Here Are The Latest Stats, Relief Options, and Advice To Get Through This Tough Time
While 2020 may have begun with the optimism that comes with a new decade, coronavirus dramatically changed our outlook virtually overnight. It’s now been six months since COVID-19 started its spread across the US, upending Americans’ personal lives and sending shock waves across the world of small business.
As we enter the second half of the year, the future can seem uncertain. What can we expect?
We hope you’re hanging in there. We’re doing our part to support you by doubling our efforts to improve the Invoice2go app and provide you with more high-quality resources. Small business is our passion and heritage. We know how vital you are to your community and the economy.
We want to share with you some of the latest data on COVID-19’s small business impact. We also want to be sure that you’re aware of all the relief options available. At the end of this article, we’ll also share 5 essential lessons from The Great Recession that are still relevant to all business owners. We hope you find the information and links useful. Let’s have a look:
The latest numbers on COVID-19’s small business impact
When it comes to COVID-19, unfortunately, we’re not out of the woods. And while no one can predict the future, it may be a long road to economic recovery. Some believe the pandemic will permanently alter some aspects of society. Take a look at these stats:
- Since March 2020, dramatic unforeseen economic changes have affected virtually everyone in the US. Unemployment has shot up to 30 million. Even with some easing of lockdown restrictions, more than 30% of all US jobs remain vulnerable.
- Unfortunately, research shows that small businesses are disproportionately susceptible to job loss. While your industry plays an important role, a recent report from McKinsey & Company shows that more than 50% of small business jobs are currently at risk.
- Despite Congress’s approval of $700 billion in support, many business are facing enormous struggles. Closures in some industries are widespread. Even companies that were hitting their stride just months ago, now face increasing uncertainty.
With statistics like these, it’s not surprising that optimism for a rapid US economic recovery is decreasing. However, although the situation changes week to week, there is room for hope. Experts highlight that the pandemic will eventually pass. In the meantime, however, you may need to make crucial changes to protect yourself.
Which businesses are most at risk right now? Which are safe or are having more success now?
Chances are you’ve seen the news or have personally observed how some businesses are struggling more than others. Here are some key takeaways from different industries:
- So far, food and accommodation services have been hit hardest by the pandemic. Education and retail are also struggling. Even construction has felt some pain as restrictions have limited work for some.
- Optimistically, some businesses remain stable or have even seen growth as our habits change due to the pandemic. At the beginning of April 2020, we shared some of the best companies to start during a recession. Now, many of those businesses are experiencing an increase in demand.
- On-camera coaching, cleaning, and delivery services have seen huge increases in demand during the pandemic. If you’re considering exploring new opportunities to expand your income, it may be useful to check out these options.
A need to adapt
What’s vital for all small businesses to understand is that to survive, adjustments are necessary. We recommend this mindset for yourself and your business: Hope for the best and prepare for the worst. Here are some ideas to help:
- Focus on cash flow. Almost 2/3 of small business owners don’t have a budget. According to the Harvard Business Review, the biggest challenge small businesses face is having access to enough cash. Optimizing your cash flow and carefully examining your current financial situation is low-hanging fruit to help your business. It may not solve your problems, but it can help.
- Consider new protocols and routines. Chances are you already practice social distancing and use masks and other protective gear while on the job. We’ve put together a few other guides that may also be of use. For example, if your company does house visits, we have tips on how to safely do it. Likewise, if you run a cleaning business or find yourself working at home with small children, we also have helpful tips.
- Repurpose and retool. Take some time to think about your expertise and any equipment you own. Are there ways you can repurpose your resources and skills to keep your business afloat? Also, what new skills can you learn to improve your business? For example, if you’re interested in learning more about digital marketing, we have a masterclass with plenty of useful information. You can also make simple changes, like accepting digital payments, or, if possible, conduct some of your work remotely.
The bottom line is to recognize that you can’t change the pandemic. You can, however, change how your business responds to it.
What types of relief are available to business owners?
Small business financial relief has been a complicated and often frustrating subject. Here is some of the most recent information presented straightforwardly:
Economic Injury Disaster Loans (EIDL)
Even if your sales have dropped dramatically, you still potentially have to pay employees, rent, and other bills. In pre-pandemic times, you might turn to a traditional bank loan in this situation to make ends meet until business picks up again.
However, these days that choice is riskier due to ongoing economic uncertainty. A potentially high-interest rate loan isn’t the best option, especially if you’re not sure you can promptly pay it back.
Fortunately, the government has allocated millions of dollars in funding for Economic Injury Disaster Loans (EIDL). These loans are designed for self-employed professionals, independent contractors, or small businesses with fewer than 500 employees. This program is more generous than a typical bank loan.
EIDL advances and loans opened again in July 2020. These are guaranteed by the Small Business Administration and provide you with:
- Low-interest rates: 3.75% for businesses and 2.75% for nonprofits
- Long-term repayment plans: Up to 30 years
They are designed to cover:
- Payroll expenses
- Fixed debts
- Accounts payable
The loan is equal to eight weeks of your prior average payroll (or earnings, for the self-employed) – plus an additional 25 percent. You don’t need to make any payments for up to six months.
The best part: The application process takes about two hours, and according to the SBA, your money can arrive in just a few days. Loans can also include an up-to-$10,000 forgivable advance. Take a look here for more detailed information.
Paycheck Protection Program (PPP)
This Small Business Association loan helps companies keep their workforce employed during these challenging times. If you are an employer, this is definitely worth looking into.
This loan can be fully forgiven if used for payroll costs, interest on mortgages, rent, and utilities. Just be extremely careful to read and follow the forgiveness criteria.
The PPP accepts applications until August 8, 2020, so it’s important to quickly take action. To read more details, click here.
The Families First Coronavirus Response Act
This act requires some employers to give paid sick leave or expanded family and medical leave for reasons related to COVID-19. The Wage and Hour Division (WHD) administers and enforces the new law, valid through December 31, 2020.
This can mean paid leave for qualifying employees for up to three months. However, the law also aims to reduce the financial burden on employers and includes a tax credit equal to 100% of the benefits you pay. Also, if you are self-employed, you can claim this tax credit if you take paid sick leave for yourself.
Look into state relief and corporate grants
It’s essential to research relief options your city and state provide. For example, Florida, Los Angeles, and Chicago have set up special funds and loans for local small companies. If you haven’t yet, set aside an hour or two and do some web searches to see if there are any useful options.
Also, corporations and nonprofits have set aside huge funds for small businesses. Facebook, Verizon, JP Morgan Chase, and Opportunity Fund are just a few of them. Other companies, like Zoom, PandaDoc, and Microsoft, are offering discounted or free services.
Finally, banks like PNC, Santander, and TD Bank are waiving fees and providing payment deferrals and other relief for small business customers. Of course, this cash does not replace customer revenue, but it can still be advantageous.
5 tips from the last recession on how to keep your business going during difficult economic times
A little more than 10 years ago, we also experienced challenging economic conditions that adversely affected small businesses across the US. Here are some of the most important lessons from that time that can help your business now:
Focus on adaptability and listen to your customers
Overall, the 2007-2009 financial crisis hit small businesses much harder than big ones. Because small companies generally have fewer cash resources, a sharp decline in sales can send them reeling in a short amount of time.
Therefore, be willing to quickly adjust your services and operational structure. Many experts recommend listening carefully to your customers and taking that information to make changes to align with their needs during the pandemic.
Also, times of economic uncertainty can cause consumers to be more hesitant about spending money. This may require more rapport and trust-building than usual. Patience and empathy with your customers can lead to winning more business in the long run.
Survive by dramatically cutting costs
During a recession, it can be extremely challenging to keep revenue up. Therefore, it’s essential to also look at ways to reduce how much you spend each month. While every business is different, here are a few ideas:
- If you rent an office space, is it possible to sublease part of it to another vendor? Can you negotiate your rent? Or, is it possible to do without an office and work out of your home for now.
- If you work with suppliers, can you negotiate prices or get discounts? Taking care to get the best deal whenever you make a purchase can quickly add up to thousands of dollars in savings.
- Do a comprehensive audit and identify other ways to reduce expenses. Here’s a list to give you even more ideas.
Develop several income streams to stay resilient
As part of adaptability, think of ways you can expand your services during these times to have more ways to bring in revenue.
Could you create an online masterclass related to your business? Is there a partnership you could establish and sell to your customers, allowing you to keep a portion of the sale? During a recession, you don’t want to put all your eggs in one basket. Think creatively of new ways you can keep money coming in.
Continue marketing your business
Be careful: Many small businesses make the mistake of cutting or eliminating their marketing budget during tough economic times. However, this is when you need marketing the most. Consumers are continually looking for the best companies to provide them with the services they want and need. Help them easily find you and get started doing business.
Recovery will eventually come, but patience is necessary
While it may take months, a year, or longer, this will pass. After the great recession there was economic recovery. These times may not be easy, but it can be useful to keep in mind that they are temporary.
Perhaps the most important takeaways are that all businesses need to adapt, look to cut costs, and find new ways to bring in revenue. It’s also important to remember that there are new sources of financial assistance. While the application processes may be frustrating, it’s worth it to take the time and reach out for help.
We’re here to support you 100%. We’d love to connect with you on our Facebook groups. Join us to meet other business owners like yourself. Connect, share, and learn valuable information you can immediately apply to your company. Have a look here to check it out.