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Small Business Access to Funding

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by Doug Cassidy
SVP- Commercial Lending Manager for North Texas Region

As the economy begins to recover, some small business owners still need help to get back on their feet. Government business relief resources like the Paycheck Protection Program are no longer accepting applications, prompting business owners to seek alternative sources of funding. Here’s a look at some available resources and important considerations to keep your business afloat.  

1. What resources are available for small business owners to get back on their feet after COVID-19?

Small business owners should look to their local city or county for additional help. Many cities and counties have CARES Act funds available to support small business owners. Check with the city or county where your business is located to learn if you qualify for any grants or loans. Nonprofit organizations should consider community development block grants, which can provide funding to keep going in a tough economy.

Another great place to check for funding is the local chamber of commerce. Many chamber websites have a page with resources for small business owners affected by COVID-19. You may have to fill out an application to be connected with the right resources for your situation.

While there are no bills in Congress right now to offer further relief, it’s possible that could change at any time. Monitor the news to ensure you are in the know if more stimulus funds become available.

It’s also important to work with your accountant to determine any cost-saving measures you can implement to help your business. For example, some counties like Tarrant County allow you to pay half of your property tax bill by November 30, 2020, and the rest by June 30, 2020. Options like this can free up funds for your business to use now while you work on getting more funding.

2. How can your banker help you evaluate your options and pursue what makes the most sense for your business situation?

If you are a lending client at a bank, they should have historical data on your business. This can help them model cash flow and provide resources for other income sources. If your banker only has access to depositing information, you may need to come armed with additional data to help them understand your situation.

At Southside Bank, our bankers are always available to sit down, listen, offer advice or point you in the right direction. Learn more about how we can support your business and contact us here.

3. If business owners have other potential resources available (business savings, personal savings, etc.), should they tap into these now rather than other available resources? What factors should go into this decision?

The quick answer is: It depends. If a business owner can qualify for a loan with a low interest rate or one that can be forgiven, this should be their first choice. This was the case with the Paycheck Protection Program loans, for example.

Before taking any money out of savings, business owners should carefully consider wants vs. needs. Sometimes you need to make tough decisions and cut expenses before drawing any money out of savings. Only fund absolute necessities with emergency cash or investments.

There’s one important caveat: Always think twice before touching retirement savings. There will be large tax consequences, and you will have only a short time to replace the funds before suffering long-term consequences.

4. What adjustments should small business owners make when ramping up business post-COVID-19?

COVID-19 is not something we have seen in our lifetime. No one knows what recovery will look like in a post-COVID-19 world. Businesses need to understand that it may take a long time to return to a new normal and scale their ramp up plans to match.

Some big themes we have seen during this pandemic will likely remain at the forefront. This includes an emphasis on cleanliness, low contact, technology and increased security. 

5. How should small business owners manage future business growth in a post-COVID-19 environment?

How businesses should manage future growth depends on their specific business model. Your business may need to consider alternative delivery methods for your products or services in a post-COVID-19 environment.

In the short term, there will be limited events, meet and greets, and other opportunities to make connections. Businesses will need to focus on their competitive advantages and figure out how to provide their offering safely and effectively.

Another piece of the puzzle is the effect COVID-19 will have on a company’s client base. Small business owners will need to focus on evaluating clients to mitigate risk and ensure they are paid. They will also have to find alternative ways of connecting with clients who may no longer visit a physical location.

The Bottom Line

Small businesses and nonprofit organizations seeking funding to get back on track should start by considering options at the city and county level. As the landscape of the post-COVID-19 environment remains uncertain, business owners should continue to mitigate risk, cut costs and adjust delivery strategies as appropriate.

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