Small business grants offer free capital to start or grow a business, and when a global pandemic hits, the need for such grants only increases. Read on if you’re looking for grants to help you pull through the late stages of the COVID-19 pandemic and its aftermath.
Types of Small Business Grants
There are various types of grants, your eligibility of which depends on your business’s products and services, ownership, and mission. The main business grant options are broken into the following sections:
Federal Grants: These grants are given from the United States government’s general federal revenue in order to help stimulate the economy and help businesses in need. They are often given to non-commercial organizations, like tech, health, science, or education companies.
State Grants: These small business grants are offered by a specific state. Because their requirements are state-specific, the competition is often slimmer. The amounts are sometimes smaller than federal grants, but they can still provide a welcome financial boost.
Local Grants: These grants focus on small businesses that directly stimulate their local communities.
Corporate Grants: These grants are gifted by select corporations. In many instances, companies will set aside funds at the beginning of the fiscal year and run competitions to determine recipients. Corporate grants have various requirements and varying amounts.
Stimulus Grants for Small Businesses
Specific grants have been created expressly to alleviate the pandemic-inflicted pain for small businesses. It’s important to note that many of these programs close for applications at some point, and some of them open additional rounds of funding, so check with each to confirm the latest.
Targeted Economic Injury Disaster Loan Advance Grant
Some small business owners applying for an Economic Injury Disaster Loan (EIDL) through the Small Business Administration (SBA) are eligible for an emergency cash advance of up to $10,000. This advance can be forgiven by the SBA (effectually made into a grant) if it is spent on maintaining payroll, paid leave, increased costs, mortgage or lease payments, or other financial obligations.
You may qualify for a targeted EIDL Advance if your business:
Is located in a low-income community
Has suffered an economic loss greater than 30% during an eight-week period since March 2, 2020
Employs 300 or fewer employees
Additionally, your business must have previously received an EIDL Advance for less than $10,000 to be eligible, or previously applied for an EIDL Advance program but never received assistance due to a lack of program funding.
The SBA will reach out to qualifying businesses for a Targeted EIDL grant, so no action is necessary on your part. All legit emails regarding SBA grants will arrive from an address ending in @sba.gov.
Shuttered Venue Operators Grant
The Shuttered Venue Operators Grant (SVOG) was introduced by the SBA as part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. It has since closed, but the SBA intends to open the program for supplemental SVOGs for 50% of the original award amount, capped at a total of $10 million. It has not yet released details.
Eligible businesses include:
Live venue operators or promoters
Theatrical producers
Live performing arts organization operators
Relevant museum operators, zoos and aquariums who meet specific criteria
Motion picture theater operators
Talent representatives
Additional SBA Grants
SBA Small Business Innovation Research and Small Business Technology Transfer Programs
SBA 7(j) Management and Technical Assistance program
SBA State Trade Expansion Program ($50,000 to $2,000,000)
State-Based COVID-19 Relief Grants
Many local COVID-19 grants and relief funds were created in 2020 to help businesses struggling due to the pandemic. Some of them have exhausted their funding and are no longer issuing grants.
However, some states and cities have continued to offer relief this year. State departments of commerce websites and local chambers of commerce should have up-to-date opportunities for grants and information.
Corporate Small Business Grants
Big corporations often provide grants to small businesses through contests. Here are a few to keep on your radar.
Intuit National Association for the Self-Employed (NASE) Grant: Typically given out annually, the tax preparation software company gifts small businesses a $4,000 grant in partnership with NASE.
FedEx Small Business Grant: FedEx hosts an annual grant contest for small businesses, awarding a total of $230,000 to 12 small businesses nationwide. Find more details, including tips and warnings from past winners, on the FedEx site.
Visa Everywhere Initiative: This grant offers funding for small business startups with innovative fixes. Visa annually awards $50,000 to the final three winners.
Wells Fargo Community Investment: This program focuses primarily on nonprofits, but small businesses with the right criteria are also eligible to receive these business grants, which are offered in nearly every state.
Kuvio Creative Impact Grant: Focusing on entrepreneurs who are making a difference, this full-service web design and development company provides qualifying small businesses with grants and free services. Applications open three times per year, and funds are reserved for nonprofits, women-owned companies, minority-owned businesses, and veteran-owned organizations. Grant recipients receive up to 100 hours of free services, the specifics of which depend on the scope of the project.
Business financial statements demonstrate the source of a company’s revenue, its assets and liabilities, how money was spent, and how the company manages cash flow. They also help managers, employees, investors, and lenders assess the company’s performance at the end of the fiscal year. Read on for the three core reports that fit together to make up a complete set of financial statements for your small business.
Income Statement: Demonstrates Business Profits and Costs
Typically, the first point of interest for an investor or analyst is your income statement (also known as the profit and loss statement). This report illustrates your business’s performance in revenue and expenses throughout each period. Your sales revenue should be displayed at the top, followed by the deduction of cost of goods sold (COGS) to find your gross profit. Note: COGS includes the cost of labor, materials, and overhead needed to manufacture a product. From there, additional line items of business expenses, including taxes, will affect your gross profit until you reach your net income at the bottom, i.e., your “bottom line”.
Balance Sheet: Demonstrates Financial Position of a Business
This report gives an account of the business’s financial health by displaying assets, liabilities, and owners’ equity at a particular point in time. It helps business stakeholders and analysts gauge the overall financial position of a company and its capacity to handle its operating needs. The balance sheet can also help determine how to meet financial commitments as well as the best methods for using credit to finance your operations.
In general, the balance sheet is divided into three categories: assets, liabilities, and equity.
Assets: These are usually organized into liquid assets (cash or assets than can be easily converted into cash), non-liquid assets (land, buildings, and equipment), and intangible assets such as copyrights, patents, and franchise agreements.
Liabilities: These are debts that the business owes. They’re typically categorized as current or long-term. Current liabilities are due within one year and include items like accounts payable, wages, pension plan contributions, medical plan payments, building and equipment rents, temporary loans, and lines of credit. Long-term liabilities are payment obligations that are due after a one-year period. These may include long-term debt such as interest and principal on bonds, pension fund liabilities, and deferred tax liabilities.
Equity: This can also be known as owners’ equity or shareholders’ equity. It is the remaining value of the company after subtracting liabilities from assets. Equity can also incorporate private or public stock, or even an initial investment from the founders of your business.
Cash Flow Statement: Demonstrates Increases and Decreases in Cash
Unlike an income statement, which shows how much money you’ve spent and earned, a cash flow statement tells you precisely how much cash your business has on hand for a specific period of time. If you use accrual basis accounting where income and expenses are recorded when they are earned or incurred—not when money actually moves into or out of your bank—cash flow statements are a necessary component of financial analysis. They show your liquidity; they show your changes in assets, liabilities, and equity; and they assist in predicting future cash flows. Additionally, if you plan on applying for a loan or line of credit, you will need current cash flow statements to apply.
One of the easiest ways to start saving for retirement is through a Roth IRA, and some would say it’s the smartest move a beginner saver can make. A Roth IRA could be a better choice than a 401(k) or a traditional IRA for a few key reasons.
Roth IRA: A Primer
A Roth IRA is an individual retirement account (IRA) that permits qualified withdrawals on a tax-free basis provided specific conditions are reached. The greatest distinction between a Roth IRA and a traditional IRA is that Roth IRAs are funded with after-tax dollars. While the contributions are not tax-deductible, this account offers tax-free growth and tax-free withdrawals in retirement. As long as you have owned your Roth IRA account for 5 years and you’re age 59 ½ or older, you are allowed to withdraw your money without owing federal taxes. In 2021, you can contribute up to $6,000 to a Roth IRA ($7,000 if you are age 50 or older and eligible for catch-up contributions). This is lower than the limit for a 401(k) but it’s still a sizable amount to help keep you on track for a secure retirement.
Roth IRA Advantages
No RMDs. Unlike 401(k)s and traditional IRAs, which are subject to required minimum distribution (RMD) withdrawals after age 72 (and penalties if you fail to make the withdrawals), there are no RMDs with Roth IRAs, so you can withdraw funds on your own schedule.
No time limit. You may invest money into your account for as many years as you have earned income that qualifies. This includes wages, salaries, commissions, and bonuses from an employer. If you are self-employed or in a business partnership, this would include net earnings from your business, less any deduction authorized for contributions made to retirement plans on the individual’s behalf and further reduced by 50% of the individual’s self-employment taxes. Funds pertaining to divorce, such as alimony, child support, or in a settlement, may also be contributed.
No employer-plan restrictions. Regardless of whether you are covered by an employer’s retirement plan, such as a 401(k), you are still eligible to contribute the maximum annual amount to a Roth IRA as long as you don’t exceed the IRS’s income limits. For 2021, those with modified adjusted gross incomes (MAGI) below $140,000 (single filers) or $208,000 (married filing jointly) are eligible.
No Impact on Social Security. Whereas distributions from a 401(k) or traditional IRA contribute to determining if your Social Security benefits are taxed (that happens once income hits a certain limit), Roth IRA distributions do not. This means that your Roth IRA withdrawals will never affect your Social Security checks.
No taxes for heirs. You may pass your Roth IRA on to your beneficiaries, and their withdrawals will be tax-free. (If you inherit a Roth IRA, you are required to take RMDs, but they are tax-free as long as the original account owner held the account for at least 5 years.)
Before You Invest in a Roth IRA
An important element to keep in mind is the 401(k) match. If your employer matches 401(k) contributions, make sure you take full advantage of this free investment money before investing in a Roth IRA.
Both a will and a living revocable trust are valuable estate tools that transfer wealth to heirs—and both can work together to establish a complete estate plan—but what’s the difference between each, and which do you really need? We’ll go over this in the article below.
What is a Will?
A will is a written document that expresses what should happen to your property and assets after you die. As such, it becomes active upon your death. You can also appoint guardians for your children, name an executor, forgive debts, and specify how to pay your taxes.
What is a Living Revocable Trust?
Unlike a will, which becomes active after your death, a living trust kicks in immediately, and you are fully in charge of your trust while you are living. After your death, the person you appoint as the successor trustee will handle your affairs as you’ve outlined them in the document. There are also irrevocable trusts, which are generally created for tax purposes. Unlike revocable trusts, which can be changed at any time by the grantor, an irrevocable trust cannot be amended after it is established.
The Main Difference Between a Will and a Living Revocable Trust
After your death, the appointed executor of your will must work with the probate court to sort the terms of your will. This is a highly-structured process that can be drawn-out and expensive. A living trust, however, appoints a trustee to manage and distribute trust property after your death. Because the trust owns the assets and the trust hasn’t died, there is no need for probate. A living trust is a private contract between you as the grantor and the trust entity. Generally, the grantor serves as the trustee of his own revocable living trust, thus managing it during his lifetime. A successor trustee can be appointed to step in and oversee handling of the trust when the grantor dies, settling it and allocating its property to the beneficiaries named in the trust documents.
Which is Better, a Will or a Trust?
A trust simplifies the procedure of transferring an estate after your death while preventing a lengthy and possibly costly course of probate. However, if you have minor children, creating a will that names a guardian is crucial in protecting both the minors and any inheritance. The decision between a will and a trust is a personal choice, though some experts advise to have both. While a trust is typically expensive and legally complex, a will is generally less expensive and easier to establish.
Which Do You Need?
Almost everyone should have a will, but not everyone will need a living trust. If you have minor children as well as property and assets for which you would feel more settled knowing they were in a trust, then having both a will and a living revocable trust may make sense. Keep in mind that they are two separate legal documents, so one does not override the other unless issues arise, in which case a living trust will likely trump a will because a trust is its own entity.
No matter which you choose, it’s important to get your affairs in order earlier rather later. If you have minor children, establishing a will that grants guardianship should be a priority. Beyond that, making an estate plan now can save money and time later, especially for the loved ones you would be leaving behind.
In late December of 2020, President Trump signed into law the Consolidated Appropriations Act, 2021 (the Act), which included the long-anticipated pandemic-related Tax Relief Act of 2020. It also included the Taxpayer Certainty and Disaster Relief Act of 2020, which extends or makes permanent numerous tax provisions, including tax breaks for individuals. The following is an overview of these key tax-related provisions for individuals.
Medical Expense Deduction
The Tax Cuts and Jobs Act (TCJA) set the threshold for itemized medical expense deductions at 7.5% of Adjusted Gross Income (AGI), but this threshold was scheduled to return to 10% of AGI as set in the Affordable Care Act. However, the expense deduction had been extended perpetually by Congress, allowing a taxpayer to continue to deduct their total qualified unreimbursed medical expenses that exceed only 7.5% of their AGI. The Taxpayer Certainty and Disaster Relief Act of 2020 made this threshold permanent.
Charitable Contribution Deduction
Generally, charitable donations are tax-deductible only if you itemize your taxes, but the Coronavirus Aid, Relief, and Economic Security (CARES) Act incorporated a provision that authorized individuals who don’t itemize to deduct up to $300 ($600 for married couples filing jointly) in cash donations in 2020. The Taxpayer Certainty and Disaster Relief Act of 2020 extended this provision into 2021 and makes it more valuable for married couples filing jointly.
Taxpayers who do itemize their deductions are typically limited to a 60% cap (i.e., the amount of charitable donations you could deduct generally could not exceed 60% of your AGI). As in 2020, that limit has been suspended in 2021.
Mortgage Insurance Premium Deduction
The Taxpayer Certainty and Disaster Relief Act of 2020 includes a one-year extension of the mortgage insurance premium deduction, so premiums paid or accrued through December 31, 2021 can be deducted on tax returns by those who itemized deductions and otherwise qualify for the mortgage insurance premium deduction.
Exclusion for Canceled Mortgage Debt
Cancelled or forgiven debt by a commercial lender can be counted as income for tax purposes. However, the Mortgage Forgiveness Debt Relief Act of 2007 generally allowed for taxpayers to exclude canceled mortgage debt from their taxable income, but only for a finite number of years. The Taxpayer Certainty and Disaster Relief Act of 2020 extended the Mortgage Forgiveness Debt Relief Act of 2007 through 2025.
Residential Energy-Efficient Property Credit
Individuals who have implemented certain energy-efficient upgrades to their homes (i.e., solar electricity, solar water heaters, geothermal heat pumps, and small wind turbines) are eligible for the residential energy-efficient property credit. The credit had been set to phase out after 2021, but the Taxpayer Certainty and Disaster Relief Act of 2020 extended it as follows:
Continuing the rate applicable to 2020, eligible property that is put into service in 2022 will qualify for a credit worth up to 26% of the property cost
Eligible property that is put into service in 2023 will qualify for a credit worth up to 22% of the property cost.
