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Banking News Viewpoints

VIEWPOINT: Approach borrowing with eye on cash flow, growth and preparedness

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By Anthony Ryan
Guest Columnist

Anthony Ryan

When we emerge from the COVID-19 pandemic, many small business owners will have gone a full year or more trying to secure or continue loan programs designed to help them survive during incredibly stressful times and circumstances.

Several of these loan programs, including the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP), SBA payment relief programs and other low or no-cost loans and grants emerged as lifelines for businesses. They undoubtedly have helped small businesses in Delaware persevere and, in some cases, thrive.

Some businesses were more financially fortunate than others, whether due to their industry or operating model not feeling the impacts as drastically, using a strategy and plan they developed because of previous hard times and lessons learned, or they simply had larger cash reserves that made needing loans less of a factor.

The key for all small businesses will be to have a plan in place and be ready to execute it with decisive action when some loan programs expire, the funds have been used, new programs emerge, or an opportunity for growth presents itself.

Here are a few ways small business leaders can prepare for success in the coming months.

Have a proactive approach

Ask yourself, “What is my plan going to be?” instead of “What programs will be out there for me?”

It’s important to avoid plugging your business into a program that is not a good fit. Even the most well-intended loan programs can have unintended consequences if your business isn’t a fit to meet the requirements for the funds.

Instead, develop a plan to go after the best loans for your business when the time is right. These may be loan programs specific to your industry or a traditional small business loan or line of credit with your bank.

Your plan should start with having your financial records and information in order so you will be ready to quickly apply for competitive loan programs or secure funding with your bank.

Deepen your banking relationship

Now is a good time to talk to your business banking or lending partner to map out a game plan for your small business’ cash flow needs, loan obligations, and financing options.

Even if your current cash flow and liquidity is excellent, it may be best to resist the urge to devote extra cash to pay down existing loans faster, for example, and instead use it to enhance your cash reserves to be ready for a future disruption, expansion or other needs.

This is also a good time to look at your bank’s small business loan options, many of which can put you in a good position for growth now and well into the future. There is no one-size-fits-all approach with these options, but you also want to prepare so you don’t end up in a “square peg, round hole” scenario with your loan obligations either. You may find that you don’t need to pursue a new loan at all.

Your banker can help sort through the available options for your business and work with you to establish or update a sound strategy.

Lean on what you’ve learned

During the pandemic, many Delaware businesses took action to adapt to a changing environment, making operations and other changes to fend off the disruption to their businesses.

Ask yourself these questions.

What’s my business’ story? Were we able to pivot? Were the changes successful enough to consider keeping my new model, or parts of it, in place? Do I have the equipment needed to operate this way long-term? Am I in the right location? Do I have the right staff?

The answers should drive your strategy and help you execute on a new, nimble business plan developed in unison with your support system, including your banking and lending, accounting, marketing and operations partners and teams.


Anthony Ryan serves as senior vice president and director of small business lending at WSFS Bank.

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