For a collection of molecules that is so incredibly small—one-thousandth the width of an eyelash, according to experts—the novel coronavirus has had catastrophic impacts for our economy. Nobody understands this better than small business owners and employees.
Last week, we provided some general tips and recommendations about how small businesses can brace for the impact of social distancing on their organization. Of chief concern among the 30 million small business owners in the United States is very likely where they will find the money to survive. In fact, according to small business network Alignable, nearly 70% of them have cash reserves that will last fewer than three months. As a second installment of our “Resource Roundup,” here are some suggestions and resources related specifically to small business financing:
I know my business needs financial help, but where do I start?
The first—and most important—step is to analyze your books and forecast the specific financial impacts COVID-19 will have on your business. Reviewing your cost structure, revenue stream, and expected decline are imperative in determining exactly how much help you need. SmartBooks, a Massachusetts-based small business accounting and finance firm, has published an extensive guide about modeling and managing the virus’ financial impact to your business.
What does the federal stimulus package mean for my small business?
The Senate unanimously passed a $2 trillion economic rescue plan on Wednesday, 3/25/2020, that will aid millions of Americans in need. The plan provides stimulus checks to most Americans (variable based on income), broader and quicker unemployment benefits coverage, and more. The New York Times has published a great article explaining the stimulus package and answering common questions, which can be found here.
$377 billion of this package is dedicated specifically to small business support, including a paycheck protection program that provides zero-fee loans of up to $10 million for businesses to pay employees, debt relief for existing and new SBA borrowers, and business counseling services. Click here for more information. Additionally, the US Chamber of Commerce has distilled this information into a handy guide and checklist for any small business looking to make use of these emergency loans.
I know I need a loan to get me through; where should I look?
The US Small Business Administration has set up a Coronavirus resource center to help small businesses understand their options. There are several different programs a business could leverage, including:
Disaster Loan Assistance: President Trump has declared Coronavirus a disaster in all 50 states.
Express Bridge Loans: For businesses who already have a relationship with an SBA lender.
Lender Match: A free referral tool that connects small businesses with participating SBA-approved lenders.
I’m not willing to take on a loan at this time. What else I can do?
There are several other options to consider:
First, check into any special funds or programs that your local municipalities have set up to help their businesses in need. For example, the city of Boston has established the Boston Resiliency Fund. While funding is available through these programs free of charge, grants are extremely limited, generally to companies who are critical care providers (think: first responders, food providers to children and seniors, remote technology providers to students, etc.).
Crowdsourcing is a great way to get immediate financial support from your loyal customers and personal connections to keep your business running. The US Chamber of Commerce has compiled several different crowdsourcing options, which include:
GoFundMe: Generally used for emergency and charitable causes. Patrons make donations to a company or cause, who gets to keep the funding, minus a 2.9% processing fee and $0.30 of each donation.
Kickstarter: Generally geared towards startups and new business ideas or projects. Kickstarter is “all or nothing,” which means that if you do not attain the fundraising goal you’ve set, your project will go unfunded. Businesses generally incentivize donors by providing a “return” once the goal has been reached. For example, once normalcy has returned, you could provide donors with a gift card in the amount they contributed, early access to a new product, or whatever you deem relevant to your company.
Indiegogo: Generally geared toward business needs, charities, or creative works. They offer both fixed (all-or-nothing) and flexible (you keep what you raise) funding options. Indiegogo usually charges a 5% fee, plus a 3% processing fee, plus $0.30 of each transaction. However, because of the COVID-19 crisis, they have set up a Local Business Relief Program and are waiving their platform fee for campaigns accepted into this program.
Organizations such as Facebook and Intuit Quickbooks are in the process of setting up grant programs to help struggling small businesses. While the grants would be free, obtaining them is a competitive process given the number of applications they expect to receive.
Credit Card Assistance
Many credit card providers are offering financial assistance based on hardship. Assistance is based on each cardholder’s individual situation but could include anything from lowering monthly payments, to late payment fee relief, to temporary interest rate reduction, to even payment deferral. Bankrate.com, a personal finance company, has collected a list of participating providers who are offering temporary relief solutions. Even if your bank or credit card company is not listed here, a quick phone call to them could be worth it to see how they can help you.
I’m stressed and scared. Where should I go for help beyond my business’s finances?
It’s natural to feel anxiety or fear during such uncertainly. However, you should never feel alone or helpless during this time of need. If you are unsure where to turn, many states have hotlines set up to get you free and confidential help for whatever you may need, from support groups, to government benefits, to childcare assistance and so much more. In Massachusetts you can dial 211 or search their online database for help. New York City’s helpline is 311. Wherever you may live and however you may feel, there are resources to support you. Do not be afraid to use them!