Keep calm … and small business on
By Mike Bowman
A JPMorgan Chase report released last fall on the financial stability of U.S. small businesses in 25 metropolitan areas has been given new context as attempts to slow the coronavirus pandemic have brought a majority of in-person commerce to a halt across communities, the country, and the globe. The report found that 29% of small businesses were unprofitable and 47% had less than two weeks of liquidity.
The health and economic challenges for small businesses and their employees are the most frightening in Delaware’s memory. There is frustration from the public by their inability to access service from their favorite providers.
While there are no short-term cures, here are a few tips and tools to consider as you work through this unprecedented time.
- Stay calm, do your research.
If you are experiencing difficulty paying bills, reach out to your creditors, suppliers, and landlord to find out if they can enact their own relief measures to help. Some entities may offer deferred payment options, waive certain fees, or work with you to address your specific needs. Also, take a look at your insurance policy to understand the details of your business interruption coverage. Depending on the scope of your coverage, certain losses may be covered.
- Look at updated unemployment policies
If you need to reduce your workforce, or your staff is unable to report to work as a result of COVID-19 (i.e. medical issues, child care issues, etc.), help your staff understand how the Delaware Department of Labor (DOL) can help. Unemployment insurance guidelines are being adjusted to respond to this crisis, and new parameters may help with eligibility for benefits. DOL will begin processing unemployment claims as they are received with the goal of benefits becoming available within a week.
Although DOL offices will be closed to public access during this state of emergency, the department remains operational and offers the ability for Delawareans to file for unemployment benefits online at the following link: https://ui.delawareworks.com/. Questions can be answered via email at [email protected] or via at 302-761-8446.
- Ask for HELP – Hospitality Emergency Loan Program
If you operate a hospitality business in Delaware, you may be eligible for special assistance under the new HELP initiative. The Hospitality Emergency Loan Program (HELP) provides financial relief for restaurants, bars and other hospitality industry businesses that employ thousands of Delawareans.
The no-interest loans are capped at $10,000 per business per month. The money can cover rent, utilities and other unavoidable bills but cannot be used for personnel costs. The loans have a 10-year term with payments deferred for nine months. Eligible businesses must have been in operation for at least a year, have annual revenue below $1.5 million and be in certain hospitality-connected industries. Other eligibility guidelines apply. Email [email protected] to learn if you qualify or call 302-739-4271 with additional questions.
4) Look into an SBA Disaster Assistance loan
Delaware was approved for an Economic Injury Disaster Loan program by the U.S. Small Business Administration. These loans assist small businesses, nonprofits and more, in meeting ordinary and necessary financial obligations that cannot be met as the result of COVID-19.
SBA makes loans available to small businesses and private, nonprofit organizations in designated areas of a state or territory to help alleviate economic injury caused by the coronavirus (COVID-19).
- Economic Injury Disaster loans offer up to $2 million in assistance.
- Loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. It does not cover lost sales. The interest rate is 3.75% for small businesses. The interest rate for nonprofits is 2.75%.
- Terms, up to a maximum of 30 years, are determined on a case-by-case basis, based upon each borrower’s ability to repay.
- Repayments are deferred for 12 months.
More details at: https://www.sba.gov/funding-programs/disaster-assistance. You may also contact SBA’s Disaster Assistance Center at 1-800-877-8339 or via email at [email protected]
5) Meet with an SBDC advisor for free assistance to access resources
Navigating the complex maze of relief resources can be overwhelming. The Small Business Development Center’s specially trained advisors are here to help. Meet with an SBDC advisor to go over financing options and resiliency strategies. The SBDC has been around for over 35 years helping to sustain or grow businesses, even during the most challenging economic times. We are still here working remotely 8:30 a.m. to 4:30 p.m. Monday through Friday. Request free and confidential advising at www.delawaresbdc.org or [email protected] or 302-831-1555.
The SBDC will remain at the front line with the full support and services of our professional tireless staff and in coordination with our many stakeholders, such as SBA and the Division of Small Business.
Stay calm and protect yourself and your family.
Mike Bowman is state director of the Delaware Small Business Development Center.