I have always had respect for business owners, but that respect has risen to a new level through the COVID-19 pandemic. Between innovating and pivoting their business to a potential “new normal” and trying to keep track of the different loans and grants available, including being a source of encouragement and support to their employees, I am just in awe of their fortitude. Regardless of the pandemic, it is still business as usual for many businesses (albeit adhering to health safety guidelines).
Apart from questions related to PPP loan forgiveness, the inquiry I hear most is this – “how do I get a loan in the middle of a crisis?” If you are asking the same question, here are a few tips to prepare business owners seeking to obtain a loan in the middle of a pandemic:
- Keep up with your personal credit. Your credit does matter when it comes to business lending and if you can show that not only did you keep your business debts current but your personal during the middle of a crisis that will mean a lot to a lender. Already behind on some payments? Now is the time to work with your creditors to get back on track and be prepared to explain to your lender what happened.
- Be honest about how things have been. If business has been down, it is ok to let the bank know. Have you had a COVID-19 case shut your doors for 2 weeks? Tell the story and how you overcame it. The bank will want to know how a pandemic like COVID-19 affected your business and what you did to overcome the obstacles and move into the future.
- Have a plan for the business moving forward. Banks want to see that you not only are making it through the crisis but that you have made changes and have a plan for the future. Upgraded your systems to accept credit cards when you had not previously? Upgraded your website to take online reservations? Your bank will want to know these things as it shows you are thinking beyond today and how to have a thriving business in the future.
- Be prepared to talk about any funding or grants you received during the crisis. Even if you were afforded grant funding, you might still qualify for a loan. Did you get a PPP loan? If you did, good for you. You were probably able to keep people employed while figuring out the rest of your business during a stressful time. Let your bank know about it, how it affected your employees and business, and if you qualify for forgiveness. If you got a PPP loan but do not qualify for loan forgiveness, the bank will just likely need to include a payment for it in their calculations.
- Keep up with your financial documentation and have it handy. Make sure your most recent personal and business tax returns are available as well as an interim financial statement, which would include data from the COVID-19 pandemic. Depending on your loan, they may not need it all, but it is good to have it handy and current.
Getting a business loan, regardless of international crisis, can be a stressful time, but being prepared and finding a banker you can trust can make all the difference.