The spike in COVID-19 delta variant cases is posing another challenge for small businesses in South Florida. Even fully vaccinated employees and customers are readopting protective measures, like mask wearing and social distancing, in restaurants, retail shops and service businesses. South Florida businesses should take action to best prepare for an uncertain future.
The federal government was quick to swing into action with financial support for small businesses struggling to survive after the COVID-19 pandemic struck the U.S. last year. The Paycheck Protection Program (PPP), which we supported at Amerant Bank, allowed businesses to keep employees on the payroll and was followed by other state and local assistance programs.
But despite the potential economic impact, there is no support in Washington for another round of PPP. Fortunately, the Small Business Administration is offering guaranteed loans with payment subsidies and reduced fees through preferred lenders and other banks for a limited time.
Regardless, South Florida businesses should take these eight important steps to best prepare for unexpected events, like the current spike in variant cases:
1. Increase cash reserves. Look closely at your cash flows to see if money can be deposited in a “rainy day” savings or money market account. Ideally, there should be enough on hand to pay employees and suppliers for three months of normal operations.
2. Analyze your cost structure. Could you reduce your rent by moving to a smaller space and having employees work-from-home on a full or part-time basis? Would a modest investment in technology, such as a new app, cut costs or improve customer service?
3. Look at your insurance coverage. Talk with your agent about business interruption insurance and weigh the costs and potential benefits of such a policy.
4. Gather financial documents. If you need to apply for a loan, it saves time to have the key documents readily available. That includes your recent tax returns, income statement and balance sheet. Your CPA or tax advisor can help you prepare the documentation.
5. Build a relationship with your banker. Talk with your representative on a regular basis to discuss how your business is doing. Having that personal connection in place can make a big difference if your business runs into an unexpected financial challenge.
6. Open a line of credit. This business banking product can help you manage the ups and downs of your cash flow, meet your payroll or cover unexpected supplier costs. You only withdraw what you need, paying interest on that amount, and typically repay the funds within a year. For instance, Amerant Bank uses the streamlined and secure Numerated digital platform to provide immediate decisions on applications for an unsecured line of credit of $250,000 or less.
7. Think about a standard business loan. This lending option is structured to finance longer-term needs, such as the purchase of new equipment or renovating a restaurant or store. The loan would typically be secured by the company’s assets, and you would make regular principal and interest payments until the loan is repaid.
8. Apply for an SBA-guaranteed loan. The federal government guarantees certain types of small business loans to reduce the risk to preferred lenders, like Amerant Bank, who can quickly turn around applications. For instance, 7A loans are available to businesses (that are defined as a “Small Business” by the SBA) in revenue for the purchase of real estate, fixed assets, equipment, working capital, or to finance lease hold improvements.
The bottom line: Don’t wait for another COVID-19 crisis or economic challenge to come along. Take a proactive approach to managing your finances, keep in touch with your banker and understand your options for the future.
Schedule an appointment at an Amerant banking center today and discuss your options.
