A Guide to Available Grants and Loans for Small Businesses and the Self-Employed in 2021
The ongoing financial burden from COVID-19 has been felt by small businesses worldwide. In the U.S., it was estimated that the gym and health club industry lost $13.9 billion and 25% of gyms were expected to close by the end of 2020.
To support small businesses through this time, government grants and loans can help. Grants help you start or grow your business, whereas loans provide financial support you’ll need to pay back.
While grants are free money, they do come at a hidden cost—it takes time to figure out what grant you qualify for. It also takes time to apply and wait to hear back on whether you’ve been approved. You also need to know about restrictions, so you use the grant money in the right way.
We’re here to break it all down for you. Here’s an easy-to-use guide to help American and Canadian small businesses and the self-employed better understand grants and loans. Let’s get started…
What’s the difference: grants vs. loans?
How do you know what’s best for your business? Think of a grant like a “gift” that you qualify for, with rules for using that money. A loan, on the other hand, often means larger amounts of money that need to be paid back eventually, but without any rules for how the money needs to be used. Here are a few other notes to explain the main differences between grants and loans:
- A grant is income, so you will be taxed on that amount, but with a loan there’s interest added to your initial loan amount.
- When you pay back your loan on time, you’re building your business credit score.
- You’ll need to compete for grants against other applicants. However, they’re often categorized for specific recipients (veterans, minorities, even fitness) to narrow the competition.
- Loans have real consequences and failing to meet the terms of a loan could have serious impacts to your business.
What is the Paycheck Protection Program?
The Paycheck Protection Program (PPP) is a government program helping small businesses keep employees on their payroll.
The White House reports that 98% of small businesses have fewer than 20 employees. For that reason, President Joe Biden changed the PPP earlier this year to make it easier for these businesses to apply.
Updates to the original PPP include:
- Shortened application times so money is received faster.
- Adjusted loan rates to increase funding to applicants for more relief. There was $1 billion set aside for businesses without employees in low- and moderate-income areas.
- People still paying back student loans now qualify to receive the PPP.
- You don’t have to pay the PPP back if it’s used for: rent, mortgage interest, utilities, operations, property damage, supplier costs, and worker protection expenses.
Your fitness business qualifies for PPP if:
- You have fewer than 300 employees.
- Your business saw a 25% decline in the first quarter of 2020, compared to the first quarter of 2019.
How can PPP help your business?
- It’s a flexible loan covering operating expenses to help keep your employees on board.
- Spending money on pre-approved expenses means the government will forgive the loan, essentially turning it into a grant.
- Most small businesses qualify, including independent contractors, sole proprietors, and people who are self-employed.
Get the help you need with this direct link. The application process takes less than 15 minutes and the approval in as little as 48 hours.
What is the CARES Act?
The Coronavirus Aid Relief and Economic Security Act (CARES Act) helps people who are out of work (or have lost income) as a result of COVID-19, benefitting mostly self-employed and contractors like those in the fitness businesses.
How does it help? If you’re still employed, you’ll receive one-time cash payments of up to $1,200, as well as $500 for each child in your household under 18.
This program hasn’t rolled out in every state yet, so use this link to check on whether you can apply.
What are tax incentives?
The government has added several tax incentives to lighten the load. For fitness businesses, every little bit counts. Here are a few ways you can use tax credits to your advantage:
- Employee retention tax credit: If you were shut down and recorded 20% or more in lost revenues, this affords you a 70% tax credit on wages up to $10,000 per person per quarter to help keep your team employed.
- Delay of payroll taxes: Get a little breathing room with an extended deadline to pay your payroll taxes.
- Modification of net operating losses: Use losses to amend tax returns from previous years for extra liquidity when you need it this year.
- Increase to interest expense deduction: Deduct an extra 30% to 50% on your taxes to keep more money in your pocket.
- Modification on limitation of losses for sole proprietors and pass-throughs: Make up for excess losses with cash flow you need now.
- Technical amendment regarding qualified improvement: Write off facility improvement costs to cover what you spent to adjust your business.
What other grants and loans are available for small businesses?
In these stressful times, grants and loans give small businesses a helping hand. Here are a few ways fitness businesses can get ahead:
- Federal Tax Deferral: If you didn’t participate in PPP and your business was shut down, apply for 25% cashback for your quarterly payroll and defer paying your corporate taxes.
- The Families First Coronavirus Response Act: Claim this tax credit to offset costs for paid sick leave.
- Economic Injury Disaster Loan: Businesses located in low-income communities with more than 30% revenue loss for 8 weeks after March 2, 2020 can apply for up to $10,000. If it’s used for payroll, paid leave, increased costs and mortgage and lease payments, you don’t have to pay it back. You can also apply for $1,000 per employee for up to 10 employees to help supplement your payroll even if you’ve already received PPP.
- Shuttered Venue Operators Grant: If your fitness business had to close down and you haven’t already applied for PPP, you may qualify for this grant of up to $10 million. Visit this link to apply.
- State-Based COVID-19 Relief Grants: Many states and communities have developed local relief programs to help their own residents. Monitor your chamber of commerce and state commerce sites to learn about local initiatives.
- LISC’s Small Business Relief Grant: Providing over 4,000 grants so far, LISC (Local Initiatives Support Corporation) rotates funds throughout the year for small businesses. Check their website for current funding opportunities.
What other help is there for the self-employed?
Gallup collected data for the Gig Economy and Self-Employment Report for Intuit’s QuickBooks. According to that survey, 28% of the population is self-employed and there are lots of non-governmental options for business owners, too. Here are some options to explore:
- National Association of the Self-Employed (NASE): Become a member and take advantage of growth grants, expert advice, helpful links, and more.
- Wells Fargo Community Giving Grants: With local and international grants, this grant focuses on helping small businesses grow.
What are grants for women?
While 40% of small businesses are women-owned, research shows that 66% of female entrepreneurs report difficulty funding their business. Luckily, there are several grants catering to female entrepreneurs. Here are a few places to look:
- Women’s Business Centers: These U.S. Small Business Administration Women’s Business Centers are a national network of more than 100 centers that offer training, networking, one-to-one counseling, and mentoring to women entrepreneurs.
- The Amber Grants: Women in business can apply for this $25,000 grant in just a few minutes with the simple application.
- Cartier Women’s Initiative Award: Helping women entrepreneurs worldwide, this grant aims to empower women and focuses on businesses with a sustainable social and environmental impact.
Check out an impressive list of grants awarded to women-owned businesses on Merchant-Maverick’s website.
Where to find grants for small businesses
Save yourself the time it takes to track down the information. Use sites like Grantwatch and Small Business Innovation Research Program for lists of grants to benefit your business, along with these sites for federal and state funding:
What help is available in Canada?
Canadians also have government and private options to help fitness businesses recover. Here are a few places to look for loans and grants if you’re in Canada:
- Federal government options for the Business Credit Availability Program (BCAP)
- British Columbia
- Nova Scotia
- New Brunswick
- Newfoundland and Labrador
- Prince Edward Island
- Northwest Territories
- Funding Finder
Monitor your province’s website for local options for funding, too.
How to apply for a business grant?
Each grant has specific requirements and an application process. That being said, here are a few tips to keep in mind when applying:
- Do your research: While there are many grants, more are added all the time. Beat out the competition by finding the right fit for your business and maximize your results.
- Meet the requirements: Confirm that your business qualifies before you waste time completing the application.
- Update your business plan: Most grants require a business plan to ensure that your business is going in the right direction. Take this opportunity to make sure all financial data is up to date.
- Submit your application on time: With so much competition, put your best foot forward by meeting the submission deadlines.
- Follow up: Get an idea of when you’ll hear back and confirm that your application was received to stay on top of your options.
The bottom line on grants and loans
Last year took a toll on many small businesses, but all is not lost. Grants and loans let you buy some time with the funds you need to keep your staff on the payroll and your business growing.
Explore your options, stay organized, and decide which route is best for your business. Use the best resources to apply for the help you need. Work smart by setting up alerts for new grants, allocating your time wisely, and using every resource you can find.
At WellnessLiving, we provide the tools you need to manage and grow your business. Our all-in-one business management software offers virtual tools to get your business online, automated marketing features to communicate your message, scheduling and booking for staff and clients, and so much more. Book a free, no-commitment demo today to find out more today.