As the devastating impact of COVID-19 continues to make itself felt across the world, one of the most pronounced effects has been economic.
A record number of small and medium-sized businesses can no longer afford to make payroll for their employees.
This means that businesses are faced with the difficult choice of whether or not to let their valued employees go.
However, if you’re wondering how to pay employees during the current crisis, there are options available to you.
Both federal and state government bodies have put together unprecedented resources for businesses that are struggling with making payroll.
Here’s what you can do to continue paying your employees during the current economic turmoil.
Apply for PPP
If you’re worried about how to pay employees in a small business right now, the first thing you should do is file an application for the federal government’s Payment Protection Program (PPP).
Launched in March this year, PPP is part of a $699 billion loan initiative designed to help businesses cover payroll costs and keep employees on-board.
Any business with less than $1 billion in assets can apply, so don’t waste any time with your application.
Apply for the SBA COVID-19 Disaster Loans
If you have been unable to access PPP funding, the Small Business Administration has resources that can help.
Their bespoke COVID-19 Disaster Loan program offers low-interest loans of up to $2 billion to small businesses.
This money can be used to cover payroll, service debts, and pay bills and outstanding invoices.
Note that these loans are only available to businesses that can prove they tried to obtain credit elsewhere but failed.
Consult Local Small Business Resources
For those wondering how to make payroll who haven’t been able to access federal money, it pays to look locally.
Numerous states and city authorities have created their own emergency funds to help small businesses pay their employees.
Washington State has launched a tax credit and relief system to help struggling businesses. With so many small businesses already struggling with their taxes, this could be a godsend.
Meanwhile, New York City is offering interest-free loans of up to $75,000 for businesses facing financial difficulties. Check your state and city authority websites to see what is on offer.
Use Traditional Financing Options
We might be in an unprecedented economic crisis, but that doesn’t mean that you can’t use the old fashioned financing options.
To make payroll, you can apply for a line of credit from a bank or lending institution to see you through.
You can use an invoice factoring service to get advance payments on your unpaid invoices. You can put assets up as collateral for payroll financing. The list is endless.
Inform Employees of Their Options
Finally, it is worth leveling with your employees and setting out what their options are if you cannot afford to pay them.
As a business owner, you have a responsibility to take care of your employees in these difficult times.
Offer assistance in helping them apply for unemployment benefits if needed. Provide information on government resources such as the CARES act, which allows laid-off workers to access their 401K without penalty.
When all of this is over, your employees will thank you for it.
Learn How to Pay Employees the Right Way
However you decide to cover your employees’ payroll, it is vital that you do it the right way.
If you want to know how to pay employees in a way that is professional and above-board, make sure to get in touch for more information on our cutting-edge bookkeeping services today.