No matter what part of the country you’re in, small business owners are struggling to keep the doors open. With unpredictable reopening plans, the need for social distancing, and the slow delivery of a vaccine, it has hit local businesses hard.

If you’re a business owner in this situation, you could find enough relief to keep your doors open and critical staff employed by utilizing the options below.

Cut Out Unnecessary Expenses

While you might have already done this, take some time and go over your expenses again.

Instead of eyeing luxury expenses this time around, focus on discontinuing low-margin services and supplies until demand gets back to pre-COVID levels. This could mean paring-down your menu, hiring a delivery person instead of using meal delivery services, liquidating inventory to reduce warehouse space, or limiting the schedule to the most profitable hours of business.

When evaluating expenses to cut, don’t think of this as a permanent solution. Instead, think of it as a temporary fix. You can bring them back when revenue and business picks up again.

Talk with Vendors and Explore Payment Arrangements

If you’re strapped for cash, your vendors may be as well. Reach out to your accounts payable and start a conversation about mutually-beneficial payment arrangements.

For example, if you can promise a certain amount towards your bill every two weeks, its better than $0 for your vendor. They will get a reliable cash flow, and you get a feasible payment arrangement.

If you and a vendor do mutual business (they invoice you and you invoice them), set up a call to review. Explore creative options like applying their invoice for $3000 to your invoice for $2500. You’ll still owe them $500, but it’s a lot better option when money is tight. This is a simple solution that often goes forgotten because AP and AR teams don’t communicate with one another.

Consider SBA Loan Alternatives

There are 4 options you can explore for much needed cash assistance to keep your business afloat:

  • Economic Injury Disaster Loan (EIDL): If you’re experiencing a loss of revenue due to COVID-19, you could be eligible. Terms are 3.75% interest (fixed) for up to 30 years with no pre-payment penalty. You can defer payments for up to one year, but interest continues to accrue.
  • Paycheck Protection Program: The government is offering businesses the opportunity to apply for a first or second PPP Loan. It allows eligible borrowers to obtain loans at favorable terms, with the possibility of forgiveness. Loans are up to $2,000,000 with a 5-year repayment term and 1% APR. It can cover anything from employee payroll to PPE and mortgage payments.
  • SBA Express Bridge Loan: If you have an existing relationship with an SBA lender, you may qualify for a loan up to $25,000. These loans can be regular term loans or bridge the gap between now and the time it takes until you are approved for an EIDL loan. Work with your existing SBA lender to see how you can qualify.
  • SBA Debt Relief: If you have an existing SBA loan and have trouble making payments due to COVID-related financial hardship, this program can bring you relief. Eligible loans include “7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020” per the SBA. If you qualify, the SBA will pay any principal, interest, and fees on your loan for six months.

Be Frank with Your Bank

Last but not least, it doesn’t hurt to sit down and have an honest conversation with your local bank. They don’t want to lose your business or lose out should you default on loans or lines of credit. Many times, they want to work with you and are willing to find a solution if you help them understand your financial picture.

There aren’t any guarantees that your bank could come through with funds or forgiveness on past due payments. But if you don’t ask then you will never know.