Hundreds of thousands of small businesses across the United States have had to temporarily close their doors, and millions more have had to adapt to the new social distancing guidelines by allowing employees to work from home and moving their operations online.
It’s a murky time for all of us. There seems to be uncertainty peeking out from behind every corner, and we’re all waiting with bated breath as to what will happen next. We’re all feeling the tension, and small businesses are no exception.
If you’re wondering how you’ll be able to keep your small business financially afloat until infection rates start dropping and social distancing restrictions are loosened, you’ll be glad to know that you have options at your disposal.
Financial Resources for SMBs Affected by COVID-19
SBA Disaster Assistance Loans
The Small Business Administration (SBA) has recently announced that it will offer small businesses affected by the coronavirus disaster assistance loans of up to $2 million. These loans will have low interest rates and will be available to any small business that has dealt with “substantial economic injury” because of the coronavirus pandemic. The one caveat to these loans is that small businesses that have access to credit are not eligible.
You can use an SBA disaster assistance loan to cover payroll and other bills, as well as to pay off any outstanding debt. So far, states that are eligible for SBA disaster assistance loans include California, Connecticut, Maine, and Washington, but the SBA’s Office of Disaster Assistance will work with each state’s governors after requests are submitted.
Credit Cards and Bank Loans
Many big banks and credit card companies have stepped up in the midst of the pandemic to offer relief to individuals and small businesses alike. Some of them offer help in the form of new loans and lines of credit, but many others are working with clients who can no longer afford to make their monthly payments.
Citibank, for example, is waiving service fees on accounts, waiving early withdrawal penalties on CDs, and its bankers are now available after-hours and on weekends to help clients in need. Wells Fargo has specialists available who can offer assistance to clients in need on a case-by-case basis.
If you find yourself unable to make minimum monthly payments on your credit card or small business loan, I encourage you to call your lender. Many have made it a point to work with businesses that are struggling due to coronavirus.
Several states have laid out their own initiatives to help small businesses cope with the fallout of the coronavirus pandemic. In New York, for example, any business with fewer than 100 employees that have experienced a decrease in sales by a minimum of 25 percent will be eligible to apply for interest-free loans of up to $75,000. And, small businesses that have fewer than five employees are being offered a grant that will cover 40 percent of their payroll costs for up to two months.
In Washington state, small businesses are able to apply for no-interest loans to help them offset any cash flow problems they may be experiencing, and they can also take advantage of state tax deferrals. And, in California, the Unemployment Insurance Work Sharing Program helps to minimize the need for layoffs, reduce the costs of recruiting, and retain trained employees so that operations can pick up again quickly.
Although some of these state initiatives are similar, they vary from state to state. To learn how your state is helping small businesses cope with the fallout of coronavirus, contact your local chamber of commerce.
While federal assistance is still being discussed, the House passed an emergency aid package on March 14 to benefit both individuals and small businesses. The government is looking at helping small businesses by passing a federal tax deferment and a payroll tax cut.
Business Interruption Insurance
Business interruption insurance is usually included in a business’ commercial property insurance policy, and it’s designed to protect a business against lost income due to natural disasters and other emergencies. If you have commercial property insurance, it’s worth a shot to see if you also have business interruption insurance.
Keep in mind that the verbiage of your business interruption insurance policy will determine whether or not it will cover losses related to coronavirus. Many insurers claim that the current health crisis doesn’t fit the criteria required to be a “direct physical loss.” However, if your business is in the healthcare, hospitality, or travel industry, you may have a specialized policy that will cover your losses.
Small businesses across the United States are facing uncertain times, and if you own one of them, it’s important to know that you’re not alone and that help is out there. I hope that this blog can be a resource for you going forward.
If you need help or advice on how to keep your small business afloat during or after the coronavirus pandemic, contact us at Marketing 360®, your go-to digital marketing experts.