Thousands of companies have gone out of business in the year since COVID-19 was declared a pandemic. Governments around the world were required to impose restrictions that cut off a wide variety of economic activity. Companies have just started to rebound from that shutdown. Many of them have also tried to blunt the impact of those shutdowns by passing large spending programs. In the United States, one of these programs is the COVID-19 economic injury disaster loan. These loans, secured with the help of small business accounting partners, can mean the difference between success or failure for a large number of American businesses.

Was my business damaged by the pandemic?

The first question to determine is if a company’s business has been directly affected by the pandemic. There is a significant slice of the American economy that has not been seriously affected. Thousands of companies have survived and even thrived in the past year. These companies will not have ready evidence showing that they are in need of a significant loan. In such a case, obtaining a loan may end up harming them. They may have to pay taxes, fees, and considerable interest. There may even be legal issues if they do not work with the right small business accounting partner and prevent these problems from occurring. But unfortunately, the vast majority of businesses do not have to worry about this. There is no question that they have been severely impacted by the pandemic over the past year.

Thousands of businesses such as bars, gyms, and retailers were simply not allowed to stay open for a significant portion of last year. They were forced to close and then their activities were severely curtailed when they did reopen. These businesses had to detail with capacity limits and always faced the threat of another shutdown if the pandemic got worse in their state or local area. This information is often quite clear on their balance sheets and accounting and bookkeeping services Carmel CA will help them prove it to the federal government.

What was the scale?

There is also the question of scale. These loans take time and energy to process. A company has to go through a considerable amount of effort to prove to the government that they were affected by the pandemic. They have to collect information from multiple sources. Companies also have to use the money in particular ways and to track its usage in order to avoid a wide variety of fees and penalties. This effort takes precious time that a company often does not have in reserve.

As a result, companies need to understand from their small business accounting partners the amount of time processing and understanding a loan will take. They need to balance that time against the actual size of the loan and the ways in which the pandemic affected their business. There is always an inflection point where the loan is simply not worth the time and effort required to manage it.

The role of small business accounting

The two questions above are essential for answering the question of if a company should apply for one of these loans. If they did suffer major damage from the pandemic, they should certainly apply for a loan. There are few instances in which a generous loan from the government would be worth more trouble than it took. As mentioned above, there is an inflection point for these loans that a company can ascertain from their small business accounting partner. But for the vast majority of companies, they should focus on receiving the loan as quickly as possible.

First, a company needs to get together with their small business accounting partner. The accountant can help them analyze their finances and determine the losses related to the pandemic. They can help a company compile all of the information required to submit to the government and prove that they are in need of federal funds. Then, a company needs to apply for the money. Once it is received, it should be spent in the way that the company told the government it would be spent for. Receipts should be collected and information verified. In some cases, money from these loans is used to retain staff that would otherwise be

Finally, a company needs to work with their small business accountant over the next several months in order to track their performance and the general success of their business. Companies may need additional help in the form of more loans. There may be shifts in the disaster loan law that extend the eligibility a company may have. Extending eligibility may allow that company to secure another loan that a company may not have otherwise been able to secure. Such a loan can help if a company is not bouncing back the way they had originally planned.


Companies are often in search of loan and funding sources. Securing emergency and long-term loans is one of the most essential skills that most company leaders cultivate over a long period of time. In the case of the pandemic, the government has offered itself to thousands of businesses as an emergency lender. It can make sure that companies retain employees and that they are able to survive and thrive into the next few years. Retaining the right accounting and bookkeeping services Carmel CA can be the key step to ensuring that a company exits the pandemic stronger than when it first started.