By Kala Gibson, Head of Business Banking, Fifth Third Bank
Drive down most streets, and it’s easy to see the obstacles our small business community is facing. There are closed signs on storefronts, empty parking lots outside malls and only carry-out from the restaurants that remain open. Whether it’s a family-owned store or a 200-person operation, business owners are making tough choices. Some have furloughed employees or let them go, trying to figure how to survive through the financial fallout from the pandemic.
Nine out of ten small business owners are concerned about the economic impact of the coronavirus, according to an April study from the National Small Business Association. More than three-quarters have seen customer demand drop, up from half just four weeks ago. More than half say they aren’t confident in the financial future of their businesses, up from 15% in January, the study found.
The diminished business has been bad enough, but the uncertainty of how long it might last is adding to the angst of many owners.
For those small business owners who were left out of the first round of the Paycheck Protection Program from the Small Business Administration, the second round was a second chance. And, with that round, $30 billion was designated for Community Development Financial Institutions (CDFIs), nonprofits that are dedicated to responsible and affordable lending to help underserved areas become stronger, as well as smaller banks.
CDFIs often are an overlooked resource for small businesses, but for some, they can serve as a lifeline right now. They are run by different organizations across the country. In Detroit, there are several, including Detroit Development Fund, Michigan Women Forward and NEI. Some will offer loans through the Paycheck Protection Program, and others also will offer low-cost and patient capital loans and help with education such as cash-flow analysis, credit management, loan applications and more. Already they have started to help by deferring loan payments and counseling small business owners.
Fifth Third has pledged $11 billion to small business loans through 2020 as part of its $32 billion Community Commitment. Through our partnerships with CDFIs and other nonprofit organizations, we continue to deliver a wide range of resources geared towards educating entrepreneurs and families on the innovative ways that they can access traditional forms of capital such as micro lending and small dollars loans through the SBA.
As small business owners look to the coming weeks and months, here are some tips from our Business Banking team to help guide them:
Talk to your banker
- Many banks are working to help business banking customers through the uncertainty. They can help with business-continuity plans and credit management and help see if businesses qualify for the Paycheck Protection Program through the Small Business Administration. They can walk owners through their own programs and refer them to CDFIs in their market. Many banks offer hardship programs. Fifth Third offers a small business payment deferral program of up to 90 days, as well as fee waivers for select services. For all details about Fifth Third’s programs, visit 53.com/covid
Understand your business position
- Take stock of where you are with debt and vendors and take a realistic look at your business for the coming weeks and months. Look to the future to figure out when you will need capital – and sit down to plan now.
Think of your customer
- Many small business customers also may be suffering financially. This might be an individual who shops at your store but whose job in the hospitality industry has been cut. Can you offer a discount to keep the customer – and the relationship – and ensure that your cash flow is under control?
Be transparent about your business
- Let your customers know you are going through this with them. One small business – a distillery – in Bloomington, Indiana, for example, shares on its Instagram account how much it must sell each day to pay its employees and stay open for carryout. The company thanks its customers each day when it reaches that mark.
Be extra vigilant online
- During times of uncertainty, it’s natural to seek information and answers through the internet and social media. Unfortunately, criminals will use that to their advantage. Our Fifth Third team has noted that some companies are seeing an uptick in phishing – when a data thief impersonates a legitimate person or company via email to bait the recipient into reporting confidential information or to gain unauthorized access to systems – and has seen reports of malware (malicious software) disguised as a coronavirus map. Watch for email senders using suspicious or misleading domain names. Inspect URLs carefully (without clicking on the link) to make sure they’re legitimate and not imposter sites.