Small Business Surviving COVID

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Some Lenders are beginning to open their doors, and their coffers, to businesses in need of working capital. However, the COVID-19 impact on lending guidelines has been brutal.

Lenders’ guidelines for these types of loans are typically tighter than pre-COVID, and every Lender requires a business applicant to provide a COVID Impact Statement.

Underwriters are taking a close look at how businesses plan to survive the continuing pandemic, especially diligent on management experience, cash reserves, equity, and business planning for pandemic-response.

Today, let’s look at some industries and businesses we expect to thrive and survive the COVID-19 crisis.

Logistics.  The pandemic panic in March and April exposed the weaknesses in supply chains, especially for groceries.  But the resiliency of the industry became quickly apparent with the exponential growth in demand for home delivery of goods from online shopping excursions as so many people found themselves locked-down at home.

Warehouses, sorting equipment, storage accessories, forklifts, robots, long haul trucks and delivery vehicles all have multiple sources of financing available to maintain and grow during the pandemic.

Professional Writers. Yes, writing for business, whether it’s email newsletters, website content, or White Papers, writers can thrive during COVID-19, especially with the trend towards remote working.

The downside to being a professional writer during this time is the influx of amateurs hustling for a work-at-home gig overwhelming the ranks of people you’re competing against.  If you’re a professional writer with Accounts Receivable from reputable business clients, there’s financing available to you to help you grow your business.  And, if you haven’t already applied, the SBA Economic Injury Disaster Loan (EIDL) is still available, even if you’re Self-Employed and you file a Schedule C as a Sole Proprietor.

Manufacturing.  Manufacturers can thrive during COVID-19 with three fundamentals in place:

  • Pivot-Planning
  • COVID safety protocols for employees
  • Supply surety

We know of one manufacturer who promptly converted his business to a COVID pandemic perspective by manufacturing components of PPE for health care frontline workers, notably plastic face shields.  He later enhanced his planning to create the decals for grocery stores that direct customers with one-way arrows and six foot social distancing location markers.

A manufacturing firm that can demonstrate its resiliency during the crisis, its ability to protect workers, and the confidence in obtaining necessary supplies for manufacturing processes is sure to find Lenders willing to provide financing, including for Accounts Receivable, Business Lines Of Credit, and Equipment financing.

Online-Motion.  We created this category at Aurora Consulting to define any kind of business demonstrating incredible pandemic-related-resiliency by either moving its business online where it didn’t exist before, or bolstering an existing online presence.  70% of Small Businesses have NO or minimal online presence.

The COVID-19 pandemic clearly demonstrates the need for your business to move online, to create product/service opportunities for consumers to engage with you remotely, and to integrate product deliveries with successful delivery systems.  The Small Business demonstrating sincere “Online-Motion” will find Lenders willing to provide financing providing a recently revised business plan demonstrates the strategies for success to survive.  Our firm Bridge Street Business Plans assists Small Businesses with this vital aspect.

Key Points of Financing Your “COVID-SURVIVING” Small Business:

  1. Management experience: substantial heft with more than three years’ experience.
  2. Equity: Whether it’s cash liquidity, real estate collateral, or other convertible equity, expect a Lender to want at least 30% equity.
  3. Credit. High credit scores, in excess of 700 for principals of the business.
  4. Cash Flow. Demonstrate how your business is cashflow positive during and through the pandemic.
  5. ROCK SOLID Pandemic Business Plan.  State the case for how your business is surviving now, how you will succeed through the crisis with a focus on strategies, profit centers, and an expanded vista that takes into account the new paradigm of limited customers in-store, remote work, online shopping, employee protections, supply-chain strength, and utilization of delivery options.

At Aurora Consulting we’re doing our part to help your Small Business survive COVID-19 with the following services:

  • Flat Fee Financing Consultation.  $750 gets your business a thorough review of your existing business plan, financial statements, and credit report.  We’ll then advise on the viability of finding Lender financing, whether that’s today, or in the future with our suggested strategies.
  • Bridge Street Business Plans.  We created Bridge Street Business Plans to assist our financing clients with a necessary component of a successful business credit application. We understand how to update your business plan to respond to the COVID-19 pandemic “pivot.”
  • Innovative Financing Products.  We know the Lenders who will lend and we know how they will lend.
  • SBA Economic Injury Disaster Loans. These loans are still available and we’ve become experts in this loan process.

Email us anytime to find out more about what financing products can help you become resilient to thrive beyond COVID.

 

We Anticipate Problems to Create Solutions

Our Process Anticipates Problems, Creates Solutions

The good news is that Banks are lending again on a limited basis for non-disaster loan requests.  The bad news is that the loan products are limited and the underwriting guidelines are very, very restrictive.

Many industries/businesses are excluded from loan programs.  Banks simply cannot determine yet the viability of the businesses to survive the pandemic. Risk is too high and thus doors to the lending vault are tightly shut.

Today we spoke to a Bank on four different loan scenarios. Each of these businesses has challenges on their loan applications of different sorts, whether it’s credit, cashflow, type of business, COVID-19 impact on the ability of the business to earn income.

In the hour-long conference call with the Bank, thanks to our qualification process here at Aurora Consulting, we easily addressed the Bank’s concerns and answered their (often) difficult questions as they assessed the risk on each loan scenario. In three out of the four scenarios, we received positive feedback of interest from the Bank. While this interest does not guarantee a loan approval, this, in our experience is a giant hurdle we overcame. 

The rest of it is the loan process.

We also spoke today with a prospective new client in a follow up to our initial call last week.  This client seeks over $4Million in funding for a unique business, a business for which many Banks and Lenders do not provide funding due to their lack of understanding of how this business operates.

We had already identified a Lender for this financing request.

In our follow up call today, the prospective client indicated they would soon make a final decision on moving forward with Aurora Consulting to secure the financing. They also indicated they were working on their credit.

STOP. RIGHT. THERE….BEFORE we go any further. (Meatloaf medley playing).

A client should not “work on their credit” without proper guidance. Luckily, we provide that kind of guidance here at Aurora Consulting. While we don’t believe in credit repair/restoration, we do have decades of expertise with credit and we also know the appetite of commercial lenders when it comes to credit. Note: We have not yet seen this person’s credit.

Our process at Aurora Consulting includes running a credit report as soon as we sign a consulting agreement with a new client. We do this so that we can anticipate any issues that could slow down or prohibit the lending process. We do this upfront so that we can provide advice that leads to a positive result for our clients.

The same holds true for our entire process. We review all financial statements, business plans, marketing plans and any other pertinent items in the early days of working with a new client.  

We do this to anticipate and resolve problems a Bank or Lender may have in the future.

When you apply directly to a Bank/Lender for commercial financing, these items, credit reports, financial statements and the like, are not seriously reviewed until the very late stages of the loan application process. By then the applicant has spent time collecting and submitting documents and spent money on application fees, appraisal fees and other associated costs.

Literally most Banks/Lenders do not run a credit report until the very final stage of the application process, weeks or months after the initial application. At that point, if a credit issue arises on the credit report, all those weeks and months of work are quite literally flushed down the toilet and the loan is declined.

Our role as your financing Broker is to review all relevant documents, including a credit report, in the early stages of your request, before the application, before we’ve even considered conversing, in depth, with a Bank/Lender.

That’s why today, we hit the mark with 3 out 4 of our loan scenarios getting the green light from a Bank to move forward to the application process.  

We were prepared for every question and concern the Bank had because we’d reviewed credit and documents. We anticipated problems in advance and could converse honestly with the Bank on possible workarounds for those problems.

It’s what we do, because we are the business-owner’s advocate. We work for the business-owner. We would be remiss if we didn’t share with you that banks call us when they can’t underwrite the loan. So we understand their process.

Ask us any questions when it comes to business loans. If you want your business to survive, and THRIVE despite the worst crisis we’ve seen in our lifetime, please call us with your questions.

Email Curious@AuroraConsulting.biz

Tough Questions from Lenders

The good news is that Banks and Lenders are opening up their coffers to provide business credit financing. The other news, that’s more anticipated than “bad,” is these Banks want business owners to answer some tough questions about preparedness for further pandemic-related challenges.

If you are applying for business financing—a loan or line of credit—that’s not Disaster Relief-related, here’s a sample from one of our Bankers on what to expect:

  • How has your business been impacted throughout the crisis?
  • How have you and your employees been affected? Your suppliers? Your customers?
  • What are your key priorities over the next 30/60/90 days?
  • How do you anticipate accomplishing these goals? What hurdles do you anticipate?

To achieve a successful response to your application, you should answer these questions with all appropriate gravitas and extreme detail.

  • The Bank wants to know that, should the pandemic-related lockdowns get tighter:
  • How have you planned to get through that?
  • Do you have cash reserves?
  • An employee-furlough action plan?
  • Do you have the ability to provide your services or products with a serious downturn in customer traffic (think early days of lockdown)?

Banks make loan decisions by assessing the risk on the credit profile of the Borrower. As with any aspect of a loan application, the COVID-19 pandemic has created another layer of risk for Banks. Your successful loan application will take that risk assessment into account as you prepare your application for submission by anticipating how to make a Bank/Lender get into a “comfort zone” about your ability to make payments on the loan as other challenges from the pandemic arise.

Reach out to discuss if your answers to these aforementioned questions would suffice. We are your advocate in the process.

Email us at Curious@AuroraConsulting.biz.