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Published By Faith Stewart at March 19th, 2020
Update 1/25/2021: As we make our way into 2021, we are still in the midst of the pandemic. Policy and funding is changing almost daily. Check out some of your best options for funding in 2021 here.
Here’s what we all know. There is definitely a coronavirus business impact. The market is scary right now. You are probably thinking now is not the time to make any big financial decisions about your business. However, the truth might surprise you.
Here are the facts. The federal government does not want to see a collapse of the economy any more than we do. They want to do what they can to help small businesses, and they are taking steps to do just that. State governments are in the same boat, wanting to ensure their states are able to survive and thrive economically despite the coronavirus business impact. What steps are being taken, and what do they mean for your fundability?
Here’s the bad news, as if you didn’t already know. Businesses are closing. People aren’t going out anyway. Spending is vastly curtailed. Without a steady flow of income, eventually businesses will not be able to make payments on existing debt.
Of course, some businesses may be able to make current payments for a few months. However, access to new credit will likely not be around for long, at least when it comes to traditional banks.
The good news in light of all of this darkness is that no one wants this to happen. That means measures are being taken to try and stop the spiral. The most notable is the rate cut by the Federal Reserve. The most recent cut brought the rate down to 0%.
Get funding for your business.
First, it helps to know exactly what fundability is. Basically, it is the ability of your business to get funding. Can you get approval for financing? Is your business eligible for a loan, a line of credit, or a credit card? It all depends on your fundability.
The cut rates and other measures do not truly affect the fundability of your business as so much plays into that. However, if you are eligible for any financing at all, it will most definitely allow you to get lower interest rates. Even if your credit score is low, meaning your rate is higher, it would be lower right now than it would have been even last week.
Because of that, along with the unique market now presented, now may very well be the time to jump on starting or growing your business rather than holding back. As already mentioned, any financing is going to cost much less right now.
However, you also have a never before seen opportunity, one we never saw coming, to create a business that works well in a market we’ve not seen in modern times. With the rise of social distancing comes a host of other needs. We are already well set with grocery delivery and food delivery services, but the possibilities are literally endless. Many of these opportunities could easily continue to be useful and profitable long after the crisis has passed. The best part is you could help people right now.
Maybe you have always dreamed of starting a mobile dog grooming business. Want to open a salon? Maybe take your equipment into homes and do your thing, with the opportunity for clients to see you sanitize and suit up before you enter their home.
If you have an innovative, useful idea that could continue to work after this is all over, now is the time to jump.
If you currently own a business, you have to act fast. Retail stores, restaurants, entertainment facilities and more are being asked to shut down each day. If you act now, before this happens to you, you can get funding that can help you get through this time with a better interest rate than has been available in a long time.
Another option is to take the funding and find a way to adapt your business to the times. Maybe offer delivery or curbside options if you don’t already. Been thinking about going online? Now’s the time to launch. Again, you must act fast to take advantage of lower interest rates.
The federal government is working on a number of options to help businesses during this time. One idea is a cut in the payroll tax. Currently, SBA loans are getting an increase from the relief fund for COVID-19. $50 billion is going in as relief in March of 2020. Also, the SBA is also waiving upfront costs on financing to veterans, up to $1 million, in the SBA Express program.
The SBA is currently permitted to exercise readily available authority. They will supply funding to businesses affected by the coronavirus to help overcome disruptions. The president is asking Congress to raise financing for this program. The intent is to make 30 million small businesses more resilient to coronavirus-related economic disruptions.
Get funding for your business.
Some state governments have stepped up also. In New York, businesses with up to 100 employees that can show a drop in sales of 25% or more may be able to get a loan of up to $75,000 interest free. In addition, businesses that have fewer than five employees may be eligible for cash grants. These can go up to 40% of payroll costs for a couple of months, so that would average to about $6,000.
In Washington State, they are working on favorable credit terms for businesses that have cash-flow problems. In addition, there is a debt and late penalty forgiveness program in the works, as well as deferred bills, waived fees, and no-interest loans.
Colorado, Florida, and other states are beginning to roll out their own unique aids to help both individuals and businesses impacted by this crisis.
There is no doubt this is a huge beast, and the landscape is very muddy. Eventually it will dry out and the beast will be gone. When it is, there is likely to be a nicely preserved footprint left behind. What might the new business landscape look like? Will companies embrace telecommuting like never before? On the flip side, will employees begin to push for it more? Will we see an even greater rise in home services, or delivery, because consumers who were previously wary of them now have to give it a try. Will there be more homeschoolers than ever before because some who were not sure before now see they like it?
Imagine the business opportunities. You could find yourself on the leading edge. However, to get the funding at the best rates available in a long, long time, you have to act now.
Other than the SBA, another option is to take a look at what is happening with private lenders. While their rates are typically higher than those of traditional lenders, the Fed’s cut shouldl make even private lender rates lower than normal.
They are likely less affected by current events. We have some favorites which can be a good fit for this unique economic climate. Some can even work with low annual revenues or lower credit scores.
Apply online with OnDeck and get a decision as soon as processing is over. If you get approval, loan funds will go to the bank account you select. Financing can be fast. Entrepreneurs can use such a loan to establish their company’s credit history by making prompt payments. They have fixed rates. $5,000- $500,000 is available.
With OnDeck, you will need to have a 500 or better personal credit score for a minimum of one owner. There is also a 1 or more years in business requirement, in addition to $100,000 or better gross yearly earnings. You cannot have a bankruptcy in the last 2 years, or any unresolved liens or judgements.
StreetShares is a loan provider offering term loans, credit lines, and specialized veteran company bonds. In addition, small business loans and investing alternatives are available. Most recently, they offer contract financing, which is similar to invoice factoring. Pre Approval takes just a few minutes and does not hurt individual credit. Loans are available ranging from $2,000- 100,000.
You need to have one year or more in business and $25,000 or better in yearly income. Often, StreetShares will make exceptions for high-earning businesses at least 6 months old. You need to have a 620 or better individual credit rating, be a United States citizen, and have reasonable credit. If you do not have reasonable credit, you need a guarantor that does.
A PayPal service since November 2017, LoanBuilder concentrates on short-term lending to midsize businesses. They provide term loans. You might have the ability to get a loan by the next business day. They have customizable loans without an origination fee.
Loans range from $ 5,000- $500,000. Requirements include a 550 or better personal credit score, $42,000 or more in annual profits, as well as 9 months or more in business.
Get quick money with BlueVine. They offer invoice factoring as well as lines of credit. BlueVine can process financing in just a day. Loan amounts from $5,000 to 100,000 are available. Lines of credit are not available in all states. Requirements are 6 or more months in business as well as $100,000 or more in yearly income. Plus, you need to have a 600 or better personal credit rating.
Get funding for your business.
Credibly is a direct loan provider that specializes in unsecured business funding. Can take just a day or two from application to financing. Funding can cover overhead or day-to-day operations. Loans are available from $5,000- $250,000. Your personal credit does not need to be super-high.
Credibly requires a 500 or better individual credit score, 6 or more months in service, and $15,000 or higher in average monthly deposits. In addition, you must have at least $10,000 in monthly deposits.
There is a small window of time to access cash, and it is open right now. You cannot wait. Even if you do not currently see a need, you need to take action. Take a look around and see what your options are for financing. You don’t have to spend it, but you need to get it so you will have it. The chances are highly likely that you will end up needing funds at some point during this crisis, but you cannot wait until you do.
By finding funding now, you can prepare yourself at the best rates possible. Not only that, but you reduce the chance of needing funding in the future and not being able to access it. Don’t wait until it’s too late.