There’s no doubt that businesses are suffering across nearly every industry. And of course, none of us can say how long it’ll take for life to go back to normal in our country. The real question, though, is how on earth these small businesses can survive long enough to make it through this crisis.
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Nearly every single business in the country has been impacted in some way since COVID-related restrictions were put into place. Some of these companies are feeling the effects more than others, but according to a survey just released by WalletHub, a sad 87% of business owners say they are really hurting right now.
Restaurants have been forced to close or limit their business to carry-out and delivery only. Barbershops, coffee shops, gyms, theaters, florists, car dealerships, retail shops, and bookstores in many states have had to shutter their windows without any idea of when they can open.
In the meantime, these businesses and their employees are hemorrhaging funds. After all, the mortgages and electric bills must still be paid, and business owners have to choose between making payroll or laying off loyal workers out of pure necessity.
My parents own a small, family-run hotel in Texas, which has seen occupancy bottom out in the last few weeks amid travel and operation restrictions. They have managed to continue paying the staff, but aren’t sure how much longer this can continue… and they definitely aren’t alone.
In that same WalletHub survey mentioned above, 35% of small business owners said that their company cannot survive more than three months in the current climate. Unless things change, and fast, many of these hard-working businesses will fail.
What Small Businesses Can Do to Survive
While some may find it insensitive to worry about businesses when there is a worldwide pandemic on our hands, the fact of the matter is that both issues are very important.
A tsunami of small business failures would not only result in skyrocketing unemployment rates for years to come, but also have devastating impacts on our economy. Not only will the business owners lose their livelihoods, but so will their many employees. Their local and state economies will lose income, vendors will lose business, and customers will lose the services that these businesses once provided to their community.
So, what can businesses do right now to simply survive this crisis? Well, it depends largely on their specific industry and operating restrictions, but here are a few things to consider.
Apply for Aid
Thanks to the CARES Act that was just signed into effect by the President, small businesses now have access to their share of $350 billion in partially-forgivable aid. This legislation includes:
- Payroll tax relief
- An increase in 7(a) business loan maximum limits
- $17 billion to go toward forgiving six months’ worth of existing non-disaster SBA loans
- $5,000 tax credit for wages paid to each employee, available to eligible businesses
- Expansion of the emergency disaster loan program, providing $10 billion in loan advances for expenses like payroll, rent, and sick leave
It also gives the Federal Reserve the ability to leverage more than $4 trillion in funds to provide a variety of financial support to small businesses.
For many small businesses with less than 500 employees (including my own family’s), applying for assistance through the Small Business Paycheck Protection Program is one of the best options available for staying afloat. This program allows for forgivable loans intended to cover payroll, employee benefits, interest on mortgages, rent, and utilities.
In order to have this loan forgiven, your business will need to maintain existing employees (and/or rehire employees quickly). At least 75% of the funding offered must go toward payroll expenses, but the remaining 25% or less can be used to cover other operating expenses.
As long as you stick to those rules, the loan is fully forgiven. Loans not forgiven will be granted payment deferment for six months, and no fees are involved with the loan.
You can apply for funding from the Small Business Paycheck Protection Program through an eligible bank or credit union. You can also get more information about this program, including application requirements and funding eligibility here, on the Treasury’s website.
Consider a Loan
If your business does not qualify for government aid or you simply cannot wait for funding to come through, consider taking out a loan to keep operations running.
Related: Best Small Business Loans
You may have a local bank or credit union that you already use for your business banking. If this is the case and you already have a relationship established, this might be the best place to start. If your bank is already familiar with your business, the application process could be faster and easier than going through a new institution.
If you don’t have a trusted relationship with a local bank, look into other business loan options. The SBA is a great place to start, with express bridge loans available up to $25,000 and disaster loan advances up to $10,000.
You’ll need to have a dedicated business checking and savings account set up to accept whichever funding option you choose. If you don’t already have such, consider opening an account through an online-based institution like Bank Novo.
Built with small businesses, entrepreneurs, and freelancers in mind, this bank offers free business account solutions with no hidden fees. Plus, you won’t have to worry about social distancing, since you can open an account online in less than 10 minutes.
Learn More: Bank Novo Review
How You Can Help Support Small Businesses Right Now
Whether you have a small business of your own or are simply worried about your family, friends, and community neighbors who are trying to stay afloat, there are many things you can do to help support small businesses through this tough time.
- Order take-out: Help your local restaurants, servers, and delivery drivers by ordering take-out for family meals. No-contact options are available for delivery, or you can swing by and take-out your food in just a few seconds. Plus, many businesses are offering special family meals or discounts in order to drum up orders, so you may be able to try some fun new meals that might not otherwise fit the monthly budget.
- Prepay for goods and services: So your favorite salon, landscaping company, or trampoline park had to shut their doors until further notice. That’s okay, you can still help by prepaying for goods or services that you know you’ll need in the near future. You can often do this online in minutes, and the cash flow will help them stay afloat for now.
- Buy gift cards: You know you’ll eventually visit restaurants, ice cream shops, nail salons, and activity centers once life starts moving again. Support these local businesses today by buying gift cards, then enjoy budget-friendly outings later this year. Many businesses are even offering gift card promotions (such as get $25 for only $20) as an incentive.
- Keep memberships going: If you can afford to do so, consider keeping recurring memberships active, even if you aren’t receiving services at this time. This applies to things like monthly massages, your kid’s taekwondo classes, and even housekeeping services. Some companies may offer to make up these services later on–but even if they don’t, you can still do some serious good for someone who may be struggling financially right now.
Of course, many of us are facing our own financial crises at the moment, and may not be in any position to spend extra money. In that case, you can still help your local businesses by sharing the word for them.
If they are still maintaining business hours, offering special discounts, or providing alternate services during this pandemic, share these on social media or with friends and family. Small businesses really rely on word of mouth and in these unprecedented times, your simple act could make all the difference in the world.
It will be interesting to see just how long the coronavirus-related regulations last, and what the long-term effects will be on small businesses everywhere. For now, though, whether you are a small business owner or just want to support the businesses you love most, there are many ways to financially survive this crisis.