4 Key Things Every Small Business Must Know About COVID-19 Grants and Loans
Government relief programs have been a lifeline for many small businesses during the COVID-19 pandemic. Between federal stimulus packages, state programs, and local initiatives, billions of dollars in grants and loans have been made available. But as with anything involving Congress, agencies, and paperwork, there are hidden pitfalls and rules you can’t afford to miss.
After years of working with both federal and state grants, I’ve seen the good, the bad, and the ugly. To help you navigate today’s relief options, here are four key things every business owner should keep in mind when applying for or managing government assistance.
1. Use the Money for Its Intended Purpose
This may sound obvious, but it’s critical. If the funds are designed to cover payroll, rent, or utilities, don’t get creative. Misuse of funds can trigger investigations, repayment demands, or worse. Many programs have strict reporting requirements, and agencies will check how you used the money. Treat it like a trust account—keep clear records and spend only on approved expenses.
2. Watch Out for Duplication of Benefits
Duplication of benefits happens when a business receives overlapping funds from multiple programs for the same need. For example, some grants automatically deduct what you could have borrowed under a loan program—even if you declined the loan. This means that by applying to multiple programs, you might actually reduce your overall support. Read the fine print carefully, ask questions, and make sure you understand how one program affects another before signing on.
3. Be Proactive With Paperwork
Don’t wait for the government to come to you. Relief programs are notoriously chaotic, with limited windows for filing and human error along the way. To avoid delays or losing eligibility, you need to:
- File paperwork promptly
- Respond quickly to calls or emails from program administrators
- Keep organized records of every submission
The businesses that stay proactive are usually the ones that get through the process smoothly. Those who drag their feet often end up stuck in limbo for months.
4. Understand the “Clawback” Risk
Nearly all government relief programs have a clawback provision. This means that months—or even years—after you receive funds, the government can review your case and demand repayment if they believe you misused the money or didn’t file the proper paperwork. It’s not always about fraud; sometimes it’s simply about incomplete documentation. That’s why it’s so important to keep records and use funds as directed.
Bringing It All Together
Relief programs are designed to help small businesses survive tough times. But navigating them takes more than filling out an application. By using funds properly, avoiding duplication, staying proactive, and preparing for clawback reviews, you’ll protect your business and maximize the support available.
At Benton Oakfield, we work closely with business owners to make sure their benefits and support strategies align with both today’s challenges and tomorrow’s opportunities. If you’d like help reviewing your options or setting up a compliance strategy, reach out—we’re here to make sure you stay on solid ground.