Start free trial
Start free trial

5 Steps to Take Before Applying for Credit During the Coronavirus Pandemic

5 Steps to Take Before Applying for Credit During the Coronavirus Pandemic

function authorName(){var last=lastName||last_name;var first=firstName||first_name||'Housecall Pro Contributer';var authorTitle=title&&", "+title;var authorName=last?first+" "+last:""+first;return authorTitle?""+authorName+authorTitle:authorName;}

Posted by EJ Brown

March 27, 2020

What do you really need to borrow to make it through this crisis? This post offers actionable steps you can take before applying for that new credit source to make sure you’re running as lean as possible.


Download a free budget and action plan worksheet now and create a 90-day strategic plan now:


1. Create a Budget and Cut Out Non-Essentials

This is a time to sit back and create a budget and you don't need software to do it. Create a list of all of your expenses that your business has. Then find the non-essential things and cut them out. When I say non-essential I mean maybe you have a subscription to someplace that really doesn't give you any business that you forgot about. Cancel the subscription. - Tracy Collins

Depending on your financial situation, what is considered non-essential may change. For instance, if your business is shut down for the time being, then items that would at other times be essential might not be at the moment. We acknowledge that our own platform may be among them. 

2. Assess Your Cashflow

Once you create the budget then look at your bank account and see how much money is in there and determine how long your money will last based on your budget, assuming no more business will come in. 

Also, consider what existing lines of credit you currently have. Combined, this is your baseline and will help you make credit decisions moving forward. 

Keep in mind that

banks and other lenders are making changes to credit lines

for existing customers. You might not be able to rely solely on your existing lines of credit.

3. Check with Your Bank And Credit Lenders

If you have loans, contact your loan companies and ask them to defer your payments for the time being or lower your interest rate. Even mortgage companies will allow you to defer your payments if you can show them just cause. - Tracy Collins

Many banks are working with small businesses

to offset some of the hardship through things like payment deferrals for existing loans and credit card bills, fee refunds and waivers. Check-in with your bank and lenders to see what emergency measures they are taking.

4. Look Into Your Insurance Policies

Many insurance policies include business interruption losses. Contact your insurance agent to see whether your plan includes business interruption coverage.

Some states are passing legislation

that will force insurance companies to include the epidemic as a business interruption event.

5. Compare Credit Options 

Don't make rash decisions. Just because the interest rates are low and everybody else is doing it (sort of like the TP crisis) don't run out and get a loan. Make sure you need the loan. - Tracy Collins

Once you’ve done what you can to assess your situation, reduce expenses and payments, you’ll know exactly whether you need an external credit source to make it through the crisis and will have a better idea of how much.

The

stimulus package and other federal disaster relief programs

will offer better benefits for struggling businesses that many private lenders. It will be important to keep up-to-date with federal aid solutions, which are  However, there are other

alternative funding sources

for you to consider, as well.


Download a free budget and action plan worksheet now and create a 90-day strategic plan now:


This article is for informational purposes only and to foster thoughtful communication and discussion regarding the COVID-19 pandemic. Readers should obtain independent advice relating to their businesses and their particular circumstances.

Let's Grow Your Business.

Get tips, tricks and trade secrets to help you build a profitable and thriving service business.

Submit

By clicking 'Submit' you agree to our Terms of Service (including the provisions of such terms that require you to arbitrate certain disputes) and you acknowledge you have read our Privacy Policy. You also consent to receive calls or SMS messages, including by automated dialer, to the number you provide, for informational and/or marketing purposes relating to our business. Consent to receive such calls or messages is not a condition to using our services.