The COVID-19 crisis is causing business disruption that is extraordinary in scope. It’s safe to say that no small business operators have faced challenges as swift or unpredictable as the ones they’re currently facing during the pandemic. To provide relief, and help businesses remain operational, the Government of Canada, big banks, and many utility and service providers are offering flexibility and understanding at this time. Businesses that take immediate action to reach out and leverage these resources have the best chance of withstanding whatever shifts and hurdles lie ahead. Here are six steps you can take toward putting your business on a sound financial footing during these uncertain times.
1. Check your insurance
Check if your business insurance carries business interruption coverage, and if so, what payments you may be entitled to and how long they’ll cover you for. Keep in mind that some policies exclude coverage for epidemics, but you should check anyway just in case.
2. Draw up an emergency budget
Even if you already run a tight budget, it’s important to reduce costs wherever you can to give your cash flow extra breathing space. With your business operations scaled-down, can you scale back any regular subscriptions and similar to match?
Have you any avoidable expenses or investments which can be postponed until the situation is clearer? Every single expense you save will strengthen your business’s viability. To learn how to prioritize your expenses and create an emergency budget, read our CERB budgeting guide.
3. Consider refinancing
Can you switch any debt repayments to a minimum holding position, reducing the pressure on your outgoings? Alternatively, could you refinance any existing credit arrangements to a longer-term or a lower interest rate?
Although refinancing can often increase debt interest over the long term, lower monthly payments will ease the pressure during the current crisis.
4. Contact creditors and suppliers
If you think you may have difficulty meeting debt repayments or paying business invoices, bite the bullet now and inform creditors and suppliers about your situation. You may be able to negotiate easier terms or deferred payments, and it’s better to raise the question now rather than after you’ve gone into arrears and the situation is more pressurized.
5. Access federal and provincial assistance
The federal government and the CRA have introduced several measures to help small businesses through COVID-19, including:
- An emergency interest-free loan of up to $40,000 through the Canada Emergency Business Account (CEBA)
- Deferrals and relief on mortgages and other credit programs, in partnership with the banking industry. Coast Capital is offering a Member Relief Program.
- Delays to filing and payment deadlines for your 2019 income tax
- Emergency wage subsidies like the Canada Emergency Wage Subsidy (CEWS)
You may also be able to access measures from your provincial government, such as wage subsidies and tax deferments. Check your province’s official web site to see what’s available. But whether federal or provincial, if you’re entitled to support then don’t hesitate to lean on the support.
6. Take as much advice as you can
Lastly, be sure to keep up to date with your accountant, tax adviser, and especially, Coast Capital’s Small Business Team. We can offer advice and assistance to match your unique situation. And the more allies you can lean on, the better shape your business will be in when it emerges from the current crisis.
Taking a proactive approach now will help you get back on your feet sooner.