PPP loans are delayed. Here are 7 ways to extend your cash, operate more efficiently, and save money while you wait.
- About a third of eligble businesses that have applied PPP haven’t heard if they’ve been approved.
- Lenders outside of the SBA are being very cautious about approving loans as demand surges.
- The bottleneck means small businesses must find ways to extend their cash, operate leanly, and cut costs.
- Visit the Business section of Insider for more stories.
Entrepreneurs who are struggling to keep their businesses afloat amid the pandemic have yet another challenge to face.
About a third of small businesses that are eligible for the Small Business Administration’s Paycheck Protection Program and have applied for the new round haven’t heard if they’ve been approved, according to a newly-released survey of more than 100,000 US-based small businesses by HR software firm Gusto.
While the SBA approved $103 billion of PPP funds so far — sending relief to 1.4 million businesses, the government agency reported — about 65% of the allotted $284 billion hasn’t been distributed yet.
Additionally, banks and lenders outside of the SBA are being very cautious about approving loans as demand surges, according to Inc. Magazine. Deals that used to take between four and six weeks are happening in four to six months, Evan Goldman, a partner at law firm A.Y. Strauss, told Inc.
The bottleneck in loan approvals could lead to the demise of more small businesses, unless entrepreneurs can find ways to extend their cash, operate leanly, and cut costs.
1. Contact your bank for interim options
Business owners should prioritize contacting their local bank or credit union while they wait for word on their loans, said Bob Prosen, a small-business adviser and coach, told Insider. Ask the bank if it’s able to provide any assistance in the interim, such as a short-term business loan, so you can bridge the gap in your finances.
“If I were a business owner in that situation, I’d be doing that immediately,” he added. “I wouldn’t wait one minute about getting in front of my bank and my credit union, and I would do whatever it takes to apply for a short-term business loan.”
2. Draw on existing lines of credit
Additionally, consider using the credit that’s already available by fully drawing on any existing lines of credit or requesting a maximum increase on any credit cards, Prosen said. The process could be complicated, but it may provide more immediate assistance.
3. Calculate your burn rate
Lastly, calculate your burn rate, or how much cash you spend per month. said Prosen. Familiarize yourself with profit-and-loss and cash-flow so you can better understand your financial situation.
“Figure out how much money you’ve got,” Prosen said. “How much cash are you using on a daily basis, and how long can you last?”
Determining this number will help business owners gauge how much runway they have left. From there, they can discern what other cost-cutting strategies may be necessary while they wait for loans.
4. Review your operating procedures for efficiency
Inspect every function of your business and determine if there’s a way to improve or cut.
For example, are there any daily tasks that could be streamlined? Is there an opportunity to implement a better, cost-cutting strategy within the daily workings of the business? Ask yourself those questions and make a plan.
Hollie DiGiorgio kept her Anytime Fitness gym in Florida afloat during the pandemic by lending equipment to members who prefered to workout from home. “We actually lent out dumbbells,” DiGiorgio said. “We would find out what weight they needed, and they could swing by and pick them up.”
5. Remind customers why they should come back
Meanwhile, continue engaging customers and pushing cost-effective marketing campaigns, said Deidre Mathis, owner of the Wanderstay hostel, told Insider. For example, communicate any current and upcoming incentives or deals as a way to win back loyal clients, Mathis said.
“If a business is not thinking about how they’re going to share their message about how they bounce back from coronavirus, then I don’t know what they’re doing,” Mathis said.
6. Renegotiate contracts
It’s important to remember the pandemic isn’t affecting all companies equally — some are experiencing massive growth as consumer behavior changes. Take this opportunity to renegotiate contacts with suppliers or customers as a way of quickly cutting costs, Prosen said.
“Check your entire value chain so that everybody knows what’s going to happen and figure out where you are in the priority of your suppliers,” Prosen added.
However, don’t shortchange your partners; consider this an exercise in operating as efficiently as possible while the pandemic continues.
7. Review business metrics and make cuts
The last and most difficult option is to thoroughly review business metrics, Mathis said. Examine expenses, employees, and other outlays for ways to trim costs, she added. It’s not easy, but a few cuts here and there can increase your bottom line.
“Look at every corner of your business because if you’re able to figure out a tweak in your business that can save your company thousands of dollars every year, then you actually came out on top,” Mathis said.
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