Some 72 percent of those who tried to apply for a Paycheck Protection Program loan were successful in submitting their applications. That left around 28 percent of small business owners on the outside, unsuccessfully attempting to apply for PPP loans.
While the federal stimulus likely would have brought some welcome relief to businesses trying to keep their finances above water, the loan program isn’t the only way to buoy the bottom line.
Smart Business spoke with Kurt Kappa, chief lending officer at First Federal Lakewood, about some of the ways companies that didn’t receive PPP loans can stay afloat.
What financial support can businesses turn to if they weren’t awarded a PPP loan?
If the lack of a second stimulus package has forced a business to explore other ways to access capital and none of them fit, one fix is to find a new perspective. Look to small banks to access different business loan and grant programs offered through the U.S. Small Business Administration and local government agencies. These institutions tend to have great partnerships with local municipalities and economic development organizations offering community-focused loans that companies may qualify for.
What other moves could businesses make to offset revenue shortfalls?
When the traditional way of selling your product is no longer feasible because of the pandemic, explore other options. Many businesses are pivoting into new channels. For instance, there’s been a considerable shift to ecommerce for businesses that have products to sell. The channel has gotten a lot more popular given the social distancing imperative we’re under at the moment. Third-party online sales platforms like Amazon or Etsy can help businesses reach new clientele who may stick around after the pandemic has subsided.
There is also an opportunity for businesses to ask, ‘Is my current business model working?’ Now may be a good time for businesses to change the mix of what they sell to better match what people are looking for, or businesses may need to adapt their products and services — for instance, during the pandemic, distillers started making hand sanitizer and personal trainers led their sessions via video platforms.
Businesses are finding that they have to do more with less, including asking a staff reduced by layoffs to work harder and often for less pay. Businesses impacted by tightened purse strings and pay cuts should consider nonfinancial incentives and benefits to attract, keep and motivate employees. Consider perks such as extra days off, creating time for passion projects or flexible work arrangements as incentives and rewards.
How can bankers help businesses figure out ways to address their financial concerns?
Small businesses should look at all their options, from overhauling business models to pivoting online to restructuring their debt. A reorganization of a business’s debts can enable it to evaluate cash flow needs and provide an opportunity to stretch, and possibly lower, some of its debt payment obligations. It’s also a good idea for a business to ask a banker about 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 forced many businesses to press pause. Then staggered re-openings, challenges getting federal financial aid 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 aid. Now may be the time for businesses to re-evaluate their models and be open to reinvention.
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