Coronavirus: Short-Term Loans may help small businesses thrive in an economic recession.

· 3 min read

image

During the current public health emergency caused by the novel coronavirus covid-19, small business loans can help small businesses that are struggling during the economic downturn caused by the outbreak. With many businesses shutting their doors, revenue is disappearing. Even businesses that remain open are struggling since many people are now staying home to either avoid being infected or to avoid spreading the infection to others. While this is the right thing to do for the sake of public health, it's also causing a lot of damage to the economy.

While the government is taking steps to lessen the impact, for small business owners these relief efforts may come too late. Unfortunately, the world doesn't stop moving even during a pandemic like this. Small business owners have bills to pay, and without revenue, they may suddenly find themselves unable to meet their obligations. What can they do to help ensure that they survive the current crisis? Short-term loans may be the answer that many small business owners have been looking for.

Should Small Businesses Get Short-Term Loans?

The current public health crisis is unprecedented in scale. It has disrupted just about every facet of everyday life and has caused people to hoard goods due to their panic. For small business owners that don't have a lot of cash reserves to fall back on, short-term loans could be the lifeline that they need to survive the current crisis. The government has recently cut interest rates to near 0. so payments on short-term loans today are lower than they have been in decades. While taking out a loan may not be an ideal option, it is the best option for many small business owners during the current crisis. A small business owner can either take out business loans to make ends meet today, or they can risk having to shut their doors for good.

Using Business Loans Responsibly Can Help Businesses To Survive And Recover

The key to being able to use short-term loans to weather the current storm and then recover afterward is to use them responsibly. If you are a business owner you can't panic and go out and get a loan for as much as possible just so that you'll have extra funds in the banks. The bigger the loan you get, the bigger your monthly payments are going to be, What you have to remember is that while there is a lot of panicking going on at the moment, in time the crisis will pass. Life will return to normal. While this may not happen next week, it should happen in the next month or two. Recovering will take longer, but people will slowly become more confident and start spending again. So, realistically you should only need enough money to cover your expenses for around 3 months at the most

You also have to keep in mind that other expenses that you normally have won't be an issue. You won't go through as many supplies, your utility bills should be reduced, and your labor costs will drop. While you may choose to continue paying your staff, if you do then maybe you should consider paying them a lesser amount. The point here is that during this current crisis you'll have to be smart with what you borrow, and smarter with how you spend money.

Another factor you might want to consider is whether or not you can negotiate with your creditors to reduce or delay your payments during the crisis. The covid-19 crisis is front-page news all over the world. Unless you've been on a deserted island you've heard about it. That means that your creditors have heard about it as well. It's possible that they'll be more flexible with you today than they normally would be since so many small businesses are struggling right now. At the very least you should talk to them to see if they can work with you, you have nothing to lose by trying, and you could gain additional financial flexibility by asking them for help.

Extremely Low-Interest Rates Make Short-Term Loans More Affordable

One step that the government has taken that should be very beneficial to everyone, especially small business owners are to cut interest rates to historic lows. Why did they do this? To stimulate the economy, and to provide to give small business owners access to small business loans. Lower interest rates mean lower monthly payments. Lower monthly payments are more affordable, making the impact of paying back a short term loan less severe for small business owners. You also have to remember that this is a short-term loan. That means you won't be making payments for years, so the impact that the payments you have to make will be minimized.

Don't Wait Until You Are At The Breaking Point To Act

At the moment you may be fine. You may have enough cash reserves to cover your expenses, and you may be confident that your business will be fine. You might be right, but you need to stay on top of things. You need to monitor your finances, and also watch the news and see what's going on. If it looks like the crisis isn't going to end anytime soon, and your cash reserves are getting a bit low, now is the time to act. You don't want to wait until you are in a financial bind, you want to act today. You may not end up needing the loan you are taking out, and if that's the case you can pay it back once the crisis is over. But, if you do end up needing it, then you'll be glad that you acted today instead of waiting for things to get worse.

Where Can You Get A Small Business Loan?

If you are looking for a small business loan to help you during the current crisis there are many lenders that you can find online. You can also apply to your bank. Due to the risks associated with spending time in public near other people, you should try to fill out an online application if at all possible. Short-term loans are not a perfect solution, but in the current health and economic crisis, they may be the only viable solution that you can find.

Interested in short term business loans?

Here are the top 3 lenders to get short term business loans in 2020!
Lender
Products
Get Started

Small Business Loans

Personal Loans

Small Business Loans

Personal Loans

Student Loans

Business Loans

Personal Loans