- About a third of eligible businesses that have applied a PPP have not learned whether they have been approved.
- Lenders outside of the SBA are very cautious about approving loans as demand increases.
- The bottleneck means that small businesses have to find ways to increase their cash flow, run lean and cut costs.
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Entrepreneurs who find it difficult to keep their businesses afloat in the midst of the pandemic have yet another challenge.
About a third of small businesses eligible for the Small Business Administration Paycheque Protection Program and applied for the new round have not heard if they were approved, according to a recently released survey of more than 1,100 US-based small businesses by HR software firm Gusto.
While the SBA has so far approved $ 103 billion in PPP funds – sending relief to 1.4 million companies, the government agency reported – about 65% of the $ 284 billion allocated have not. still been distributed.
Additionally, banks and lenders outside of the SBA are very cautious about approving loans as demand increases, according to Inc. Magazine. Transactions that took between four and six weeks happen in four to six months, Evan Goldman, partner at law firm AY Strauss, told Inc.
The bottleneck in loan approvals could lead to the demise of more small businesses, unless entrepreneurs find ways to increase cash flow, run lean and cut costs.
1. Contact your bank for intermediate options
Business owners should prioritize contacting their local bank or credit union while they wait for information on their loans, said Bob Prosen, Small Business Advisor and Coach, Told Initiated. Ask the bank if they are able to provide you with any help 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 this situation, I would do it immediately,” he added. “I wouldn’t wait a minute to show up to 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
Also, consider using credit already available by fully drawing down any existing credit lines or asking for a maximum increase on all credit cards, Prosen said. The process can be complicated, but it can provide more immediate help.
3. Calculate your burn rate
Finally, calculate your burn rate, or how much money you spend per month. said Prosen. Familiarize yourself with P&L and cash flow to better understand your financial situation.
“Find out how much money you have,” Prosen said. “How much money do you use daily and how long can you last?” ”
Figuring out this number will help business owners gauge how much lead they have left. From there, they can discern what other cost-cutting strategies may be needed while they wait for loans.
4. Review your operating procedures for efficiency
Inspect every function of your business and determine if there is a way to improve or reduce.
For example, are there any day-to-day tasks that could be streamlined? Is there an opportunity to implement a better cost reduction strategy in the day to day running of the business? Ask yourself these questions and make a plan.
Hollie DiGiorgio kept her Anytime Fitness gym in Florida afloat during the pandemic by loaning equipment to members who preferred to work out at home. “We actually loaned dumbbells,” said DiGiorgio. “We would find out how much weight they needed, and they could go by and pick them up.”
5. Remind customers why they should come back
Meanwhile, continue to engage customers and promote profitable marketing campaigns, said Deidre Mathis, owner of youth hostel, told the insider. For example, communicate any current and upcoming incentives or offers as a way to win back loyal customers, Mathis said.
“If a business isn’t thinking about how they’re going to share their message about how they’re bouncing off the coronavirus, then I don’t know what they’re doing,” Mathis said.
6. Renegotiate contracts
It’s important to remember that the pandemic doesn’t affect all businesses the same – some are experiencing massive growth as consumer behavior changes. Take this opportunity to renegotiate contacts with suppliers or customers to quickly reduce costs, said Prosen.
“Check your entire value chain so everyone knows what’s going to happen and determine where you stand in the priority of your suppliers,” added Prosen.
However, don’t skimp on your partners; think of it as an exercise in operating as efficiently as possible while the pandemic continues.
7. Look at trade indicators and make cuts
The last and most difficult option is to take a deep look at the trading indicators, Mathis said. Look at expenses, employees, and other expenses to find ways to cut costs, she added. It’s not easy, but a few cuts here and there can boost your bottom line.
“Look at every nook and cranny of your business, because if you are able to find a fit in your business that can save you thousands of dollars every year, then you actually came out on top,” Mathis said.