President Biden signed the $1.9 trillion American Rescue Plan Act for COVID relief on Thursday, opening the gate for small businesses to apply for aid.
The package includes several provisions for small businesses, including another round of Paycheck Protection Program (PPP) forgivable loans, Economic Injury Disaster Loans, and grants for some of the hardest-hit sectors, such as restaurants.
Getting approved for some stimulus aid can be a life raft helping small businesses stay afloat until things normalize. Help see your business through with these five strategies for making the most your funding.
1. Get Current on Bills
“If have past due bills, like utilities, make payments on those," says Shaniece Bennett, a faculty member of the Goldman Sachs 10,000 Small Business Program, which helps business owners obtain practical skills in areas such as negotiation, marketing, and employee management.
Even if your utility companies or landlord are waiving late fees due to the pandemic, being current on your expenses can help give you peace of mind and the ability to plan for the future.
Make sure you set aside enough money to pay your taxes, adds Jason Brown, CEO, and founder of the online business magazine ApprovedCosts.com.
“Unlike 2020, the IRS will no longer postpone tax filings in 2021," he says. “Tax season has already started, and your taxes will be due soon. Yes, your stimulus aid will not be taxed, but your other earnings, such as unemployment benefits, will be. Use your stimulus check to lessen the taxes you'll need to pay."
2. Hire Professional Help
If you don't use professional services, such as an accountant, consider using the money to get help with tasks like financial reporting and projections, suggests Bennett, who owns the Saint Clair Shores, Mich.-based accounting and tax services firm Accutrak Services.
“When COVID hit, we had 100% success in getting our existing clients approved for PPP funds," she says. “When we offered the service to new clients, many didn't have their information ready and couldn't answer the questions. By the time they gathered the information, much of the funds were gone. By having financial documents already together, business owners can be ready to apply for future grants and aid."
3. Protect Your Business
Consider securing your intellectual property, such as registering copyrights or patents for your unique designs or filing for trademarks that protect your brand name and logo. If you only operate locally, another business with a similar name in a different market may not be much of an issue, says Chris Motola, small business analyst for MerchantMaverick.com, a small business service provider. If you sell online or plan to expand, however, it's a different story.
“You get state-level protection when you register your business name," he says. “If you're operating across state lines, that's when you'll want to start thinking about trademarks."
4. Spend Money on Revenue-Generating Activities
Remember that your customers may have received some of that stimulus money, too, says Motola.
“Unless you're based in a really elite neighborhood, most of your customers will be getting a cash infusion," he says. “You may want to think about how you can spend your stimulus check in a way that encourages people in your market who may be getting an infusion of disposable income to spend part of their stimulus checks at your business."
Motola suggests spending the money on an advertising campaign, an intriguing renovation, an interesting product line, or filling a niche that may have been recently left by a business that didn't survive the pandemic.
5. Start an Emergency Fund
If you learn anything from the pandemic, it's that nothing stays the same, says Brown.
“Plenty of businesses have been forced to close their doors because they were unprepared," he says. “Use your stimulus check to start an emergency fund or add to it if you already have one. With the funds, you can easily get back on track when you encounter problems down the road."