We’ve all felt the impact of COVID-19 on our personal lives, both financially and emotionally. But for small business owners, the pandemic packs an extra punch.
According to a survey performed by the National Federation of Independent Business, about half of small business owners said they’d be unable to continue operations for more than two months without help. Impacted entrepreneurs are experiencing slower sales, supply chain disruptions and, of course, concerns about employees contracting the illness — and that’s all on top of figuring out how to keep their doors open.
Fortunately, there are steps small business owners can take to help their companies come out of this quarantine on the right side of the proverbial dirt.
Just as you use masks and hand sanitizer to help you survive the pandemic personally, here are some tools to help your business make it out alive, too.
1. Apply for emergency funding
The coronavirus has led to unprecedented economic pressures — which is part of why the CARES Act contains $376 billion in relief measures for American workers and small businesses. In addition to traditional funding options, the CARES Act established some new, temporary assistance programs specifically in response to COVID-19.
- The Economic Injury Disaster Loan (EIDL) program provides a cash advance of up to $10,000 — which does not have to be repaid.
- The Paycheck Protection Program expands SBA 7(a) loans to provide loan forgiveness to business owners who keep all their employees on the payroll for eight weeks.
- SBA Express Bridge Loans allow small business owners who have an established relationship with the SBA to gain quick access to up to $25,000, which will be repaid in full or in part by proceeds from the EIDL loan.
- The administration is also providing debt relief in the form of paying six months’ worth of principal, interest and associated fees owed by eligible borrowers.
Additionally, the U.S. Chamber of Commerce Foundation has created the Save Small Business Fund, which will provide $5,000 grants to small businesses employing between three and 20 people. Certain states and cities have also set up their own lending programs, so it’s worth scoping out what’s available in your specific location.
Of course, in all cases, applying for emergency funding will require many of the same steps as applying for any small business loan. Even though it may involve a lot of time, energy and paperwork, do it anyway: Chances are you’ll find it’s well worth the red tape in the long run.
2. Look for alternative financing options
If emergency funding won’t cut it (or it’s taking too long to go through), traditional funding from a local bank or credit union is a great start. However, there are alternative financing options to consider as well. Online lenders often have less stringent approval guidelines, though you’ll likely see higher APRs and fees.
Since the economy has turned down for just about everyone, you may have less success seeking a loan and your creditworthiness might be under more scrutiny than before the virus. It may be worthwhile to consider a completely different approach, like crowdfunding (think Kickstarter or GoFundMe) or even asking friends and family if they’re willing to help directly.
3. Cut expenses
If you can’t make as much money as you used to, the next best move is to spend less of it — which means looking for non-essential services and expenses and cutting them for the time being. This may include:
- Allowing employees, if possible, to continue to work at home, so as to minimize operating costs (and also encouraging social distancing practices).
- Adjusting certain employee schedules from full-time to part-time, if necessary. This may also reduce your contributions to certain benefit plans, like retirement or health insurance.
- Minimizing the purchase of any perishable materials and ingredients you may use to make your products, and focus on goods with a long shelf life.
- Reconsidering any large expenses that you may have budgeted for before the pandemic in order to increase cash flow elsewhere.
- Delaying or postponing certain projects or initiatives that require the input, and payment, of independent contractors.
4. Renegotiate your contracts and debt
While you likely want to maintain good relationships with as many of your contacts as possible, if there were ever a time to put on your negotiating hat, the coronavirus outbreak is it.
Consider reaching out to suppliers, vendors and even your landlord to learn whether there might be a way to rearrange existing contract terms. It may even be worthwhile to seek out new relationships with companies that are better able to meet your budget needs.
This might also be a good time to consider refinancing any high-interest business debt you may have, or to consolidate multiple lines of credit into one to make for easier payments (and potentially cost savings, too).
Unsecured lines of business credit can be used for this kind of consolidation, and generally offer higher limits and lower rates than business credit cards. As lenders are tightening their belts, be sure to explore all funding alternatives so you can make an educated decision.
5. Keep driving business
Although your previous business model might not be viable in this brave new world of ours, you might be able to find new ways to connect with customers, like partnering with other local businesses to provide unique products or experiences.
For some businesses, shifting your mode of advertisement could be a big enough boost. If you’ve focused on billboards, for instance, finding some online ad space may be more likely to get eyeballs in front of your product during the quarantine period.
Finding new ways to drive business may take time and brainpower, but it’ll help you create sustainable cash flow now — and increase your client base once the pandemic is over.
6. Think outside the box
While expanding your clientele is one thing, many business owners may also benefit from more substantial shifts to their product. Restaurants who can’t serve a dine-in crowd can consider packaging ingredients for their signature meals so adventurous foodies can try their hand making it at home.
You may even be able to adapt your product to provide relief for others who are struggling — bars can consider making and selling hand sanitizer and small manufacturers may be able to produce personal protective equipment like face masks.