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The 5-Step Guide To Financial Recovery After COVID-19

Jul 18, 2021

The 5-Step Guide To Financial Recovery After COVID-19

Improving your operations and adapting your business model can help your small business survive the post-pandemic crisis that is occurring. However, finding the cash to do so may be a stretch, which is why business loans are on the rise.


The truth is, it is the unique nature of the COVID-19 crises that poses a set of challenges for small businesses as they try to recover. In reality, many businesses still face muted demand, low customer expectations and operational challenges because of the current restrictions and new strains.


Making Extreme Changes To Survive

One thing we know at this point is that recovery takes time. If we take the 2008 recession as an example, we will see that large companies recovered their contribution to GDP in an average of four years, while smaller ones averaged six years. How long it takes for the current recession is based on both your economic vulnerability to the COVID-19 response and the macroeconomic outlook in your industry.


There are plenty of small businesses in the United States that will need to make extreme changes only to survive. By now, the broad theme is familiar with most large businesses:


  • to protect the health and safety of their employees and customers
  • to adapt their business models
  • to invest in talent and technology
  • to adjust their staffing models and labor practices


In order to make all of these changes at relative cost and with less working capital, businesses need to invest in the models and technologies to survive.


Adopting New Technologies Is Essential For Growth

Right now, it seems that the most effective way for small businesses to meet the new expectations is by designing effective contactless experiences. 


Teams that work remotely have already seen a major difference in adapting and invested in new technologies to facilitate their day-to-day remote work. Restaurants that swapped menus with QR codes are enjoying the same benefits. Among retailers, eCommerce has been a big force – nowadays, Amazon, Etsy, and Instagram make it relatively simple to sell online and expand your audience. 


However, even with all of these digital options, there is a cost to operating expenses. For example, you need to pay to have photos of your products or invest in new technologies to sell or showcase your services online. The bottom line is that for many small businesses, adopting these new technologies will require significant changes. Additionally, there are other investments that might become necessary.


Survival Of The Fittest

The survival of small businesses across the economy requires new business models and solutions that only few have the resources to finance. The pandemic has exposed a lot of weaknesses that businesses have built over time, and the next normal could impose additional burdens.


Adapting to such challenges will require that small and medium sized businesses invest in new technologies, discover new operating models, and adapt their workforce. However, that is not easy and requires an economy-wide effort to provide additional financing, restore the demand, and improve their capability and resilience.


While getting back to the pre-pandemic standard will take some time, businesses need to embrace financing and show their optimism for the future. The good thing is that being present during this change can only allow businesses to strengthen the levels of consumer confidence and spending patterns in their audience.

5 Steps Towards Small Business Financial Recovery After COVID-19

As we mentioned above, it will be several years until we fully realize the impact of the pandemic. However, what is clear at this point is that businesses face an uphill fight. If you are in the shoes of a small business owner, here are five steps you can take to recover and foster growth.


Assess Your Financial Damage

The first step to rebuilding in the wake of the pandemic is to determine how deeply your business has been impacted. Update your financial statements and compare them to last year. The damage might be big, or small, depending on your sales, profits, and cash flow. Analyze your documents and determine the overall damage.


Determine Your Obligations 

Next in your plan is to determine your obligations. If you recently reopened your doors, you need to educate yourself about the new regulations and consider the steps you need to take, and the investments you may want to make. It is likely that your business requires both physical and operational changes in order to survive.


Rework Your Budget

Establish a realistic timeline for rebuilding your budget. You may need to spend some money before you can make some money so it could be worth investing in a term loan. Ask yourself whether you need new hires, inventory, marketing technologies and budgets, etc. Doing everything at once probably won’t be possible, so you should prioritize jobs and expenses, and then build a timeline for action. Be realistic and prudent, and try to secure capital before you initiate your plan.


Consider If/How Much Funding You Need

Most small businesses find that they need some liquid capital to jump-start their way out of the crisis. The best way to see how much funding you need is by consulting with an expert. Our team at Business Loans Spokane can help you recover, rebuild, and ultimately achieve your business goals through corporate financing.


Create A Contingency Plan For The Next Crisis

We all hope that the COVID-19 pandemic is a once-in-our-lifetime crisis. However, disruptions to small businesses are inevitable and once you are back on your feet, you will need to think about future shocks and worst-case scenarios. The more you do to prepare for what might come down the road, the better your odds are of not only surviving, but also thriving during challenging times.


In the end, looking beyond the chaos and adapting to the current situation is the only way to grow and succeed. Focus on your fundamentals and even if you need to “get back to basics,” do it diligently to find new ways to live and work.


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15 Apr, 2024
In the ever-evolving landscape of entrepreneurship, small businesses often find themselves navigating a labyrinth of financial challenges. Whether launching a startup or scaling an existing venture, securing adequate financing is crucial for growth and sustainability. However, with a multitude of options available, choosing the right financing strategy can be daunting. In this blog post, we delve into the diverse array of small business financing options, empowering entrepreneurs to make informed decisions tailored to their unique needs. Bootstrapping For many entrepreneurs, bootstrapping is the initial method for financing their ventures. This involves utilizing personal savings, credit cards, or leveraging assets to fund business operations. While bootstrapping offers autonomy and flexibility, it may not be feasible for all entrepreneurs, especially those with limited personal resources. Traditional Bank Loans Traditional bank loans remain a popular choice for small business financing. These loans typically offer competitive interest rates and structured repayment terms. However, securing a bank loan can be challenging, requiring a solid credit history, collateral, and a comprehensive business plan. Additionally, the approval process may be lengthy, delaying access to funds. Small Business Administration (SBA) Loans: SBA loans are government-backed loans designed to support small businesses. These loans offer favorable terms and lower down payments compared to traditional bank loans. SBA loans are ideal for entrepreneurs who may not qualify for conventional financing due to limited collateral or credit history. However, navigating the application process and meeting eligibility criteria can be complex. Venture Capital and Angel Investors For high-growth startups with ambitious goals, venture capital and angel investors provide an injection of capital in exchange for equity ownership. These investors offer not only financial support but also valuable industry expertise and networking opportunities. However, securing venture capital or angel investment often requires a compelling business idea, a scalable business model, and a convincing pitch. Crowdfunding Crowdfunding platforms such as Kickstarter and Indiegogo have revolutionized small business financing by allowing entrepreneurs to raise capital from a large pool of individual backers. Crowdfunding offers a platform for product validation, marketing exposure, and community engagement. However, running a successful crowdfunding campaign requires meticulous planning, compelling storytelling, and active promotion. Alternative Lenders In recent years, alternative lenders have emerged as alternative sources of financing for small businesses. These lenders, including online lenders and peer-to-peer lending platforms, offer quick approval processes and flexible repayment terms. Alternative lending may be suitable for entrepreneurs with less-than-perfect credit or those in need of fast access to funds. Not all alternative lenders are created equal, however. Borrowers should be wary of high-interest rates and hidden fees as they carefully assess the suitability of each lender's offer for their business' long-term health. Grants and Government Programs Various government agencies and private organizations offer grants and funding programs to support small businesses, particularly those in specific industries or underrepresented demographics. These grants provide non-repayable funds, alleviating the financial burden on entrepreneurs. However, securing grants can be highly competitive, requiring thorough research, meticulous grant writing, and adherence to strict eligibility criteria. Navigating the terrain of small business financing requires careful consideration of the myriad options available. Entrepreneurs must assess their unique financial needs, risk tolerance, and growth objectives to determine the most suitable financing strategy. Whether you opt for a traditional bank loan, explore alternative lending sources such as Business Loans Spokane, or seek investment from venture capitalists, informed decision-making is essential for driving your business' success in today's dynamic marketplace.
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There is a short and a long answer to this question. The short one is that a business loan can last up to 20 or more years. The long one is that everything depends on the type of loan, the amount received, and the lender. For example, if you are considering business loans in Spokane with a larger amount in order to expand your operations but don’t want loan payments to deplete your cash flow, you can opt in for a conventional long-term business loan. On the other hand, short term loans are better for situations like covering expenses, bridging in gaps in your cash flow, taking care of payroll, and similar situations. What are the repayment periods based on? The repayment periods in a loan and the requirements for repayment are generally determined based on the lender – their terms and guidelines, type of institution, loan programs offered, as well as your intended use of funds and your financial profile. How long do you repay a standard bank loan, SBA loan, and term loan? If you are looking at standard business bank loans, the repayment periods usually last from 5 to 7 years on average. For SBA loans, they are longer and can last up to 25 years. Business term loans have average repayment plans of 1 to 5 years. What does a usual repayment structure look like for most business loans? The repayment structure is determined by the lender, along with the full repayment period. In many cases, you can repay a long-term business loan through monthly or bi-monthly installments, where the payments could start in as little as a few weeks after your loan was approved. Short-term loans require weekly or daily repayments over a set period that is usually less than a year, and a total repayment period that is around three months on average. Standard business term loans take longer to repay, which is why the answer to the question above varies based on the type of loan, lender, your use of funds, and your business profile. How is the repayment period determined? As we said above, repayment periods vary from one lender to another, and are different in almost every loan type. It is the lender that determines the length, right after they assess the risk at the borrower. A lender needs to feel confident that the borrower is able to repay the debt on time so they can approve it. From a lender’s perspective, longer repayment periods work, but carry a greater risk. Precisely this is the risk that needs to be calculated, so that a repayment plan is set in place. The bottom line is that the length of the repayment period depends on the financial information provided from the business owner, along with the full financial history and credit score. Afterwards, the lender evaluates that information and creates the repayment plan. How does repayment work in long-term business loans? With long-term business loans, you have a longer repayment period that can last anywhere from one year up until 5, 10, or in some cases, even 25 years. However, this is the most popular type of small business loan and the first choice for owners who seek corporate financing for their small business. The good thing about term loans is that once you are approved, you get the full lump sum deposited to your bank account, and a repayment period that is usually spread throughout monthly or bi-monthly installments and fixed interest rates. What are the term lengths associated with a long-term loan? Different long-term loans have different terms that are commonly set on a variety of factors. The factors here include the loan amount, the purpose of the loan, the policy of the lender, etc. In most cases, long term business loans have terms that last anywhere from 3 to 10 years. As for interest rates, there are no previously set rates with long-term loans. Therefore, interest varies by the lender, borrower (their creditworthiness), and the amount of the loan they applied for.
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