A new coronavirus relief bill will provide $284 billion in loans for small businesses. Here are some key details.

President Donald Trump has signed into law a new $900 billion coronavirus relief and stimulus package. Among its provisions: An extension of last spring’s Paycheck Protection Program, allowing another $284 billion or so in forgivable, federally backed loans for ailing small businesses.

The initial program, overseen by the U.S. Department of Treasury and Small Business Administration, shepherded some $525 billion to more than 5 million recipients but was fraught with loopholes and liabilitiesthat raised countless issues throughout an already complex process.

The new Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act clarifies questions about the loan process, but also adds rules about applying for new loans and seeking forgiveness for old ones. The bill gives the Small Business Administration 10 days to implement the new rules, so more specific rules could be coming. Until then, borrowers should turn to their lenders for guidance.

Here are some answers to questions business owners might have.

How does this round of loans differ from the last one?

Some aspects are broadly the same. Applicants have between eight and 24 weeks to use the funds, with at least 60 percent going toward payroll and the rest toward eligible expenses like rent and utilities.

New loans are capped at $2 million, compared to $10 million before. Applicants must have no more than 300 employees, instead of up to 500, and must demonstrate at least a 25 percent drop in revenues from the fourth quarter of 2019 to the same period this year.

The bill expands the type of covered expenses to include things like cloud computing or remote-work software; and equipment for government-mandated sanitation and social-distancing, like sneeze guards or air filtration systems. It even covers “property damage and vandalism or looting due to public disturbances that occurred during 2020.”

One notable aspect of the new bill that’s not directly tied to new loans is an expansion of the employee retention tax credit, a facet of the Coronavirus Aid, Recovery and Economic Stimulus (CARES) Act that encouraged employers not to shed jobs. Originally, businesses that got Paycheck Protection Program loans were not eligible to claim that credit. Now they are.

If I already got one loan, can I get another one?

Yes. These are called “second draw” loans, and as long as you meet the qualifications above, you can apply. The deadline for all new loans is March 31.

Are any businesses eligible for more help than others?

New loan amounts are determined by a formula that involves payroll costs multiplied by a factor of 2.5 (again, capped at $2 million). Restaurants and other hospitality businesses may multiply those costs by 3.5, making them eligible for slightly more funding.

The bill restricts certain companies from applying for loans, including businesses specializing in political or lobbying activities — like the Florida Democratic Party, which received, then returned, $780,000 the last time around. Also excluded: Businesses with extensive dealings in China, or who have China residents on their boards.

Concert venues, theaters and museums, which had long lobbied for additional aid, are not eligible for new Paycheck Protection Program loans, but can apply for special “Shuttered Venue Operator Grants” worth up to $10 million.

How will this impact my existing forgiveness application?

If you got more than $150,000, it probably won’t. If you got less, the process should be much easier.

A few weeks ago, the government simplified forgiveness applications for businesses that got less than $50,000, requiring only a description of how much loan money was spent on payroll, and how many employees the recipient was able to retain as a result. The new bill ups that limit to $150,000. Affected businesses will not need to submit documentation supporting their claims, but should keep it on hand in case of an audit down the line.

If you’ve already applied for and received forgiveness, none of the new provisions apply — you’re done. But you can try to get a second loan.

By Jay Cridlin

THE IMPORTANCE OF FINANCIAL ADVICE WHEN STARTING A BUSINESS

Understand the importance of financial advice when starting your own business

THE AMERICAN TRUTH

Understand the importance of financial consulting when starting your own business.

When starting your own business, you need to keep in mind how to invest your initial capital and how to maintain cash flow, so that your company continues generating income and is potentially recognized in the market. For that, it is essential to analyze and organize your finances with the assistance of a specialized financial consultant. With a good financial planning, it will be easier to make large investments in order to ensure your company’s success.

1. What is the meaning of financial consulting?

It is necessary to first identify its literal meaning in order to have a better notion of consulting. The word consulting comes from “receiving or giving advice”, which means the branch of activity that will help someone, or in this case an entrepreneur, to diagnose financial problems and solutions to leverage results and prospect your business. Furthermore, it is the financial consultant who evaluates the data of your finances to seek strategies that may keep them more organized, so that your company is safe to invest and also ready to face the challenges of the market.

2. Build a good financial plan

Every entrepreneur needs to build a good financial plan to achieve his/her goals based on an appropriate level of organization. This will help them avoid going bankrupt due to lack of efficient financial management and it will make your company stands out. Regardless of whether the entrepreneur owns a small, medium or large company, to be successful you must start by separating personal and business finances, record excessive expenses and spending, set prices for services according to what the market demands, have a cash flow, pay attention to payroll, among other initiatives that help keeping your company running. Therefore, for this financial plan to work, it is necessary to rely on the help of a financial consultancy that will make the entrepreneur understand the direction his/her company is going. As a smart act that will add value to the success of your business.

3. How is the financial consulting conducted?

Many entrepreneurs expect to be almost bankrupt and full of problems to seek financial advice, but it does not have to be this way. Before starting a business it is essential to identify the points you need to improve in your company’s financial life to prevent future situations that could put everything to lose. When hiring this service, the consultant will visit your business and compile a detailed data sheet, analyzing the inflows and outflows of money, and assembling a report with the entire financial routine that the entrepreneur provides. Afterwards, the consultant will assemble a diagnosis with all the information to propose actions and strategies to help improve your company.

4. What Do Consultants Do?

The consultant’s work is simple: he will impartially analyze the company’s situation, suggesting changes and understanding the company’s profitability to enable the healthy growth of your business. With his help, the entrepreneur will be able to make more assertive decisions about which direction the company wants to take. In addition, the suggestions may impact several areas of the business such as feasibility, administration and investments.

Now that you, entrepreneur, already know the importance of having the support of a financial consultancy, search for a good company and do not waste more time in bureaucratic processes alone. A good financial management at the beginning of your business, will make you climb higher mountains towards success. Investing in financial consulting will make your company more stable and consequently easier to manage.

The dream of many Brazilians is to have a business and become a successful entrepreneur, but due to lack of planning, things can go out of plan and the result is companies closing their doors with less than a year in the market. According to the Service of Support to Micros and Small Enterprises (SEBRAE), 20% close for lack of capital and 7% for lack of profit in business, leading to the belief that companies close their doors for lack of proper management. Many small entrepreneurs start a business on their own, without the support of specialized entities and associations to give the necessary support in the beginning as well as lack of basic concepts of administration, stock, cash flow and accounting, making it hard to keep the business running for a long time.

For a business to have the expected success it is necessary to plan and organize internal projects, making the management more professional and efficient. Turning the company into a formal one makes the small entrepreneur get ahead of the competition and invest in the quality of his business. But why can’t companies maintain themselves?

1 – Difficulty in planning

The first months of a company’s life are considered the most difficult ones, since they need to have a name that impacts the market. With limited money and an unknown name on the market, any mistake leads to greater instability in keeping the company open. Therefore, in order to avoid such mistakes, it is essential to structure a business plan considering the target audience, competition, costs and as many variables as possible, to prevent the unforeseen events that may arise along the way.

2 – Copy business models

Inspiration is the key to creating new ideas, but many new entrepreneurs end up more than just getting inspired and fully copying the competitor’s business model. This attitude leads to failure, as the entrepreneur neglects the importance of adapting formulas to his own reality.

3 – Develop an incompatible planning with your reality

One of the main mistakes of the new entrepreneur is the development of a business plan that is different from the reality in which the company lives, adding very high values and thinking about reaching a high audience in a short period of time. This leads the entrepreneur to not achieve the expected results. Therefore, it is crucial for the company’s success and growth to study the market, understand the target audience, the branch of activity and the products it may offer, without running away from reality.

4 – Lack of experience

It is not necessary to have been an entrepreneur before to start a new business, but it is very important that the entrepreneur has skills and is aware of what he can do to leverage his business or what to do when facing a crisis. A solid professional training and coaching help to keep the company’s life much healthier. Invest in online courses, meetings, lectures and any range of information that can help build a better company.

5 – Lack of follow-up

The inspection of all your company’s activities is essential to understand what is happening. Many entrepreneurs close down activities early because they delegate functions and do not closely follow the work being done. The main ingredient of a successful business is work, so it is essential that the work of employees and collaborators is supervised, the accounts are reviewed and the entrepreneur follows closely the company’s revenues and expenses.

6 – Not segregating personal accounts from company accounts

This may be the main mistake of entrepreneurs: mixing the company’s accounts with personal finances. This act can result in great difficulty in the financial control of the company, creating irreversible mistakes, which could result in bankruptcy. Mixing personal accounts with company accounts may also bring future problems with the IRS, since withdrawals without accounting records can be understood as tax evasion.

7 – Lack of marketing strategies

A good promotion of your products and services makes your company known in the market, so it is very important to create marketing strategies, focus on communication, learn to enjoy online sales and social media. Although word-of-mouth still yields good publicity, social networks have made the process more accessible and with greater visibility. Bet on the optimization of these tools to attract customers in a continuous way and increase your profit.

8 – Cash Flow Problems

The lack of organization with finances is common in entrepreneurs who cannot keep the company active, this is because they do not plan expenses and investments in advance. To improve this, you need to create spreadsheets, graphs, notebooks and control all the information about your company during the week. This will allow you to identify your cash flow and monitor everything that happens in your company.

Good partnerships help entrepreneurs to succeed in their businesses

A good business alliance is able to strengthen the company, make it recognized in the market, conquer other segments, open a new portfolio of customers and services and also a range of opportunities that the company could not achieve if it remained independent. Moreover, alliances are necessary to expand the customer base and strengthen existing ones. We can mention the example of Uber and Spotify in the United States, which have made a partnership where Uber’s customers, besides knowing the music streaming service, can control the radio during the whole trip. This has given both companies a new range of customers and opportunities to leverage their business.

Partnerships are beneficial to every business, from micro and small to large companies, as long as they know how to take advantage of the partnership in a way that brings good results for both. Therefore, it is important that the entrepreneur analyzes how he can create alliances to enable the company to grow. It is recommended to look for reliable partners, with similar values and business trajectories and with similar personalities so there are no major differences of ideas.

To build a successful alliance you must first decide what kind of partnership is needed to leverage the business. Will there be several partners for social promotion or distribution? It is important to bear in mind some projects in order to be able to choose the right kind of partnership your company needs. Understanding the advantages of working with another company is essential. A good alternative is to research how they will contribute to your growth and make an assessment of what is needed for the partnership to work. The entrepreneur who seeks the partnership needs to clarify his goals and facilitate the conditions so that together they reach the targets proposed.

Below you will learn 6 tips to achieve a successful partnership:

1 – Point out the aims of the partnership

Alliances and business partnerships connect companies so that together they can improve their reputation and thrive in new markets, which is why it is important to clarify your goals as an entrepreneur and what you intend to achieve with the partnership. By setting out the aims you will give your partner the opportunity to talk about your business and listen to the ideas that may strengthen both companies.

2 – Make your partner’s work easier

It is important that both sides make the alliance as easy as possible and are committed to the business growth. A partnership to work must not become complicated. Deliver materials, projects, marketing pieces and demonstrations so that your partner can promote your products in a simple way. This will also ensure more visibility for your company and a new range of customers.

3 – Set out the structure of the partnership

Elaborating a structure with details is not always a simple task when building a successful partnership, but it is important to specify what the partnership will accomplish for each company and what the domain of each partner is. When you start your company you have already set the roles that each employee would take on, and the same should be done when you take on the partnership, so that one of the team gets a specific title with clearly stated responsibilities.

4 – Think of your partner as a member of your team

From the moment you consider your partner as part of your team and not as a competitor, you will be even more successful. Conflicts may delay or undo the partnership before you even make a profit, which is why you need to be fully integrated in both teams.

5 – Be honest and transparent

To achieve the desired successful partnership, you need honesty and transparency in transactions, interactions and in what you want for your company. Whenever possible, keep communication open, make your strengths and weaknesses known to your partner. Companies need to be more transparent about their business, explaining what is missing and what they offer in order to decide if the partnership is a good idea.

6 – Have a good relationship

Observing and encouraging your partner’s business is a step that helps strengthen the partnership. The more you are able to show how your company will help, the more the partnership will benefit both of you.

A successful alliance will bring advantages to both companies, access to new audiences and ease of prospecting new clients, besides leveraging reputation, brand and influence in the market, making companies with more competitive potential over others.