If you are a business owner, you likely have experienced some of the impacts that the COVID-19 pandemic has had on the world. COVID-19 has negatively impacted the economy, sending it into one of the worst recessions ever.
Most business owners were not ready to handle the dramatic impacts that the coronavirus has had on the economy. If you are a business owner and do not know where to turn, don’t panic. There are loads of different resources available to you to make it through the current situation we are in.
Take Advantage of the CARES Act
If you have been following the news (which you should be!) then you likely have heard about the CARES Act that was recently passed. The CARES Act is a $2 trillion-dollar stimulus package that was passed to combat the economic impact of COVID-19.
The act will mainly impact seven groups: large corporations, small businesses, individuals, healthcare organizations, educational institutions, local government, and the federal government. In this piece, we are interested in how it can help small businesses.
- Apply for an Economic Injury Disaster Loan, or EIDL. An EIDL loan has a low-interest rate of 3.75% and generous repayment plans. The biggest draw of the EIDL loan is the $10,000 immediate advance that will not need to be repaid. Apply for an EIDL loan here.
- Apply for a Payment Protection Plan Loan, or PPP. The PPP was probably the most talked-about section of the CARES act. The PPP allows business owners to take out a loan that is equal to two months of their average payroll from 2019, plus an additional 25% on top of that. This loan will be designated for owners to pay their payroll, benefits, taxes, and more. Find a PPP lender here.
- The last type of loan that was introduced via the CARES act is the Express Bridge Loan. An express bridge loan will provide businesses with quick funding. This loan is meant to suffice a business until their EIDL loan is approved.
- If your business already has an SBA loan you may be eligible for debt relief. Only specific loans will qualify for debt relief. Here is a brief overview of what loans are eligible for debt relief.
If you do need one of these new loans, make sure to apply now, many banks are freezing new applicants and experts are unsure of how many small businesses will actually receive funding.
Continue to Operate in Some Capacity
Depending on the industry that your business is in, it may be impossible to remain open during the COVID-19 epidemic, but if you are lucky enough to be deemed an essential business, you should try to remain open.
Obviously, you will have to adjust how your business operates to maintain healthy cash flow during the duration of social-distancing.
The first step your business should take when deciding to stay open is to do a deep dive into your current financial situation, and come up with a cash flow forecast. This will help mitigate any big risks that your business may encounter. Any great leader should know how to plan.
Once you have your plan in place the next order of business (pun intended) is to figure out how to best serve your customers effectively and efficiently. Look at what others in your space are doing and try to emulate their efforts. Place an emphasis on online ordering, delivery, and shipping.
Staying open will allow you to bring in some cash while also showing your customers that you care about them, which in turn will build loyalty.
Consider Grants or Alternative Funding
Loans are not the only option available for small business owners when it comes to funding. There are many options out there, but some will take some digging to find.
The first place to look if you are interested in applying for a grant is your local small business development center. They will often post news and updates about grants available to different businesses.
Be diligent when looking for grants, they often will come from places you wouldn’t expect. Facebook recently announced they would be offering grants and ad credits to businesses impacted by the coronavirus. Other companies like Facebook will be offering grants to help lessen the economic blow of the epidemic.
When looking, be mindful that grants are harder to come by than loans, as there are usually more stipulations and requirements.
Besides grants, other business loans are still an option. With loads of business owners flocking to the banks to apply for traditional loans, many big banks have had to turn away applicants. Online loan providers are a great option to look into during this troubling time. They typically will offer all the same loans that a traditional bank would, just online and with quicker approval times.
Either route you take, be sure to do your research into each type of loan or grant. You do not want to handicap the future of your business for a short-term win.
Final Words of Wisdom
Just remember to keep your head up during these tough times. During times of hardship, we must band together and work with one another to overcome challenges. If you feel like you need some assistance staying afloat, lean on your loved ones and friends. They likely will know of ways to help you out!