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.
It features advice that Tracy Collins, Owner of
, shared with pros in the
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
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
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.
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.
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
for you to consider, as well.
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.