Many businesses are shutting down because of a lack of customers as governments have imposed emergency lockdowns across countries. These small businesses account for almost half of global private employment, so governments all across the world have announced support programs for individual businesses and large firms.
Many small business owners across the world have serious concerns about government coronavirus relief packages and loan schemes. They believe taking out a loan in this troubling global financial situation would be too risky. They have complained that facing interest rates up to 30% is too high for small companies and personal businesses.
As governments all around the world announce coronavirus loan schemes worth billions of dollars for small businesses, owners have started becoming alarmed. Why? Because they fear that the government is expecting them to borrow loans to keep their business afloat while there is no income generation for repayments.
One of their biggest concern is what will happen when and after the crisis is over? But this question is something that even high profile economists have problems answering because of the nature of the crisis and the virus itself. Some believe it is still early to predict the outcomes of the global economy and possible recession.
For those who felt puzzled whether to go for loan and risk repayment or shut down their businesses, here are some changes to the coronavirus loan schemes that you may have missed.
This crisis is not like the 2008 financial crisis because there is no credit crunch and banks have money to lend to the people as there is no constraint on the volume of capital lending. Therefore, these schemes can help your business in managing necessary cash flows during these months of crisis.
In light of the current situation, small businesses are particularly vulnerable to the COVID-19 pandemic because of disruption in supply and demand. To ensure your business keeps afloat, here is a three-step recovery plan development for your business.
Before taking any drastic measures, just sit back and access the current situation of your company to determine where to start planning. Since this crisis is unprecedented and unlike anything seen ever before, many businesses are quite puzzled and unprepared. The best practice is to start accessing the cash flows in the company. Here are a few things to consider:
After assessing cash flows, it is better to get in touch with financial and accounting firms to help build a proper plan for the next six months. Once the evaluation is done, gather all the relevant data and create a bigger picture and address all the expectations and realities. Consider the following key aspects when building a plan.
Once planning is done, communicate the plan with all the concerned parties and specify the goals and objectives of each initiative. Keep in touch with government representatives for changes in financial support programs and policies and reach out for financial assistance from the government. Keep communication open during the time of crisis where in-person communication is impossible.
You cannot survive the crisis without external help, and there are great government initiatives to help your business survive. For example, the UAE government recently launched a Dh100 billion support plan for small, individual businesses. Therefore, it is recommended to consult the bookkeeping and accounting firm in Dubai to analyze your financial need and help you apply for the program and ensure the business loan.
The coronavirus pandemic has crippled economies and quarantined people in their homes. Businesses are forced to shut down because they have no income to work on. It is time for us to ditch conventional ways and improvise to stay afloat during the crisis.
Be flexible with changes, and it gets too overwhelming, consult a finance professional before losing all hope.