There’s little doubt that COVID-19 has rapidly disrupted the way that small, medium and even large businesses conduct their affairs. But, like all crises and disruptions, there is never a better opportunity for moving quickly and making a profit. It is a fact that more millionaires are made in recessions than in times of ease.
And the world was shifting to work from home (‘WFM’) before COVID hit. A survey from Global Workplace Analytics found 56% of the US tech workforce (75 million employees) have a job description perfectly compatible with remote work.
Click here to view chart: https://www.finimpact.com/covid-19-coronavirus-smbs/
Post-COVID 19: Leverage 10 New Business Trends
#1 – Reduced Rent
Working from home has a myriad of benefits, for both business owners and employees. Some of these will be outlined in more detail below. But, reduced rental costs are major. One of the biggest problems for all kinds of businesses is rent in urban locations. It is especially relevant for corporate outfits renting office space, which has a massive price tag. Imagine being able to completely cut all your rental costs.
Most business owners simply don’t see this. Yes, there is the issue of existing leases, but allowances have been made in the US for this, and financial help is also available. Rent is a major cost – use the funds saved from rent to foster an intimate relationship with employees who no longer meet face to face. Of course, this does apply so much with a services company such as a restaurant that needs a physical presence. But it will work for digital and certain other models.
#2 – Reduction Of Associated Costs
While rent is one of the major benefits, there are a plethora of associated costs that are also vastly reduced. If you are no longer using office space, then there is no need to pay for insurance on the premises, and no chance of having to shell out for an injury. You also have zero utilities to pay.
The cost of hiring and onboarding staff has further been drastically reduced. This is due to the fact that no longer are physical interviews possible, so more of the process will be online and automated. HR and recruitment is a very expensive process. But without a physical presence, there is less need for an HR team to settle disputes and organize activities (though HR is still certainly needed in some capacity in medium to large business models)
#3 – Mental Health As A Priority
COVID-19 has brought mental awareness to the forefront of employers and employees. This is an interesting point as it kind of works both ways. Many workers seem to experience feelings of isolation when working from home.
Their routine has been upset, and it is incredibly difficult to adapt. There are many more temptations, and it is so easy to simply leave the desk with nobody knowing, or have one too many snacks from the fridge! Many studies and prominent psychologists have alluded to mental health risks.
The fact is that people are stressed about getting the virus. According to Reuters, many COVID-19 survivors are likely to be at greater risk of developing mental illness, after a large study found 20% of those infected with the coronavirus are diagnosed with a psychiatric disorder within 90 days. Anxiety, insomnia, and depression are common.
Mental health is a vital aspect of worker productivity. And much of the existing mental health issues simply went unaddressed in the pre-covid era. However, it’s also worth mentioning that a significant proportion of workers are extremely positive about working from home and are adapting quite well, with significant mental benefits. They don’t have to commute from work, and they have more freedom around the home to do as they wish.
#4 – Faster Implementations
Due to COVID-19, many organizations rolled out initiatives very quickly due to the need for speed. Because of the crisis, business executives are overseeing a wide shift in how organizations work, spanning tactical adjustments in areas such as meeting structure and cadence, and day-to-day management, as well as enterprise-wide changes in leadership and talent management, use of technology, and innovation. In most industries, 50% of more of the leaders surveyed are considering or planning large-scale changes in various sectors. Leaders are making many of these changes swiftly by necessity.
As one surveyed healthcare leader explained – “We were able to deploy an enterprise-wide virtual care solution in a matter of weeks, because that is all we had. This rollout had been planned for over a year, prior to this.”
Many organizations realize the value of speed during these times of flux and uncertainty. Surveyed leaders most often cite the need to react more quickly to market changes as the reason why organizations have made changes during the pandemic. This need is reported significantly more often than factors such as the need to reduce costs, increase productivity, or engage more effectively with customers. If you want to take advantage of COVID, then you need to act quickly and with precision. This is an area where a business owner can make great gains.
#5 – Leveraging Technology
For decades people have been hyping up technology. But it works and has transformed the world. With the onslaught of COVID, technology is needed more than ever. People are communicating via messaging and video applications and need virtualized areas to collaborate. Security is going to get more sophisticated, with retina and fingerprint scanners to verify entry to workspaces.
Technology can improve on speed and decision making, 2 pivotal components of any business enterprise. Many leaders view the pace of decision making as a priority for improvement, likely because many organizations find it harder to choose a path forward than to follow that path.
Communication and collaboration are 2 key areas that business leaders highlight when talking about technology. The speed at which accurate data is transferred is key. And to do this, there also has to be a clear chain of command where everybody knows their position. Superior technology can help from onboarding to payroll to learning to project execution.
#6 – Less Red Tape And Bureaucracy
With systems and management get established in a business, it’s hard to think of doing things differently. But many of these systems (and even certain staff) are surplus to requirements and make things even more difficult. In many instances, it is not the execution that is the problem. It is actually getting the sign-offs for disparate managers, all of whom have their own opinions about things. The end result is unnecessary delays.
Many business owners are finding that they operate just as efficiently, if not more so when the workers are given free rein to complete tasks on their own with only a light veneer of guidance. This runs counter to the management ethos that unless the workers are carefully managed, they will not get the work completed. A primary advantage of COVID is that it highlights what is truly necessary for a business and what was there simply nobody believed it was unnecessary before.
#7 – Sustainable Development
COVID-19 has woken the population up to the fact that sustainable development is necessary for the global economy to thrive. Sustainable development can take many forms, including:
- Financial sustainability
- Environmental sustainability
- Social sustainability
How can a business owner take advantage of ‘sustainability’? There is a huge market for organic or fair products, perceived as those that have long-term value and a transparent ethos. Clients and investors do not put up with shady businesses any longer. They consider the social and wider consequences of where they put their money. This trend has been reflected in the socially responsible investing phenomenon and the emphasis on green products in recent months. The trend is only going to continue year on year.
#8 – Education and Upskilling
Never before has there been such a radical shift in the global economy at such a rapid pace. As a result, large segments of the workforce need to upskill and reeducate themselves. May college students find themselves in a terrible environment for their courses, and because change is coming so rapidly, it is just not possible to accurately predict what skills are most relevant.
But there is a definite upside to this. Some skills are definitely in-demand, such as mobile app development, AI, automation tools, supply chain management, consultancy businesses, and far more. It is the prime opportunity to pivot an existing business to make it more profitable.
Pivoting refers to the art of changing your core business model to adapt to current circumstances. A Startup Genome study demonstrated that businesses that pivoted once or twice enjoyed far more success than those who stuck to their guns for the long-term. You and your employees can benefit from either upskilling or ‘pivoting’ to a new model entirely.
#9 – New Productivity Mechanisms
The fact is that COVID-19 has actually accelerated both employee productivity and employee satisfaction levels. The majority of independent studies are reporting this, and it goes against many employer fears of a lazy and complacent workforce. The reasons for this are unknown, but possibly in line with the fact that workers do better when they have the time and space to get the job done.
They are also more free to do things that make them more productive and motivated, whether that is a walk in the park, a 9 AM yoga session to start the day, or simply a coffee in a local cafe. Business owners can trust their employees to work without breathing down their necks. And the need for managers might actually be reduced in a collaborative environment where workers are independent with only light-touch management.
It’s also a major benefit that employees do not have to commute an hour to and from work. This is precious mental bandwidth that can increase their productivity levels.
#10 – Direct Entrepreneurial Expansion
You can take advantage of COVID-19 in a variety of different ways. Consider the various business opportunities – hand sanitizers, masks, door deliveries, mental health, remove services, shared office spaces, the list goes on and on.
Fast-acting entrepreneurs are having a field day with all of the opportunities. Particularly, small business owners who opted for restaurant delivery fared quite well, though this option was not taken up by every outlet.
There are still many opportunities for expansion in the post covid era. Supply chains are operating differently, consumer preferences are changing, and there are multiple opportunities in niche industries including VR, AI, renewable energy, supply chain management, and far more.
Tech companies are still incredibly lucrative, according to a Startup Genome Study, with impressive job multipliers and innovations that can have incredible benefits to the wider economy. In contrast to entrepreneurs, business executives have a slightly different focus. When surveyed, business executives primarily placed an emphasis on 3 key areas:
- Making good decisions more quickly.
- Improving communication and collaboration.
- Making greater use of technology.
The Importance of Speed
Speed is of the essence when it comes to pandemics like COVID, where the fastest acting businesses reap the rewards. As things start to solidify, it is design, patience, planning, and longer-term foresight.
There are also many ways you can directly take advantage of COVID with financial incentives. These financial incentives are outlined below. Note that some of them, such as the Paycheck Protection Program, are no longer available.
#1 – SBA Paycheck Protection Program
The SBA Paycheck Protection Program (‘PPP’) is a new protocol created under the 2020 CARES Act. The CARES Act was introduced to combat the financial implications of the Corona Virus for all citizens. The PPP aims to provide relief to small business owners who cannot currently pay wages, rehire employees, and cover overhead. It is the primary relief package under the CARES Act.
It provides up to 8 weeks of relief with no fees or interest. In addition, the funds can be used to pay for rent, utilities, and mortgages. Wages and salaries must stay the same, and fired employees must be rehired. More details on the now-defunct program can be found here. Many are saying that the 8 weeks of Paycheck ‘forgiveness’ will not be enough to prevent the fallout, and will have to shut their doors anyway.
#2 – SBA Economic Injury Disaster Loans
The SBA Economic Injury Disaster Loan (‘EIDL’) is perfectly suited to the current economic crisis. It can provide up to $2 Million to businesses that suffered economic injury as a result of a disaster. They must be in an area that has been officially declared to have undergone a disaster. Aside from the PPP, this is the second strongest arm of relief underneath the wider CARES Act.
However, like most of the SBA disaster programs, it has run out of funding. No new applications are being accepted and it is currently only providing $10,000 of relief to affected enterprises. Updated! The EIDL program is now all but closed, only accepting applications from those in the agricultural industry. No new generic applications are being accepted and it is currently only providing $10,000 of relief to affected enterprises. The $10,000 relief is known as the Economic Injury Disaster Loan Advance (EIDL Advance). It is effectively an advance on the EIDL loan. The funding underneath this particular program is set to increase to $15,000 in the near future. Like the straight EIDL program, only agricultural companies are eligible following the recently updated criteria.
#3 – SBA Express Bridge Loan
The SBA Express Bridge Loan allows businesses that currently have an Express Loan to gain access to $25,000 quickly. This loan is specifically designed to ‘bridge’ the gap while applying for other kinds of loans, such as the EIDL Advance or the PPP. You can find more details here.
This loan is a little less appealing in the sense that it must be paid back when relief is granted in contrast to some of the other options, such as the EIDL or PPP. However, in many instances, you will not have to repay the loan. For example, you could apply for the PPP so you won’t have to cover payroll/wages for an 8 week period.
While there is a backlog right now, the Express Bridge Loan could easily tie you over until these funds become available. The turnaround for this loan is quite swift. It is a pilot program allowing SBA accredited lenders to lend up to $25,000 immediately to certain applicants.
#4 – SBA Debt Relief
Businesses that are currently taking advantage of the SBA 504, SBA Microloan, or SBA (7)(a) can have all fees, including the principal, waived for 6 months. In effect, this means that all of your debt payments can be effectively wiped out if you apply under this program.
These loans are often not small. For example, the SBA 504 commercial real estate loan can be up to $5 Million, and the monthly interest on this can be large in dollar amounts. The SBA Debt Relief program is a new offering designed specifically to assist businesses suffering from the COVID-19 fallout.
Effectively, most loans that you currently have should be forgiven payments during the current period. Both commercial and state loans are forgiving payments on existing loans, for at least 30 days. So you should have a lot of flexibility. Reach out to all lenders to see if you can get an extension of some kind, even outside of the SBA program.
#5 – Online Business Loans for COVID-19
Online lenders are almost certainly the best bet in the midst of the COVID-19 crisis. This is because online lenders like Kabbage, OnDeck, Lending Club, SmartBiz, and LoanBuilder are famous for 3 things:
- Low Eligibility Requirements.
- Lightning Fast Funding.
- Opaque Terms and Conditions.
Right now, the most important thing for a small business owner is to get funds without delay. A typical bank loan can take months to complete with many documentation requirements. And it’s not possible to meet people in person without the danger of contracting the virus.
But the online lending process can be done without meeting anybody in person. With lenders like Kabbage, you don’t even need to take a call. The money can be in the account as quickly as the next business day, after completing a 10-minute application.
The requirements will usually be $50,000 in annual revenue, a minimum credit score of 550, and 3 months of bank statements for verification. This is usually all that you need, though some online lenders will have different requirements. With the speed of application and the speed of delivery of funding, online lenders are ideally suited for the COVID-19 crisis.
#6 – SBA Microloan Program
Microloans are loans available from the SBA that are under $50,000. Microloans are available mainly to small businesses in underprivileged areas. They are also typically granted to minority businesses run by women, veterans, Hispanics, African Americans, etc. These businesses must be for-profit and must be located in the USA.
The criteria for qualifying for these microloans are quite low. A credit check is not required unless the amount is over $20,000. The borrower cannot already owe more than $50,000 at the time of application. The maximum term of the SBA microloan is 6 years, which is a very long term. No physical collateral is required, though a note of collateral must be signed.
Microloans are processed much more quickly than typical SBA (7)(a) loans. However, it is still not as quick as the emergency funds that are available. There are better options available. A microloan is not a line of credit but a term loan. Eligible uses include inventory, wages, working capital, equipment, and machinery. More details can be found here.
#7 – Business Interruption Insurance
Business Interruption Insurance is a typical insurance policy that most small business owners should have taken out. In fact, it is designed specifically to prevent these kinds of challenges. Business Interruption Insurance is supposed to cover any kind of business interruption that affects wages, fixed costs, loan payments, etc. Many insurance companies are currently trying to default on their loan obligations, claiming that COVID-19 is a natural disaster.
However, policymakers are in the process of forcing the insurance companies to make good on their obligations. In California, the commissioner has issued a notice forcing companies to cover COVID-19 claims. This kind of insurance is most typically for larger companies. Only 33% of small businesses get it, according to the American Action Forum. The issue remains quite controversial at present.
The President, and many other state senators, have made statements to the effect that insurance companies have to pay, even where there are specific exemption clauses in place. Multiple bills have been introduced by states including Massachusetts, Ohio, New Jersey, New York, California, Louisiana, Pennsylvania, and South Carolina. Consider the following clause form a New York draft bill:
In other words, if you have Business Interruption Insurance, you could easily be reimbursed even if the contract has a specific viral clause in place.
#8 – Other Forms of Corona Virus Relief
If you have been hit hard with the effects of COVID-19, it’s vital to use all of the avenues at your disposal. These avenues include:
- Mortgage Relief – The CARES Act allows mortgage relief up to 180 days for those affected. This is the case for Federally backed mortgages. If you cannot make your mortgage payments due to COVID-19, then you definitely need to contact your bank. All you have to do is submit a request to the servicer – no further documentation is required.
- Lease Relief – know your rights. Landlords cannot evict tenants during the present time (provided they have been granted forbearance) without giving 120 days of notice. The CARES Act forbids evictions in Federally backed housing (note that you must still pay your rent – you just have a longer time to do it and won’t have any penalties for late payment). Many states and local authorities have issues laws that prevent landlords from evicting tenants.
- Unemployment Benefits – If the worst comes to worst and you do lose your job, then at least you will be fully entitled to jobseekers allowance. A $2 Trillion Bill enacted in late March allows those who are now unemployed due to Corona Virus to gain the necessary funds to meet basic needs. The Pandemic Unemployment Assistance (‘PUA’) covers. Independent contractors and sick people caring for a loved one. The PAU also offers $600 on top of existing benefits for eligible applicants.
- Friends and Family – There is increased solidarity among small communities and a willingness to help out. With a global pandemic, people are understanding and willing to lower costs and lend a hand. While not a direct form of finance, this is something that can be leveraged.
Capitalizing on the Corona Virus
The first instinct of the business owner (and people in general), when faced with a global pandemic, is to panic. But there is an abundance of ways to not only claim relief but to make a profit. Consider all of the examples given above – there is finance available to nearly everyone, even if the delays need to be taken into account.
There are many benefits to this virus, which may not be readily apparent at first. Employers will allow more people to work from home, given the necessity of working from home at present. New markets will open up. Other industries are booming – Amazon, Dominos, Burger King, and many other large chains are in the process of hiring more employees.
It has always been creativity that has propelled US businesses to the forefront of the global market. While the outlook has been quite gloomy, there is always a way to give customers what they want with innovative solutions.
Contractors and Digital Nomads
One contentious area surrounding the Corona Virus relief packages is that of independent contractors and gig workers. However, if your small business does fall underneath these categories of workers, you can still avail of upcoming relief.
The Pandemic Unemployment Assistance Website will launch soon. This site will allow contractors, gig workers, and digital nomads to claim benefits. Little is known about this program as it is not currently operational. Applicants are advised to start preparing the documentation in advance.
This can provide up to 39 weeks of unemployment benefits and will be backdated to January 2020 or the first day you were unable to work. If you have tried other options and been rejected, this could be the way forward. Information needed to qualify for this benefit might include:
- Copies of recent paycheck stubs.
- Bank receipts showing deposits.
- Billing notices are provided to your customers.
- Recent advertisements for your business or services.
- Statements from recent customers.
- Current business licenses, ledgers, contracts, invoices.
- Building leases.
Online Lenders The Strongest Choice?
Online lenders are also processing certain government programs during COVID-19. The SBA Paycheck Protection Program can be accessed through both OnDeck, Smartbiz, and Kabbage.
If you have an existing loan with PayPal Loanbuilder, you can simply enroll in the PayPal Business Financing Merchant Assistance program. Thie allows a reprieve of 30 days where no withdrawals will be deducted from your existing loan. LoanBuilder also offers the SBA Paycheck Protection Program. Other online providers are operating similar forgiveness programs for existing loans – you should be able to get a month’s reprieve. However, you might still need to contact them directly to discuss your options.
If the many relief programs available to you fail, then you can always gain access to funds from online lenders, one of the easiest ways of financial growth. For example, Kabbage offers a business line of credit up to $100,000 and a term loan up to $250,000. There is no credit score (though 540 is recommended). The only real requirements are $50,000 in annual revenue and 12 months in business. The application can be filled out online and you will get a response within 10 minutes, with funds supplied as soon as the next business day.
LoanBuilder, OnDeck, Lending Club, and SmartBiz provide similar functionality. While there is a lot of doom and gloom surrounding the Corona Virus, if business owners make the right applications, they are unlikely to fall short of the required funding. So many options are available right now and the people who remain calm and balanced will end up in a far better position if they play their cards right.
Corona Virus Financial Resources
To exhaust all of your options, we have made a comprehensive resource page of relevant information. There are many ways to protect your finances during a meltdown.
Relevant sites that have important financial disclosures in relation to COVID include:
- Commodity Futures Trading Commission
- U.S. Department of Agriculture
- Department of Defense
- Department of Education, Federal Student Aid
- Department of Labor
- DOL, State Unemployment Benefits
- Department of Treasury
- FHFA mortgage updates
- Federal Reserve
- FTC scams
- HHS’ Administration for Community Living
- Office of the Comptroller of the Currency
- Small Business Administration
- U.S. Securities and Exchange Commission
Summary of Financial Relief Strategies
As a small business order, make sure that you run through all of these financial tools, preferably in the order they are written below.
- SBA Paycheck Protection Program (‘PPP’)
- SBA Economic Injury Disaster Program (‘EIDL’)
- SBA Express Bridge Loan
- SBA Debt Relief
- Online Lending Options
- SBA Micro Loans
- Business Interruption Insurance
- Other Forms of Relief (Mortgage, Lease, Unemployment Benefits, Family, Friends).
Also keep an eye out for the Pandemic Unemployment Assistance program, which is aimed specifically to help out independent contractors and small business owners who do not qualify under the existing infrastructure. The program is not operational at the time of this writing, so check in periodically through this site.
Best Option for Cash Strapped Small Businesses
The truth is that there is a myriad number of ways to avoid the financial fallout from the Corona Virus. Relief is available in abundance. The main solution is just to stay calm and to submit applications to all of the relevant programs. There is a Federally mandated program to assist with every single demographic right now – including entrepreneurs and the self-employed.
Remember, do your research – there has never before been so many financial programs in place from both government entities and online lending providers.