Among the biggest challenges that small business owners face is that of funding. You may have the best business idea in the world – but as a small business owner, you’ll quickly learn that the idea is only a minor part of the equation. You need adequate cash flow at every step of the way – and that isn’t always possible, especially when you’re just starting out.
Coronavirus and Cash Flow
The challenge of cash flow has been a particularly pressing one for businesses during the Covid-19 pandemic. Due to extended lockdowns around the world, even established small businesses that had positive cash flow found themselves in financial jeopardy.
To address the financial concerns brought about by the pandemic, governments around the world introduced business assistance programs. For example, the Coronavirus Business Interruption Loan Scheme (CBILS) was introduced in the UK, and the Paycheck Protection Program (PPP) was implemented in the US. However, at the moment, several schemes (such as CIBLS) are closed for new applicants.
This poses a challenge to businesses that are still facing financial issues and have not recovered completely, as well as new companies looking for funding to get their operations off the ground.
Other Loan Options
Luckily, while Covid-19 relief schemes have ended, it is still possible for small businesses to apply for (and receive) loans to help with cash flow concerns.
Business loan schemes differ based on country. Some may be specifically for small businesses. Taking Singapore as an example, it is one of the most notable growing business hubs in the world, and loan options are plenty. Many banks offer the Enterprise Financing Scheme in Singapore, and this kind of loan is ideal for both small and medium-sized enterprises. Which loan is right for your business is a decision you’ll have to make based on your company’s unique needs.
Additionally, you’ll also have to consider what you’ll be using the loan for – for example, if you’re confident that cash flow will return to normal and you’ll be able to repay your loan quickly, you can look at loans that have a shorter repayment time-frame. This may also mean additional benefits over longer-term repayments, like lower interest payments overall.
However, if you need longer-term help, your options will be different, especially if you need a significant amount of money. Loans often have a maximum quantum, so you’ll need to find one that fits your financial needs.
Asking for Help
The fact of the matter is, most small business owners aren’t trained in the nuances of the business loan process well enough to know which loan is right for them. This is especially true in case of unexpected financial needs, such as those caused by the Covid-19 pandemic.
In this case, it’s essential to work with a professional who will be able to guide you through the loan application process. You may be able to find a government agency, such as the Small Business Administration, that is able to serve as a guide. If this is not available in your country, you can also look for help from a professional like a financial advisor or consult with your bank for further guidance.
Loans can seem like a challenging process to navigate, especially when your cash flow issues are unexpected. However, with a bit of research, you’ll quickly find that there is more than enough help available out there, regardless of what type of loan you need.
Founder Dinis Guarda
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