With everything going on in the world these days, small business owners are looking at ALL their options to keep the doors open. For many businesses out there, that means getting financial support in the form of loans, grants, and even scholarships.

Even though the initial wave of applications has come down a bit, there are still plenty of us who are still applying. (Because after all, it never hurts to ask, right?)

So how do you improve your chances of getting the green light with any kind of loan or grant?

I’ve been getting a TON of questions about this very thing lately. This is why I’ve decided to share the top four questions my clients are asking, and the answers I’ve been sharing with them. Take a look at this quick little Q&A and see if it applies to anything that you’ve been applying for…

My Top 4 Loan, Grant, and Scholarship Questions From Small Business Owners (And My Answers):

Q. How do I apply for a small business loan without any prior income history? 

A: Let’s get to the bad news first. Unfortunately, it would be nearly impossible to get approved for a loan if you don’t have any prior income history. Before a loan can be approved, the banks and loan officers need to know that you have the means to pay the loan back. Typically, this means you’ve got to provide two years of financial data to prove that you’ve got steady income. So if there’s no prior history to speak of, that’s a pretty definite disadvantage.

HOWEVER, here’s the good news. COVID loans can convert into grants. Grants are different from in that they don’t require repayment (a pretty big difference, right?). So with that idea in mind, it never hurts to throw your hat in the ring for a grant. Check out how to apply for that right HERE: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

Q- Can I use the fact that my company is in education to get a loan, grant, or scholarship?

A- Everyone’s business situation is a little bit different. Without knowing exactly what’s going on with any specific business, what I can say is this: Right now, the only leverage I’m seeing for receiving loans, grants, or scholarships is “essential” versus “nonessential” businesses. There are some grants available for women-owned, veteran-owned, and minority-owned businesses through the SBA. These may or may not be on hold during this crisis time, however. 

But, as always, it definitely can’t hurt to ask! 

Q- How about loans for non-profit vs. for profit businesses? 

A- Here’s the interesting thing. Nonprofits actually can make a profit. Most nonprofits have great owner salaries, believe it or not. (Sometimes in the 6-figures, too.) If you have a nonprofit, you need a good accountant to keep an eye on your finances. This is because as a nonprofit, there are a ton of rules and regulations for how you handle your money. You might have more overhead, but under certain thresholds you don’t have to pay or even file taxes. 

So have a good accountant look over everything you’ve got, and let them help you get your ducks in a row before you apply.

Q- Can my company itself be a tax write-off? 

A- Let’s get a little clarity around the question. If you file your Schedule C that shows a loss for any given tax year, then this is a YES. If you have a loss in your business for three years in a row, the IRS will consider your business a “hobby business.” In this case, a new set of rules apply. Check out those rules HERE: https://www.thebalancesmb.com/is-this-business-for-real-or-is-it-a-hobby-397675

So there you have it! Basically what it comes down to no matter what is having access to all the info you need, and being sure that your books are clean before you apply. That in itself entails quite a bit, of course!

If you’re looking for help in this area–as in why to apply, when to apply, and how to apply, let’s chat! Get a FREE 20-minute consultation in which we’ll go over your situation, and see what the best way forward might be for you.

Grab your spot HERE!

Until next time,

Love, light, and MONEY, honey…

Kaylee

Posted in CFO Services, Debt & Credit Score, Money Tips for Startups, Wealth Coaching

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