Small businesses should be vigilant as government aid amid the coronavirus pandemic is seen drying up. A new study by LendingTree found that the end of federal aid has the potential to cause a small business crisis.
Entrepreneur and keynote speaker Ramon Ray commented that Covid-19 has sapped the cash flow of millions of small businesses. The government’s Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan through the SBA “can only do so much.”
Potential Small-Business Crisis
Small businesses have overwhelmingly relied more on federal aid rather than support from their local communities.
A LendingTree analysis warned that some form of small-business crisis may come because of the end of federal aid. The crisis could be similar to the recent eviction crisis. Also, it can come after the PPP application deadline passes tomorrow, Aug. 8.
The Census Bureau’s Small Business Pulse Survey shows businesses seeking aid. Nearly 8 in 10 small businesses have received aid from the federal government since March. Plus, about 5% of businesses have actively asked for help from state or local governments.
That’s also in contrast to just over 4% of businesses having asked for help from family or friends. The status quo could flip as federal aid dries up.
“Without federal aid coming and with state and local governments already looking to cut their budgets, local communities may end up being one of the few sources left for small businesses to look for help. How much local communities will be able to support their favorite small businesses, though, remains a question,” LendingTree’s Derek Miller said.
Ramon’s Tips for Small Businesses
- The key for businesses to weather the crisis is to stay vigilant.
- Look for other funding opportunities, such as grants from private companies like Facebook, Keap, Hello Alice and others. However, considering other sources for aid comes with a caveat.
- Be careful of piling on debt and being in an even worse predicament than before.
- Diversify and keep communication with clients and customers open.
- Keep focused on what new solutions you can offer. Continue to communicate with your customers.
- If it comes down to it, small businesses need to be ready to alter their course.
- Consider how you might need to shift and pivot and change your business.