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The following are three ways entrepreneurs can protect themselves.
1. Secure liquidity
According to the federal government’s Small Business Administration, only about half of small businesses last longer than five years. This shows how difficult and expensive it is to maintain a businesses, so liquidity is very important.
One way to access liquidity is through the “Small Business Workforce Stabilization Fund.” Treasury would forgive financial assistance provided to those small businesses which were solvent prior to the crisis, so long as the same number of employees are rehired within a 12-month period after the crisis.
This program would provide immediate cash flow to the most vulnerable businesses, keep employees on payroll, and allow businesses to grow once customers return.
2. Ensure access to capital
For franchise businesses, liquidity is just part of the equation. The cost of goods sold in the service industry is primarily wages paid to staff. Debt loads from Small Business Association loans are common for small businesses, and can create additional pressure on business owners. With demand down and paid leave provisions now a reality, layoffs are a real concern.
In order to help small businesses make payroll and cover expenses — including paid sick leave, paid FMLA, and loan repayment — a relief plan tailored to small businesses is in order. And in my view, the proposed $300 billion Restoring Economic Security, Confidence, and User Endurance (RESCUE) Businesses Act of 2020 would do just that. Under this proposal, the SBA would waive all fees for all 7(a) loans for one year for both lenders and borrowers and provide a 90 percent loan guarantee for all loans, no matter the size. The legislation would also increase the loan limit for SBA Express from $350,000 to $1 million and give local businesses the breathing room they need to remain in business and thus maintain staff in light of the health crisis.
3. Engage with policy-makers
Proposals in Washington calling for billions in aid to small business are enormous, and may feel out of reach as we work from our towns, miles away from our nation’s capitol. But our voices are crucial in this moment of crisis, and we cannot leave big business to speak for us when it comes to emergency stimulus or any economic policy that impacts us.
This can be done individually and it can be done in partnership with other entrepreneurs; the mediums for engagement are endless. Social media, letters, email, phone calls are all effective ways to engage. The method is less important than the message, and the message is this: small businesses are the lifeblood of our communities and economy; we need relief in the midst of this crisis.
The small businesses within our communities provide jobs and economic growth to local economies. This is where most Americans are feeling the impact of the pandemic — our coffee shops, restaurants, gyms, and pet stores are all closed; our friends and family members are losing jobs.
For more ideas, read our recent article “What is Renters’ Insurance and What Does it Cover?”
Speak with a licensed agent at Uniamericainc.com to discuss which coverages best fit your unique situation.
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