Non Risky Ways on Acquiring and Managing Business Loans for COVID-19

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All across the United States, the pandemic forced several small businesses to scale back operations, if not push them for an indefinite closure. No one can predict how long non-essential stores will open again. This unprecedented economic disruption created a devastating financial burden on small business owners. Many are opting for financial help from various lending institutions to get through the current crisis.

Income and sales will be critically low during a pandemic like this, and a loan can support your business by replacing lost cash flow, revamping marketing, or making payroll. But keep in mind that although a loan could help your business through this challenging stretch, it’s still not a definite solution. A loan can also cause more harm than good if you fail to allocate appropriately. Thus, it is crucial to have a well-thought-out plan to manage your financial aid.

We’ve laid out all the crucial information you’ll need to know about small business loans during COVID-19. We’ve also included debt management steps to ensure that you have the right resources and not putting additional risks to your business.

Loan Options During The Coronavirus (COVID-19)

The recently passed CARES Act by the federal government includes an emergency relief resource of $350 billion to support workers and small businesses during the COVID-19 crisis. Here are the loan resources you can apply for through the Small Business Administration (SBA).

Paycheck Protection Program

The Paycheck Protection Program (PPP) is a loan for small businesses to keep their workers on the payroll. The government will give the credit if the funds are for eligible expenses, and the company will meet all employee retention criteria.

The application process has resumed, and the new deadline is on August 8, 2020.

SBA Expressed Bridge Loans

The Express Bridge Loan Program provides up to $25,000 vital economic support to current small businesses that currently have a relationship with SBA Express Lenders. This loan can help with the loss of revenue and sales while waiting for the Economic Injury Disaster Loan.

Economic Injury Disaster Loan

The economic Injury Disaster Loan (EIDL) will help provide financial relief to eligible small businesses and non-profit organizations in all US states and territories qualified for a low-interest loan. The funds can help cover operating expenses, such as rent, utilities, continuing health care benefits, and fixed debt payments.

Last June 15, the SBA resumed accepting new applications.

Other Options

Aside from the SBA’s current loan programs, another option is to access small business loans from traditional lenders like banks, online lenders, and credit unions. Applying for a loan through traditional lenders is the most common way to fund a business and provide cash flow.

The application process is relatively easy and convenient for any entrepreneur and business owner. These institutions can also provide more significant amounts. This year, loans from national banks ballooned to $500,000.

You can also acquire lower interest rates, especially if you have good credit scores. But you may incur higher interest rates when you have a bad credit score, and you can amend these by maintaining a healthy financial habit.

Traditional lenders offer non-risky loan applications as long as you get it from reputable institutions. Applications can be online or by phone. Just provide necessary documents, like a copy of bank statements showing your revenue, proof of payroll, business plan, and bills that you need to cover with the coronavirus loan.

Managing Your Business Loans

Managing your business and your debts can be challenging, but being on top of your loans is essential to keep your business running and survive this pandemic. Here are some critical things to keep in mind when dealing with your loans.

Prioritize Payments

You won’t be able to pay all your debts overnight. Thus, you’ll need to prioritize certain debts over others. The most reasonable option is prioritizing loans with the highest interest rates because you’ll end up paying more if you take more time paying them off.  You also need to stay on top of your personal loans and bills as some creditors can take any of your assets if your business fails to pay its loans.

Do Some Accounting

It’s also crucial that you have a good grip on your business’s financial situation and cash flow. You can start by bookkeeping financial transactions, like purchases, sales, and payments, using Excel or an accountant’s help. In this way, you’ll have a good overview of all your financial liabilities and business performance.

Talk To Your Creditors

The current crisis is an avenue for plenty of dilemmas and unexpected issues. You may face unavoidable problems, especially with paying off your debt. Whether your creditors are loan institutions or vendors, it is crucial to maintain proper communication.

Don’t wait for a loan agent to chase you with your debts, give your creditors a heads up when you can’t make repayments and ensure a specific time frame in dealing with your dues.

Takeaway

Many have failed to keep their business going during this pandemic. This may be a sad reality for many business owners, but you don’t need to be in the same situation. Maximize your resources and manage your financial liabilities well, and you’ll thrive in any crisis that may arise.

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