How Small Businesses Can Make the Most of U.S. Stimulus Aid in 2024

Small businesses are the lifeblood of the U.S. economy, accounting for over 99% of all firms and employing nearly half of the nation‘s private workforce. But they‘ve also been among the hardest hit by the economic fallout of the COVID-19 pandemic, with over 70% reporting negative impacts and many shutting their doors permanently.

Recognizing the vital role small businesses play in driving growth, job creation and innovation, the U.S. government has enacted a series of sweeping stimulus measures aimed at helping them weather the storm. The most recent package, passed in late 2023, includes over $1 trillion in financial assistance and tax breaks earmarked for small to mid-sized firms.

But with so many complex and evolving programs, it can be challenging for small business owners to keep track of what‘s available and how to take advantage. In this guide, we‘ll cut through the noise and provide actionable, expert advice on leveraging stimulus aid to survive and thrive in 2024 and beyond.

Loans & Financing

One of the centerpieces of the 2024 small business stimulus is an expansion of low-interest, forgivable loan programs administered through the Small Business Administration (SBA). These programs aim to provide affordable working capital to help businesses maintain operations, retain workers, and invest in growth. Here‘s what you need to know:

Paycheck Protection Program (PPP) Loans

The hugely popular PPP, which offers forgivable loans to cover payroll and other key expenses, has been replenished with an additional $300 billion in funding for 2024. Key updates include:

• Maximum loan amount increased to $3 million (up from $2 million)
• Expanded eligibility for certain hard-hit sectors like hospitality and tourism
• Streamlined forgiveness process for loans under $250,000
• Option for a second draw loan for businesses that have exhausted their initial PPP funds

To qualify for PPP loan forgiveness, at least 60% of funds must be used for payroll costs, with the remainder allocated to eligible expenses like rent, utilities, and supplier costs. Borrowers must also maintain employee headcount and salary levels, with some exceptions for rehires.

PPP Loan Terms	2024
Max loan amount	$3 million
Interest rate	1%
Loan term	5 years
Deferment period	10 months
Forgiveness	Up to 100%

Source: U.S. Small Business Administration

Economic Injury Disaster Loans (EIDL)

The EIDL program provides low-interest, long-term loans of up to $2 million to help small businesses overcome temporary revenue losses and fund operating expenses. For 2024, the SBA has:

• Extended deferment period to 24 months (up from 12 months)
• Raised maximum loan amount to $2 million (up from $500,000)
• Expanded allowed uses to include payment of federal business debt
• Waived affiliation rules for businesses with multiple locations

EIDL funds can be used for working capital, inventory, equipment, and other ordinary business expenses. While not forgivable, they offer generous repayment terms of up to 30 years and interest rates as low as 2.75% for nonprofits and 3.75% for businesses.

SBA 7(a) and 504 Loans

In addition to PPP and EIDL, the SBA is also bolstering its flagship 7(a) and 504 loan guarantee programs, which can be used for a wide range of purposes including real estate, equipment, inventory and other investments.

The 7(a) program offers loans up to $5 million, with a maximum interest rate of Prime + 2.75% and terms up to 10 years for working capital and 25 years for real estate. The SBA has also increased its guarantee to 90% (up from 75-85%) to incentivize more lending.

The 504 program provides long-term, fixed-rate financing of up to $5.5 million for major fixed assets like real estate, facilities and machinery. Interest rates are pegged to an increment above the current 5- and 10-year U.S. Treasury yields.

Pro Tip: When shopping for an SBA loan, don‘t just focus on the interest rate. Also consider factors like term length, fees, collateral requirements, and prepayment penalties. Consult with multiple SBA-approved lenders to compare offers and find the best fit for your needs.

Tax Breaks & Incentives

In addition to loans, the 2024 stimulus package also includes a number of juicy tax breaks and incentives for small businesses. Here are some of the key provisions to be aware of:

Employee Retention Tax Credit (ERTC)

The ERTC, which rewards businesses for keeping workers on payroll, has been extended through the end of 2024. Eligible employers can claim a refundable credit of 70% on up to $10,000 in qualified wages per employee per quarter. That means a potential tax savings of up to $28,000 per employee for the year.

To qualify, businesses must have either:

1. Been fully or partially suspended due to government orders related to COVID-19, or

2. Experienced a significant decline in gross receipts compared to 2023.

Wages covered by PPP funds are not eligible for the credit.

Paid Leave Credit

The stimulus package also extends tax credits for employers who voluntarily provide paid sick and family leave to employees through the end of 2024.

Covered leave includes time off related to:

• An employee‘s own health needs, including COVID-19 illness or quarantine
• Care for a family member
• Childcare due to school or daycare closures

Employers can claim a credit for 100% of the wages paid, up to $511 per day for personal leave and $200 per day for family leave. The maximum credit is $12,000 per employee.

Other Business Tax Breaks

Additional tax incentives in the 2024 stimulus bill include:

• An extension of the Work Opportunity Tax Credit, which provides up to $9,600 for hiring workers from certain disadvantaged groups like veterans and ex-felons.
• Full deductibility of business meals through 2024 (up from 50%)
• Expanded deductions for facility improvements and renovation costs
• Bonus depreciation for equipment purchases, allowing full write-off in the year placed in service

Tax Tip: Don‘t wait until tax time to start thinking about these credits and deductions. Meet with your accountant or financial advisor now to develop a proactive strategy and ensure you have the necessary documentation to claim every dollar you‘re entitled to.

Targeted Industry Grants

For certain industries that have been disproportionately impacted by the pandemic, the stimulus package also sets aside special grant funding. These include:

Restaurant Revitalization Fund

This $50 billion program provides direct grants of up to $10 million to eligible food and beverage businesses, including restaurants, bars, caterers, and tasting rooms. Grant amounts are based on the difference between a business‘s 2023 and 2022 gross receipts, minus any PPP funds received.

Funds can be used for a wide range of expenses, including:

• Payroll (excluding owners‘ draws)
• Mortgage, rent and utilities
• Maintenance and construction of outdoor seating
• Supplies, inventory and protective equipment
• Normal food and beverage costs
• Operational expenses

The SBA will prioritize grants to women-, veteran- and minority-owned businesses, as well as those with under $500,000 in annual revenue.

Shuttered Venue Operators Grant

Live entertainment venues, museums, movie theaters and other cultural institutions can apply for grants worth up to 45% of their 2022 gross earned revenue, with a maximum of $10 million. To be eligible, applicants must have experienced at least a 25% drop in revenue between 2023 and 2022.

Allowable expenses include payroll, rent, utilities, inventory, insurance, advertising, production costs, and capital expenditures related to meeting safety protocols. Initial grant funds must be spent within the first year, with a potential supplemental grant available for 50% of the original amount.

Industry Insight: Even if your business doesn‘t qualify for these targeted grants, you may be able to tap into other industry-specific relief programs at the state or local level. Check with your industry trade association and local business development organizations to learn about additional funding opportunities.

Strategic Planning & Advice

With so many stimulus options on the table, it‘s critical for small business owners to approach this aid thoughtfully and strategically. Here are some key considerations and best practices to keep in mind:

Assess Your True Need

Just because funding is available doesn‘t necessarily mean you should take it. Before applying for any stimulus program, take a hard look at your current financial situation and forecast for the coming year.

• How much cash do you realistically need to sustain operations and invest in growth?
• What is your current debt load and ability to repay new loans?
• Are there other sources of capital you could tap first, such as personal savings, lines of credit or investment from friends and family?

Remember, even forgivable loans like PPP come with strings attached and require careful tracking and documentation. Don‘t take on debt you don‘t truly need.

Prioritize Your Greatest Needs

Once you‘ve determined your funding needs, prioritize them based on your most critical pain points and growth opportunities. For example:

• If cash flow is your biggest challenge, an EIDL or 7(a) working capital loan may be your best bet.
• If you‘re struggling to retain workers, the ERTC or PPP could provide vital payroll support.
• If you need to invest in new equipment or technology to adapt to changing market conditions, a 504 loan or special tax incentives might fit the bill.

There‘s no one-size-fits all approach. Focus on the programs that will have the greatest impact on your specific needs and goals.

Get Your Ducks in a Row

Applying for stimulus aid can be a time-consuming and document-intensive process. Before you dive in, gather all the necessary paperwork and data, such as:

• Financial statements and tax returns
• Payroll records and headcount data
• Revenue and expense documentation
• Lease agreements and utility bills
• Relevant licenses and certifications

The more organized and prepared you are upfront, the smoother the application process will be and the faster you‘ll get funded.

Keep Meticulous Records

Proper recordkeeping is absolutely essential for demonstrating compliance with stimulus program rules and avoiding potential penalties down the road. For each program you participate in, maintain clear and comprehensive records of:

• How much funding you received
• When you received it
• Exactly how it was used
• Any relevant supporting documentation

If you‘re claiming tax credits, make sure you understand the specific eligibility criteria and have all necessary forms and worksheets to back up your claims. When in doubt, consult with a qualified tax professional.

Invest in the Future

While it may be tempting to use stimulus funds to plug short-term holes, don‘t lose sight of the bigger picture. Where possible, look for opportunities to invest in your business‘s long-term growth and resilience. That might mean:

• Upgrading your technology and digital capabilities
• Developing new products or services to meet evolving customer needs
• Investing in employee training and development
• Exploring new markets or distribution channels

By using this aid strategically, you can not only survive the immediate crisis but emerge stronger and better positioned for the future.

Seek Expert Guidance

Finally, don‘t be afraid to ask for help. The stimulus landscape is complex and constantly evolving, and even the savviest business owners can benefit from expert guidance. Some valuable resources to tap include:

• SBA district offices and resource partners like SCORE, Small Business Development Centers, and Women‘s Business Centers
• Local chambers of commerce and economic development organizations
• Industry trade associations and professional networks
• Accountants, lawyers, and financial advisors with expertise in small business relief programs

The Bottom Line: The 2024 stimulus package offers unprecedented support for small businesses, but it‘s up to you to make the most of it. By being proactive, strategic, and shrewd, you can leverage this aid to not only survive but thrive in the face of ongoing economic headwinds.

No matter what challenges the future holds, one thing is certain: small businesses will continue to be the beating heart of the U.S. economy. With the right resources, guidance and grit, there‘s nothing they can‘t overcome.