Photo by Vanessa Velez Photography
The Bride Candy is fortunate to be part of an amazing community of wedding vendors that specialize in making dreams come true. Unfortunately, many of us have been heavily impacted by the current pandemic. Before all else, I hope you’re staying safe and healthy and relatively sane during these crazy times. There’s a lot of information and misinformation out there on what steps to take to try to minimize the impact to business. We sat down with our friend Carlos Canasi, a Miami-based CPA, to get the scoop on what help is available to small businesses in the industry. This post is geared towards Florida-based small businesses, but there are national resources mentioned as well.
What is being done to help?
The most consequential help available is under the CARES Act, passed earlier this year. “The purpose of the CARES act is to provide relief to individuals, businesses, and government organizations by public funding of $2 Trillion dollars,” said Carlos. It’s a sweeping bill that has multiple provisions that may pertain to you, like stimulus checks, expanded unemployment, and grants and loans to small businesses. To a lesser extent there are also state programs available, but major funding for just about all help comes from the CARES Act. Here’s what you can expect.
Getting a Stimulus Check
There’s been a lot of press about the one-time non-taxable $1200 checks coming from the government. How do I get that money? “You need to do nothing,” said Carlos. “The government knows who and where you are (literally) and will directly deposit the funds into your account. You won’t have to file anything to receive the rebate.” But not everyone is eligible to receive a check. “The government will use your 2019 tax return or your 2018 tax return to determine if you qualify. If your income is $75,000 or less - or $150,000 or less if you’re married - you’re eligible for a $1,200 individual or $2,400 married couple rebate. If you have dependent children under 17, you’ll also get $500 per child. If you make over $75,000 or $150,000, your rebate will be reduced by $5 for every $100 over $75,000 that you make. But if you make over these threshold amounts, you won’t get a rebate: Individual: $99,000; Head of household with one child: $146,500; Joint filers with no children: $198,000. To qualify, you can’t be claimed as a dependent by others and you must have a work-eligible social security number.”
“The government knows who and where you are (literally) and will directly deposit the [stimulus] funds into your account.”
Filing for Unemployment
One of the major aspects of the CARES Act is that it expands state unemployment payment levels and eligibility. “You are eligible for unemployment as a self-employed person under the CARES Act,” said Carlos. “You are entitled to $600 a week for up to four months.” And that’s on top of Florida’s determination (up to $275 a week depending on your previous income). You can apply for Florida Unemployment via website, phone (1-800-204-2418), or paper form. This is an excellent benefit and you should take advantage of it! You need to apply soon - there are hundreds of thousands of people in front of you. Call centers have been overwhelmed and the Florida Unemployment website frequently goes down, so the most reliable way to apply is to complete the paper application and mail it in. If you need help, contact your State Senator’s office – they are experts at getting things unstuck that are tied up in bureaucracy. If you’re outside the state of Florida, go to this website and select your state to find your unemployment office.
Photo by Care Studios
Getting a grant by taking a loan
There’s been some information going around that says small business owners might be eligible for disaster grants. But this grant is actually an advance on a loan from the SBA. “To get money to businesses that need it quickly, anyone who applies for an Economic Injury Disaster Loan (EIDL) can request an emergency grant on that loan of up to $10,000,” said Carlos. “This money will be distributed by the SBA (Small Business Association) within three days. The grant can be used to maintain payroll, provide sick leave, buying materials, paying your mortgage or rent, and repaying any obligations you can’t currently pay because you’ve lost revenue from COVID-19.” You are eligible for this as long as your business is under 500 employees. Sole proprietors, LLCs, and Corporations are all eligible. Find out more and apply at the SBA website.
The EIDL itself is expansive. “You can borrow up to $2,000,000 on a 15- or 30-year term,” said Carlos. “The interest rate is 3.75% for businesses and 2.75% for Not for Profits.” The EIDL is not a forgivable loan. “And you don’t want it to be forgiven! The SBA will only forgive your loan if you go completely out of business.”
“You need to apply soon - there are hundreds of thousands of people in front of you.”
Should I take out a loan?
“Borrowing is a unique/personal decision. There isn’t a one-size fits all formula,” said Carlos. “For most small businesses, a quick “back of the napkin” calculation is a good way to start.” Ask yourself these questions:
How much cash do I have available to pay current and future debt?
Is there anything I can liquidate to come up with cash?
What’s my current monthly debt?
Is the interest rate favorable? Do I have credit cards with better interest rates than the loan offers?
Is there a penalty for paying back the loan ahead of maturity?
You’ll also want to do a bit of forecasting. “Create a spreadsheet in Excel forecasting the next 12 months. Include your forecasted cash inflows and outflows,” said Carlos. If you need help putting together a spreadsheet like this, contact Carlos here.
Photo by Vanessa Velez Photography
How can I financially survive this pandemic?
Everyone is worried about cashflow right now, but to best protect your finances you’ve got to stay safe! “Follow the CDC guidelines and stay home. Getting out and being exposed can end up in unnecessary medical expenses, and worse, health complications,” said Carlos. If you need help, start with the people who are closest to you. “Many times we’re afraid of asking for help because we’re proud people. And by asking for help I mean asking friends and family for business, financial advances (keep your promise, of course), CPAs for advice, etc. Be able to rely on your community and share with others whatever knowledge you acquire.”
“Remember that 87% of the population is still employed and many of those are willing and able to spend their dollars.”
