Recap and Tips: COVID-19 Relief for Small Businesses + Nonprofits
If you plan to apply for funding relief for your business or nonprofit through a loan program or via the newly replenished Small Business Administration (SBA) Paycheck Protection Program (PPP), it's important to read the fine print and get prepared before completing your application. To help you get ready to apply, we've compiled a list of tips and best practices from our recent Virtual Connect + Chat event with The Cooperative Bank of Cape Cod, Coastal Community Capital, and Boardwalk Business Group. See below for tips shared by these local experts, and check out the full session video on our YouTube channel here.
Need to get the basics? Learn more about the SBA loan programs, PPP, and other relief options through the SBA here, and learn about other resources for small businesses and nonprofits through CCYP's COVID-19 Resources Page.
PRO TIP 1: Get your Financials in Order
The Paycheck Protection Program (PPP) offers cash funding equal to 2.5 times your monthly payroll costs, plus benefits. Other costs such as mortgage payments and utilities may also be eligible for funding under this program. However, the burden to accurately calculate these costs for your PPP application primarily falls to the borrower (that's you!) and not the bank. If you're having trouble completing the calculations, ask an accountant or finance professional for assistance. And be sure to consider how you will track and document expenses once you receive the relief funding. If you spend the money like you told the bank and the SBA you would, then the funding you receive could be forgiven - meaning you won't need to pay it back. This forgiveness option is one of the features that has made the PPP so popular to date, but it's important to get a system in place now to ensure you can qualify for forgiveness later - and not end up with a loan to pay off.
With other loan products, it's equally important to have your financials in order as much as possible when you approach your bank of choice. Many are handling high volumes of loan requests at this time - for example, Peter Rice, Senior Vice President and Chief Commercial Banking Officer with The Cooperative Bank of Cape Cod, says their bank has seen more than 500 applications over the course of two weeks. That's more loans than they would normally process in a year and a half. The takeaway? Bring complete and thorough information to your bank at the beginning of the process, and your funding request process is likely to go more smoothly.
PRO TIP 2: Create a Cash Flow Forecast
What is your cash "runway?" How long do you have before you need a cash infusion for your business or nonprofit? How much should you ask for in a loan or PPP application? These questions and more can be answered by a cash flow forecast. Matt Cronin of Boardwalk Business Group - a bookkeeping, accounting, and finance firm based on Cape Cod - recommends assembling a "cash flow team" to compile, analyze, and routinely monitor cash flow for your business or organization. Make sure to use a consistent cash flow template (Matt recommends something like this) and keep it updated on a regular basis.
PRO TIP: Call Your Legislators
Jeannine Marshall of Coastal Community Capital reports that their organization - a Cape-based community development financial institution and SBA partner - is seeing record demand and need among small businesses and nonprofits seeking financial relief. With the PPP, many nonprofits and small businesses - for example, those with 10 or 20 employees or less (the majority of Cape Cod's businesses), seasonal businesses, and non-English speaking business owners - were unable to meet the qualifications or complete their applications quickly enough to receive relief through the first round of funding. Fortunately, organizations like the Cape Cod Chamber, Massachusetts Growth Capital Corporation, and the National Council of Nonprofits are working to advocate for the needs of businesses who may have been left behind in the first phase of the PPP. However, businesses and nonprofits must share their needs directly with legislators and encourage reforms where necessary. To get started, find your federal and state legislators here.
Additional Resources
From Senator Ed Markey's Office: A Guide to the CARES Act (Federal Coronavirus Aid, Relief, and Economic Security) passed Friday, March 27
Massachusetts Association of CDCs (MACDC) offers resources to address urgent needs for small businesses in the State of Massachusetts
Mass Nonprofit Network - Coronavirus and Massachusetts Nonprofits
Paycheck Protection Program (PPP) Technical Assistance and Multilingual Translation Services