As COVID-19 cases continue to rise in the U.S., businesses are forced to remain on lockdown. Small businesses that were thriving just three to four weeks ago are likely to experience financial strain in the coming weeks—especially those entities designated non-essential. They’re being forced to adapt quickly and creatively to continue financing operating and payroll expenses.
As a community bank or lender, you’ve likely gotten inquiries from loyal customers wondering how they can obtain emergency funding to stay afloat during the crisis.
We’ve compiled 4 tips you can pass along to your small business clients to support them through this difficult time—and help them regain their footing once restrictions ease up. Keep an eye on this post—we’ll continue to update as we learn more.
Tips that community banks can offer their small business customers
- Learn about the Congressional aid available to your business under the CARES Act.
Small businesses under 500 employees can apply for a range of Small Business Administration (SBA) loans offered in conjunction with the newly-passed Coronavirus Aid, Relief and Economic Security (CARES) Act. These provisions include:
- Paycheck Protection Program (PPP): Qualifying small businesses can receive up to 2.5x their payroll to cover employee pay, rent and mortgage payments, and utilities for a period of eight weeks. The application is open now—and it comes with forgiveness provided you retain staff, maintain wages, and use the funds according to their intended purpose.
- Economic Injury Disaster Loans and Grants (EIDL): Businesses can apply to receive up to $2 million in working capital loans. There is no forgiveness provision for the loans, but business owners can also obtain an advance of up to $10,000 through either EIDL or PPP. The application for these COVID-specific disaster loans is available on the SBA website.
There’s also tax relief on the way. The deadline for federal and state taxes has been pushed to July 15th, and small businesses may qualify for employee retention tax credits as well as tax credits for up to 80 hours of sick leave per employee.
- Create—and deepen—digital relationships with your customers.
As a small business (and part of the fabric of your community), think about how you can maintain relationships when you can’t be face to face with your customers. For example, you can share your expertise through a live-streamed webinar. Bring the in-person experience or services you offer online: from digital beauty classes, cocktail making classes, and fitness classes to allowing customers to “virtually test drive” vehicles and tour homes on the web. Your customers will appreciate your dedication to their needs and interests during this crisis. By having to stay home, they have the time now to research, learn, explore, and be entertained.
- Communicate with your customers.
Keep your customers informed of how you’re handling the crisis. If you have a large community following, you may even see if you can create a staff fund to prioritize your employee income during this time. And tell us: if you’re a small business that’s still open, what tactics are you using to maintain a safe and sanitized workplace? We’ll pass along your strategies to the other businesses in our community. By sharing best practices, we will get to the other side of the curve faster.
- Reallocate staff to online or delivery operations.
Online, your business never has to close. Whether you’re a retail company transitioning your sales solely online or a local pizzeria offering orders exclusively through delivery, you can temporarily use on-site staff to perform these jobs instead of their typical roles. That way, your employees can help you fulfill more orders as your business model shifts—and you can stave off layoffs.