While the Covid-19 pandemic has affected every American citizen differently, small businesses owners have been hurt the worst financially by this crisis. Unlike large corporations, small businesses do not have the financial capital necessary to withstand months of being shut down. If you are a small business owner right now, you may be panicking. Before you lose hope, however, you need to know that although difficult, it is entirely possible to hamper the effects of the Covid-19 crisis on your small business by following a few simple guidelines. There are both short term and long term guidelines listed below. If you successfully follow many of the strategies listed, you will be well on your way to saving you and your business from a lot of stress and financial struggles.
Small Business Loans and Financing Options During The Covid 19 Pandemic
The most important short term strategy to help your small business financing is applying for a loan from the Small Business Administration (SBA). On March 27, 2020, President Trump signed the CARES Act into law, effectively providing more than $300 billion in relief to small businesses who were struggling financially from the effects of the Covid-19 crisis. Since then that money has run out, but Congress is currently working on the final details of a new bill that will supply even more funding for small businesses who are most in need. Until the economy is back on track, and small businesses have adequately recovered, it is a safe bet that the federal government will continue to provide loans to small businesses. You should definitely take advantage of these loans, as they will help your small businesses cope with the effects of the Covid-19 pandemic while it is still affecting the United States economy.
In the long term, it is a good idea as a small business owner to explore all your capital access options. Although an SBA loan may help you in the short term, they will not be around for years. The fallout from the Covid-19 crisis, however, may indeed affect your small businesses for a year or more. This is why you need to have several capital access options. Explore and develop a plan to help you access additional capital for the next 12-18 months. Many of these options may involve a loan. Other options could include taking from you personal savings. The worst thing that could happen to your small business is running out of money; that is why it is so important to have a plan in place to access more capital if you find yourself short on cash in the coming months.
Another important thing to keep in mind in the long term is potential supply chain shortfalls. This is most relevant for small businesses who have suppliers in or around China, but it affects other small businesses as well. To protect your small business from possible supply chain shortfalls, you should seriously consider taking in additional inventory. By doing this, you can prevent the total destruction of your business if your supplier is forced to shut down because of Covid-19. Additionally, you can diversify your suppliers to help prevent supply chain shortfalls. By spreading out your suppliers across the United States and the globe, you will protect your small business from shutting down if one area is hit particularly hard with Covid-19.
There are numerous other tips that you can follow as a small business owner to help protect your small business from collapsing during the Covid-19 crisis. However, if you follow the 3 guidelines listed above, you will be helping to prop up your small business in the short term, and mitigating risk in the long term.
Additional Small Business Financing Resources
The author of this article is Patrick, with editorial contributions from Don