Preparing for relief funding or grants

Preparing for relief funding or grants

Elevate Hennepin financial management advisors shared some of their best practices to prepare for relief funding or grants in a crisis.

Advisors Lee Hall and Hiromi Yokoi, from NextStage, and Kathy Pyle, from Clear Talk Accounting, say the most important things are preparedness, responsiveness, and clarity.

The first thing to do when preparing for any relief or recovery funding is read through the guidelines and ensure that you’re collecting the right documents. Most funds, however, require some basic financial documentation, as Kathy says, namely a tax return.

“They absolutely need a signed tax return from one of the last two years. And signed is important because I could go out today and just make a tax return,” said Kathy. “Most people will have a Schedule C with their 1040. You’ll need both of those.”

For many relief funds, like the Hennepin County Small Business Recovery Fund, owners also need to prove an impact on their business.

Kathy said most owners will need a “a profit and loss statement showing they have either lost revenue, or your expenses have gone up or something else.”

Lee said there are multiple ways to show that there has been an impact, and period- or accrual-based accounting is a real help because it shows that whatever impact was actually caused by the crisis, not an ongoing issue.

“You need to be able to demonstrate that this isn't an issue with your business, that this is an issue with changing factors and the best way to do that is clients who have good accrual-based period accounting. If you can show this is something abnormal, not the underlying business,” said Lee. “If you're a business that your accounting is, I take a shoebox to my accountants every April. There's no way you can do that.”

If a business isn’t accounting in this way already, he said there are other ways to verify an impact via a third-party source.

“No one can take your word for it,” said Lee. “If you file monthly sales tax reports with the Minnesota Department of Revenue, can you demonstrate an impact there? If you have a point-of-sale system, we can look at to verify the impact and tie it to a specific date.”

Double check everything before applying

When a business owner pulls the right documentation for the relief or recovery opportunity, Hiromi says they should take the time and double check everything accurate, then send.

“Just check spellings before you hit submit. I see a lot of misspelled addresses, I see email addresses in the phone number field,” said Hiromi. “Things like that mean the administrators need to contact you or send your information back for an update.”

That will slow down an application and potentially put it at the bottom of the queue and affect the potential to get funding at all.

Grants often have more applications than funding, and the process moves relatively quick. Reviewers just do not have capacity to chase missing documents. If something is wrong, or a document is missing, advisors say owners should be ready to respond.

Once an owner submits all the right documentation and it’s in process, Hiromi asks for time and trust.

“Trust that we’re working on it. Your application is not just going to sit there,” said Hiromo, noting that she routinely gets questions days or even hours after an owner submits their documents asking where the money is.

A realistic timeline to receive funds  is 40 to 60 days. So, business owners should ensure that they have a plan to make it through the near term. That can be anything from a small loan, renegotiating key operating costs like rent and inventory, or working with vendors on payment plans.

No matter what kind of grant or relief a business owner is looking at, all three advisors stressed the importance of reaching out for help. Elevate Hennepin advisors are ready to support business owners as they prepare for and apply for funding.