions about COVID-19 business relief, PPP loan forgiveness, or anything else relating to the challenging times we find ourselves in.
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We are nearly one month away from the 2020 Election Day. And while COVID-19 has driven the rise of early voting and mail-in ballots (2 million Americans have already voted), many voters will still be heading to the polls on November 3.
Because the US doesn’t recognize Election Day as a national holiday — unlike some countries such as South Korea or Israel — actually venturing to the polls can be a difficult task for many people who can’t take time off from work. This difficulty has brutally impacted elections in the past. For instance, a Pew Research Center report found that 35% of Americans who didn’t vote in the 2014 midterm elections did so because of scheduling conflicts with work or school.
However, the tide may be changing.
According to survey results released earlier this week by mobile payment company Square and market research firm Wakefield Research, 76% of US small business owners plan to give workers time off to cast their votes in the 2020 presidential election.
Among the owners who are giving time off, 83% plan for paid time off. A smaller number, 26%, said they would be willing to make Election Day a company-wide holiday.
The survey further found that three-quarters of small business owners believe the election has become more important during COVID. Those surveyed also indicated nearly unanimously (96%) that they plan to vote themselves.
Small business owners are also keen to help their employees make informed decisions on Election Day. Square found that 67% of those polled consider it their civic duty to assist their employees in accessing educational voting resources.
Encouraging voting has been a particularity close topic to Square itself. Starting with the 2016 election, Square treats the Presidential Election Day as a company holiday. The company also recently joined Time to Vote, a nonpartisan, business-driven initiative that aims to ensure workers the ability to vote without missing out on a paycheck.
Time Off For Election Day Is Picking Up Steam
It’s not just small businesses that are giving employees time off to vote — a number of bigger organizations have signaled various plans to make it easier for employees to vote this Election Day. The big companies include:
Apple. Employees at the computer giant can take up to four hours off to vote or volunteer at a polling place on Election Day, per Bloomberg.
Facebook. In a post last month, CEO Mark Zuckerberg wrote that employees can take Election Day off to “volunteer to staff the polls.”
Salesforce. The CEO of the customer relationship management company Mark Benioff tweeted last month that employees worldwide will get the day off to vote.
Twitter. The social media site (headed by Square CEO Jack Dorsey) has made Election Day a paid holiday for workers, per the Associated Press.
Uber. This ride-hailing company is giving employees the day off to vote. Discounted rides to and from the polls will also be available.
The idea that companies can encourage workers to vote isn’t necessarily new. In 1999, the Detroit auto trio of General Motors, Ford, and Chrysler made Election Day a holiday for union workers after a pact with the United Auto Workers union. However, voter encouragement has gained traction recently as companies aim to become more conscientious of social issues.
Notably, over 750 companies have signed on to ElectionDay.org, an initiative that encourages vote-friendly policies in the workplace. By Merchant Maverick’s count, over 70% of the companies that have pledged vote-friendly policies through ElectionDay.org have fewer than 50 employees, although several bigger brands have added their names, such as Adidas, Lyft, and Dropbox.
“There is a groundswell of interest coming out for this,” Nora Gilbert, director of partnerships for ElectionDay.org’s parent organization Vote.org told the Associated Press in August.
Time to Vote, the coalition Square latched on to, counts over 1,300 companies that have joined its effort to drive “the culture shift needed to increase voter participation.” Major companies that have affiliated themselves with Time to Vote include Google, Nike, Patagonia, and PayPal.
It’s also worth mentioning that while the US doesn’t recognize Election Day as a federal holiday, some states do have laws in places so workers can receive paid or unpaid time off during elections. As an example, Illinois requires companies to give employees two hours of paid time off for shifts that start less than two hours after polls open and end less than two hours before polls close.
Other Ways Businesses Can Help Employees Vote
Voting is an integral part of the American fabric. As such, it’s important for small businesses to help employees get out and vote.
To assist small businesses in preparing their employees for Election Day, Merchant Maverick has crafted a guide for helping employees vote. For learning about vote-friendly policies for the workplace, check out ElectionDay.org’s primer.
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