What the heck happened over the last few weeks? One day everyone is talking about a theoretical impending recession, and the next, millions of people are losing their jobs. It’s hard not to have the REM song, “It’s the end of the world as you know it” playing over and over in your head right now. Business owners all over the world are facing the hardest decisions they’ve ever had to make virtually overnight in an attempt to stop their companies closing down for good. Its difficult to predict how long this might last, but we have three top tips for keeping your business going, at least for now.
Top Tip #1 – Financing
Never has it been more important to know you have some form of financing in place (and that doesn’t include your personal credit cards as the first line of defense). If you have a line of credit, draw on it now before something even worse happens and it gets pulled. Its better to have the money in your bank account than go begging for it later and find out it’s no longer available. You can always pay it back if you don’t need it, or if we wake up tomorrow and find out this whole situation was just a bad dream.
If you don’t have this option, consider applying for SBA Economic Injury Disaster Loan assistance. This is a great way to help you through the next few months but it’s not a miracle solution for everyone as you may not qualify for enough financing, particularly if you have less than stellar credit or haven’t been in business very long. It also might take several weeks to come through which might not work for you.
Also look into alternative lenders to see what they might be able to offer you, although many of these appear to have pulled out of the lending space overnight, and those that haven’t, have increased their pricing to even more eye watering levels than they already were. If you are considering one of these loans, please, please, please read your contract very carefully and understand what you’ll be paying back and more importantly, what might constitute a breach of the agreement and the additional impact and cost that might bring. Make sure anyone you consider working with is reputable before you sign on the dotted line. Read reviews and ask for references from other customers.
Top Tip #2 – What expenses can I reduce?
Take a good hard look at your business expenses and work out what is unnecessary right now. This probably includes making some really hard decisions over any staff that are not considered business critical, especially those ones who have not been performing or may negatively influence the team with a bad attitude moving forward. You might also want to consider asking those you keep taking a temporary pay cut until you get back on your feet again. You may also be able to apply for a piece of the $350 billion “paycheck protection program” part of the economic stimulus program. Here you may be able to receive a loan amount covering about two months of essential overheads such as payroll and rent if you promise not to lay off workers. Again, it is not known how long it will take for the money to be received once approved.
Whatever you do, you should continue to pay your key vendors. Those suppliers of goods you need to stay in business. Know who they are. If you stop paying them now, they will cut you off and then where will you be? The chances of finding a new supplier when you have no payment history will be extremely difficult and even if you can, you have no guarantee they will be able to provide you with the right quality products when you need them.
Top Tip #3 – Communication
Talk to everyone. Your bank or financiers, your vendors, your employees, your family. Be open and honest about the situation you find yourself in. You do not want to make a bad situation worse by ignoring it and hoping it will go away. This is not the time to be an ostrich. Sticking your head in the sand will only cause you even more problems, and there is nothing worse than sand up your nose. By sharing your situation, you may find that people have some great suggestions on the best way forward. Collectively coming up with a workable arrangement to get you through this challenge is the most sensible approach. There may be options available that you didn’t know existed that could save you a massive headache.
Eagle Business Credit is an invoice factoring company that specializes in providing working capital lines of credit to small and medium sized businesses. The management team has over 100 years of experience in accounts receivable finance, helping thousands of business survive and grow during both good and bad times. It is a proud member of the International Factoring Association and strongly abides by their published code of ethics. We have not changed our pricing structures or lending criteria to take advantage of this terrible situation.
Finally, and most importantly, the whole team at Eagle Business Credit wants to wish everyone to stay safe and observe any required remain in place orders.