Can Young People Start Successful Businesses?   

There is a growing trend of encouraging young people to be their own boss and start some sort of “hustle” to help them earn their own money. But can young people start successful businesses? The post Can Young People Start Successful Businesses?    appeared first on Young Upstarts.

Can Young People Start Successful Businesses?   

There is a growing trend of encouraging young people to be their own boss and start some sort of “hustle” to help them earn their own money. Is this a legitimate way to do business and how easy is it for a young person to be taken seriously when they first launch a company?

Let’s take a look.

Drive.

The world of work has shifted monumentally in the past few decades. One of the clear areas where this has happened is with university applications. Whereas university once used to be for the elite, more and more people are studying these courses now and it is thought to be just another part of the education system. With many high-paying jobs needing degrees as standard, many students are left to look elsewhere in a competitive job market.

Many therefore turn to the idea of starting their own business. They have the drive and ambitions to do so, and they are ready to put in the work needed to push a business ahead. With the right drive and determination, they can create a thriving business that is pushing forward and allowing them to pursue a career that otherwise would have been very difficult.

Investment.

Every business needs capital to help it take off. Luckily, many top businesses from Tej Kohli Ventures to Kindred Capital are allocating funds specifically towards investing in the businesses of tomorrow.

These investors recognise that many of the top ideas are beginning to come from this younger generation. By choosing to put their money towards these ventures, they are providing the funding many need to get their start. At the same time, young business owners are getting the capital they need to make their businesses the best they can possibly be.

Internet Literacy.

We are slowly beginning to see the emergence of a generation that has never known life without the internet. As they begin to enter the workforce and set up their own businesses, we are likely to see some major shifts occur.

This generation can pick up new concepts and ideals incredibly easily. From new pieces of technology to philosophical and ethical concepts, they are viewing the world in a way that is very different to how older generations do. As they set up their own businesses and begin to make some changes to this world, they are likely to bring some extremely new changes to them which could shape the world of business forever.

Can young people run successful businesses? Of course they can! They are just as capable as someone from an older generation when it comes to running a business in this field. As their businesses flourish and grow, it is likely that we will see some amazing changes occurring. Keep your eyes on the world of business for the next decade or so. As young people become more of the workforce, they will bring great things with them.

The post Can Young People Start Successful Businesses?    appeared first on Young Upstarts.

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New Treasury Guidance Provides Safe Harbor for PPP Loans

For companies that received funds but were worried they could be subject to SBA or Treasury audits or potential penalties and damages, these new guidelines provide welcome relief. The post New Treasury Guidance Provides Safe Harbor for PPP Loans appeared first on AllBusiness.com. Click for more information about Neil Hare. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.

New Treasury Guidance Provides Safe Harbor for PPP Loans

As small business owners begin looking towards applying for forgiveness of their SBA Paycheck Protection Program (PPP) loans, the Treasury Department issued highly sought-after guidance on May 13, providing a “safe harbor” from audits or penalties for companies that received a loan under $2 million.

The new guidance was posted in an updated version of PPP loan FAQs. The guidance states the following:

Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity.

Previous to this guidance, many companies were worried that under the “good faith” certification requirement on the PPP lending application, they would be subject to SBA or Treasury audits and potential penalties and damages. The PPP loan application requires the borrower to certify in “good faith” that they are requesting the loan due to “economic uncertainty,” and that they have no access to credit elsewhere. Traditional SBA loans require written documentation that the borrowed tried and failed to access credit from other sources.

With no real definition of “good faith” or “economic uncertainty” in a business environment that no one in either the private or public sector has seen before, business owners were concerned about their future legal exposure. While it defied credulity that the government would have the bandwidth to audit many loans or the political will to narrowly define “economic uncertainty” after it shut down the economy, business owners were nevertheless concerned.

This anxiety was further exacerbated by media reports that publicly traded companies and major brands like Shake Shack, Sweetgreen, the LA Lakers, and Harvard University received PPP loans when seemingly they would have access to capital elsewhere. Many of these companies and organizations returned the funds, while others did not. The negative press also had a chilling effect in which the flow of loan applications and amounts requested slowed down, leaving many billions of dollars left in the program, for better or worse. This is partly because smaller firms are finally in the queue for PPP loans, which is good, but the entire point of the program was to introduce liquidity into the economy and to protect workers’ wages. Therefore, having this money sit on the sidelines is not helpful to businesses, workers, or the U.S. economy.

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It is worth noting that these larger brands met the requirements of the PPP program but still faced pressure from the court of public opinion. Arguably, the shutdown of the NBA season caused plenty of “economic uncertainty” for the Lakers, along with no real end in sight for social distancing, making attending sporting events unlikely well into the future. The team is not, however, a mom-and-pop corner shop, so perhaps the backlash was justified.

Based on the new guidance, businesses with loans under $2 million no longer have to worry about an audit or possible penalties for not meeting the “good faith” requirement. And, while loans over $2 million might be scrutinized or audited, there will not be severe penalties or criminal charges, outright fraud excepted. The worst-case scenario would be a request to repay the loan with interest.

The new guidance did explain that for all borrowers, there could still be scrutiny that the loans were used appropriately to meet the forgiveness requirement: 75% for payroll and 25% for expenses such as rent, mortgages, utilities, and interest payments, tracked for 8 weeks immediately after receipt of funds. If lenders or the government determine the borrower did not use the funds as such, a portion of the loan could potentially not be forgiven and could convert into a 2-year loan at 1% interest. However, banks do not want to carry small, 1% loans on their balance sheets, nor does the government want to encumber small firms with debt, so the overwhelming majority of these loans should be forgiven if administered correctly.

Despite this much-needed safe harbor, many questions still remain about PPP loan forgiveness, which will hopefully be answered in future Treasury guidance. Meanwhile, on May 15 the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, a new relief bill worth $3 trillion. The legislation does look to change some of the PPP requirements that have elicited objections from small business owners. This includes expanding the current 8-week period to use the funds to 24 weeks instead; reducing the 75% payroll requirement; extending the PPP program through the end of the year; and making 501c(6) organizations like chambers of commerce as well as small media companies also eligible for PPP. And, if the Republicans in the Senate have their way, any new legislation will include a new safe harbor for potential lawsuits against companies based on Covid-19 along with no additional funds for PPP until the current round is exhausted and its benefits measured.

One additional relief measure on the horizon is the Main Street lending program. This will look like a traditional loan and have an application process with lending institutions with standard due diligence. The loan amount will be a minimum of $500,000, so it is aimed at larger firms. Eligibility requirements for the Main Street program are still evolving.

In the meantime, this new safe harbor will hopefully lead to many more small businesses feeling more confident about applying for and receiving PPP funds, with less worry about problems down the road.

RELATED: Loan Forgiveness Under the PPP and SBA EIDL Programs: 10 Things Small Businesses Need to Know

The post New Treasury Guidance Provides Safe Harbor for PPP Loans appeared first on AllBusiness.com. Click for more information about Neil Hare. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.

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