How small business owners and self-employed can use the coronavirus stimulus package

How small business owners and self-employed can use the coronavirus stimulus package

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Countless 57 million self-employed people make up a large piece of the country’s economic puzzle. However, during the global pandemic, as businesses begin to dry up, those working for themselves are the most vulnerable.

Take the example of a freelance photographer making a living taking a picture for a corporate event, professional portfolio, or marketing material. With social distances and the entire state being closed off, group gatherings are a thing of the past, and headshots may not exceed most companies’ ToDo lists. Large companies may be able to afford the idle workforce by putting in reserves, but that is often not the case if you work for yourself.

If your business is already being hit, it’s a good idea to know what stimulus is and how to protect your assets and lives in the event of a crisis.

How to collect unemployment advantage

Typically, most self-employed and independent contractors are not eligible for unemployment unless someone sets up a business as an S corporation. But things have changed. Congress recently passed a $ 2 trillion stimulus package, the Coronavirus Aid, Relief and Economic Securities Act [CARES], which includes extending unemployment insurance to self-employed and independent contractors. The bill extends unemployment benefits for an additional 13 weeks and includes an extra $ 600 per week for up to four months in addition to state unemployment benefits. For self-employed independent contractors and freelance workers, the national salary may be lower.

Not all self-employed people will be eligible for unemployment, but it makes it an option for more people. People who are sick and ordered to be quarantined are also eligible for unemployment.

To apply for unemployment benefits, visit the state’s unemployment website. The required information is as follows: social Security number. Driver’s license or state ID The social security number of the dependent you are claiming.

How to get a small business loan From the government

Michael Morton, financial advisor to Morton Financial in Harvard, Mass. No. “What if you borrow money for a month and make it, but the situation doesn’t change in a month and you need more? The worst thing you can do is risk future risks due to short-term situations. To attack, “he says. Ask yourself tough questions about how to repay your loan and whether your business will recover.

However, there are many low-interest, interest-free loans. Find out what is offered to banks and credit unions. The American Bankers Association maintains a list of programs offered by banks nationwide.

And even if you don’t need cash right now, it’s wise to have a credit line. And unlike term loans, you only need to repay what you withdraw from the line. “If you don’t need a loan, don’t use it, and you don’t have to buy a loan to buy a consumer item, but if you need it to keep your business running smoothly, “Acknowledges that we have the money in the bank,” says Tara Uberzact, Certified Financial Planner and Founder of South Bay Financial Partners in Torrance, California.

Many counties, cities, and states offer their own financial support programs. The National Governors Association has a list of websites to search for resources by state. Also check your local small business development center for potential programs.

Finally, the CARES Act includes $ 349 million for the US Small Business Administration [SBA] to guarantee loans through the 7 [a] loan program. SBA also offers economic injury disaster loans to qualify for small businesses. These are long-term, potentially 30-year, low-interest loans for small businesses and nonprofits. You can apply for an SBA loan from that site. Be prepared to provide the following information:

  • Tax Information Approval [IRS Form 4506T], completed and signed by each principal or owner
  • Recent federal income tax returns
  • Personal financial statements [SBA form 413]
  • Debt summary listing all fixed liabilities [SBA form 2202]
  • You may also need to provide an income statement, a recent tax return, and a balance sheet.

How to drive more business

You may be discouraged or panic about the future. But there are a few things you can do to inspire more business and protect your finances.

  • Networks, networks, networks— “The worst thing you can do now is stop communicating,” says Chris Russell, Certified Financial Planner and Founder of Tempus Pecunia in San Diego, California. Tell Facebook that you’re still open. To help you better adapt your business in light of COVID-19, put a banner on your website and add that you are still up and running and make your business more appropriate Notify of changes. Many people have put together such sites with opportunities and resources for freelance artists, so reach out to the people in your industry.
  • We offer free advice— Not surprisingly, it’s ideal to get paid for work, but providing free advice and services to those in need can help keep you busy, protect your name around the world, and increase your audience A good way to expose yourself to, and hopefully, win. In the future, when the business will flourish again.
  • Improve your business— If you are self-employed, you typically do not have much time to fine-tune your business. Now is a good time to make changes. Think about ways to operate more efficiently. Review your marketing materials to see what needs to be updated. Think about technology and social media accounts. And think about what needs to be updated in your business to deal with the future and the new way of life after the pandemic, Morton says. Reducing costs is important, but Unverzagt warns against reducing what can make money, such as marketing tools and key staff.
  • Get the side gig— Consider chores such as online tutoring and delivery. Or, take an aspect of your own business and shape it into what people need right now. “Advertising to the locals and selling some extra cash to what people crave during this time being trapped and moving away from others,” Morton says.

How to handle student loans

The US Department of Education allows anyone holding a federal student loan to suspend payment for a 60-day loan without accruing interest. Regardless of whether you suspend the loan, all loans are at 0% interest for at least 60 days. To suspend a loan, you need to contact your loan provider. To find a provider, log in to your My Federal Student Aid account.

A better option is to switch to an income-based repayment plan. These plans are based on a percentage of any income. You will pay more interest throughout the life of the loan, but if your income suffers a great deal, your monthly payments will be much more manageable.

If you have a private student loan, that does not mean you are out of luck. Many private lenders reflect federal student loan offers. Contact your provider to see what they can do.

How to handle emergency funds and retirement allowances

Yes, this is an emergency, so break the emergency fund glass. According to Morton, there is no need to take advantage of emergency funds today, but they may be able to access them after significant savings. But for retirement accounts, “if they have enough cash flow and liquidity to meet their needs, they should be off limits,” Russell says.

If approved, the government’s coronavirus stimulus package includes a provision exempting a 10% early withdrawal penalty of up to $ 100,000 for COVID-19 difficulties. But if that doesn’t happen, taking that 10% hit is not a good idea. “Especially, if you need to pay income tax on your distribution, look for a low-interest loan or borrow from 401 [k]. Otherwise, you will have few problems,” says Unverzagt. You.

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-Winners and losers of the $ 2 trillion coronavirus rescue package
—How does the United States pay $ 2 trillion in relief bills? With two shiny coins, this MP claims
—17 companies employed during the coronavirus crisis
-The fastest way to boost the economy is not considered. why?
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—Fortune podcast listening to Leadership Next and investigating evolving CEO role
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