Helping people find reliable answers to their credit and financing questions has been the theme of Gerri Detweiler’s work for the past 20+ years. Today she serves as the education director for Nav, where she helps business owners navigate the confusing world of small business credit. Gerri gave us her take on the latest stimulus bill and tips on how business owners can improve their business credit.
There are several ways the newly passed stimulus bill will help small business owners. Most of the provisions are an extension or expansion of what was in the previous stimulus bill. The new part of this bill is the restaurant revitalization fund and grant program. What I’m excited about is, restaurants no longer have to choose between PPP or a grant, they can apply with confidence to both and the funds will balance out.
Except for the targeted EIDL grants, the newest round of PPP loans is available to any small businesses regardless if they applied in the past or not. Additionally, they’ve changed the calculation for self-employed people, so more people are now eligible to receive funds. The biggest group not eligible for funds are start-up businesses that launched during the COVID pandemic.
For the PPP loan, a business can receive up to $10 million but that is limited to 2 and a half times your average monthly payroll. If you are self-employed the maximum you can apply for is $20,833, which is capped based on up to $100,000 in owner compensation. In addition, the new bill has business grants available that are based on revenue lost due to COVID.
Small business credit and financing can be confusing for business owners due to all the different options available and lack of clarity on the terms. Unlike consumer loans, business loan providers don’t have to provide you with a free credit report or tell you the APR. Oftentimes we see lenders using fancy words to describe the terms that make the loan sound affordable when it is quite expensive. As the education director at Nav, my goal is to try and help business owners understand these nuances so they can make better decisions.
The biggest credit mistake we see small businesses make is they are often not aware their business has a credit report and thus they don’t check it. Related to that the other mistake we’ve seen a lot of small businesses make is that they don’t keep their business finances organized and separated from their personal finances. When it comes to organizing your finances, business owners have to embrace that this is part of running a business. If financial management isn’t your strength you can partner with a bookkeeper or financial coach, or even take a class to educate yourself. No matter what you choose, you need to learn to embrace this side of your business and find the solution that works best for you.
Cybercrime prevention is all about protecting your business from being hacked and potentially exposing your customer's sensitive information. If you keep a record of any sensitive customer information, you should have someone advising you on how to protect it, and some insurance to cover your business if something did happen.
Business identity theft is on the rise but it can go unnoticed because business owners aren’t used to monitoring their business credit reports. At Nav, we offer free business credit report monitoring which can help alert you to any issues. Business tax fraud is also on the rise and the IRS offers a free pin you can use to help secure your tax filings.
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