Some 72 percent of those who attempted to apply for a Paycheck Protection Program loan were successful in submitting their application. This left around 28% of small business owners on the outside, who tried unsuccessfully to apply for P3 loans.
While the federal stimulus would likely have brought welcome relief to companies trying to keep their finances above water, the lending program is not the only way to support results.
Smart business spoke with Kurt Kappa, Director of Loans at First Federal Lakewood, on some of the ways that businesses that haven’t received PPP loans can stay afloat.
What financial support can companies turn to if they have not obtained a PPP loan?
If the lack of a second stimulus package has forced a company to explore other avenues to access capital and none of them fit, one solution is to find a new perspective. Use small banks to access the various business loan and grant programs offered by the US Small Business Administration and local government agencies. These institutions tend to have excellent partnerships with local municipalities and economic development organizations offering community-based loans that businesses are eligible for.
What other measures could companies take to compensate for the revenue shortfalls?
When the traditional way of selling your product is no longer feasible due to the pandemic, explore other options. Many companies are turning to new channels. For example, there has been a significant shift towards e-commerce for businesses that have products to sell. The channel has become much more popular given the social distancing imperative we are under right now. Third-party online shopping platforms like Amazon or Etsy can help businesses reach new customers who may remain after the pandemic.
Businesses also have the option of asking, “Is my current business model working?” Now may be the time for companies to change the mix of what they sell to better match what people are looking for, or companies may need to adapt their products and services – for example, during the pandemic , distillers began to manufacture hand sanitizers and personal products. the trainers animated their sessions via video platforms.
Companies are finding that they have to do more with less, including by requiring staff reduced by layoffs to work harder and often for less pay. Companies affected by the tightening of the purse strings and pay cuts should consider incentives and non-financial benefits to attract, retain and motivate employees. Consider perks like extra days off, creating time for passionate projects, or flexible working arrangements as incentives and rewards.
How can bankers help businesses find ways to address their financial concerns?
Small businesses should consider all of their options, from redesigning business models to online pivoting to restructuring their debt. A reorganization of a company’s debt can allow it to assess its cash flow needs and give it the opportunity to stretch or even reduce some of its debt payment obligations. It is also a good idea for a business to ask a banker for the eligibility and availability of additional loan and grant programs.
Small businesses haven’t had it easy in 2020 and early 2021. First, shelter-in-place orders have forced many businesses to take a break. Then, phased reopening, challenges in securing federal financial assistance, and ever-changing rules and regulations continue to force businesses to pivot again and again. Almost all businesses have had to adapt to changing customer needs in order to stay afloat beyond the support of government assistance. Now may be the time for companies to re-evaluate their models and embrace reinvention.
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