The Corona Virus has hit and businesses are forced to close. State Governors are ordering meeting places of more than 50 people to disperse. They also want all bars and restaurants to only be available for take out. States of emergencies are being declared in almost every state. This is just not a good time to be in business. How do you survive this pandemic? Most small businesses will not survive this. With a few small tips you may be able to weather the storm.
Step 1 – Negotiate with your suppliers and lease holders. If you don’t ask you don’t know. Ask them if they will allow you to suspend payment until the State of Emergency is lifted. If they won’t suspend payment maybe they can push out your payment terms to an additional 30-45 days to help with the current cash flow situation. Most landlords and suppliers would rather you stay in business instead of looking for another tenant or customer. They will work with you. All you have to do is ask.
Step 2 – Minimize your staff. Furloughs, work from home, now is a good time to have your staff use their vacation hours.
Step 3 – Try to increase other avenues of revenue from your restaurant or business. Give discounts or loyalty programs for deliveries or shipping. Provide additional discounts if people bulk buy or use your services over a longer period of time. Your main focus should be to keep moving inventory or goods out your door. Your profit margin may shrink but it’s still a profit to keep you afloat.
Step 4 – Create an emergency fund because now’s the time to use and create it. Don’t worry if you haven’t saved for this scenario. You may be able to create funding during this time.
Lines of credit – Home Equity Line of Credit (HELOC). This however requires a physical asset such as your house to leverage. If you think you can over come the slow down and weather the storm you would take this drastic measure. The only problem is that you are offering your house or rental property as an asset if you default. The approval process could take 2-6 weeks.
Personal loans – You may be able to get a personal loan from a bank or credit union. You need to have a high credit score and provide documentation for income which would usually be tax returns. Credit limits won’t be very high.
SBA Loans – This requires high credit score, 3 years tax returns, and in business at least for 2 years. It will taks 90 days or longer to be approved. The approval rate tends to be lower than most other loans. They cherry pick their candidates to provide these loans to only the very best.
Credit card cash advance – Variable APR. You continue to pay interest on any outstanding balance. High fees and low limit.
MCA – Merchant Cash Advance. This is your best option if you need fast cash. Low credit score, no tax returns needed, and you can be funded in 4 days. Yes the interest is higher but you get to setup a flexible payment plan that suits your needs. The amounts offered are higher and there should be no hidden fees. Everything should be upfront.
What about all the emergency money from the government or zero percent interest rates?
Do you think you will qualify for a zero percent interest loan? Do you think you will qualify for the emergency SBA loans from the government? We encourage everyone to exhaust all their resources and to explore all their options. Just remember time is of the essence. Most people do not have time to wait for a long drawn out approval process. The sheer amount of people applying means there is a long list of applicants. You will be playing the waiting game while your business is bleeding capital.
Weigh all your options and decide how long you can hold out. Your business is your lifeline at this point. If you can just get through these tough times your business will thrive when things get back to normal. Competition will have thinned when you get back to full operation. Your main objective during this time is to survive. Or the very least have some emergency money so you can restart again when the economy jumpstarts again. Think about using an MCA to get those funds ready. Merchant Post funding can help you get those funds when you need them the most.