April 4

COVID-19: How Your Small Business Can Survive The Quarantine

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The COVID-19 Pandemic Has Swept The World Into Disarray

COVID-19 has created one of the most consequential health and financial impacts the world has ever known.

Many small business owners, entrepreneurs, and commercial property owners face immediate stress. In addition, many business owners and entrepreneurs are forced to close or work from home and practice safe distancing. This has triggered the largest unemployment rush in the nation's history. With the immediate suspension of business for so many owners, the revenue stream was immediately shut off.

The COVID-19 domino effect of businesses shutting down has put tremendous pressure on commercial property owners. A wave of notices and letters have been sent to landlords stating that businesses are unable to pay rent this month and possibly the next as well.

Commercial property owners rely on their monthly revenue from commercial leases to in turn pay their monthly commercial mortgage payments to their lenders. Without revenue, or with substantially decreased revenue, the commercial property owners are also facing dire decisions.

All of this has pushed the final domino down. Lenders are now under financial stress due to their customers requesting assistance with mortgage payments. In near record time, the congress and president have signed into law several bailout packages. Most of these COVID-19 bailout packages are being handled by the Small Business Administration (SBA) and total roughly $2 Trillion Dollars.

In addition to the bailout funding supplied to lenders, to then provide directly to business owners, entrepreneurs, independent contractors, and sole proprietors, the Federal Reserve has provided additional liquidity to the financial markets to the tune of roughly $4 Trillion dollars.

Never before has the entire country come to nearly a complete stop due to a crisis such as the pandemic known as COVID-19.

Watch our video and explore our links and resources to navigate your business through these troubling seas.

The First COVID-19 Response: Act Immediately

This can not be stated clearly enough. Time is critical and you should pursue multiple funding sources and have multiple options lined up.

8 Tips to Navigate

the COVID-19 Quarantine

1. There is Federal Relief for COVID-19. Explore SBA Lending, Payment Protection Program (PPP), and CARE Bailout Programs

Visit www.sba.gov to learn about all of the bailout and funding programs.

Specific programs to consider can be located here:

COVID-19 SBA PPP

SBA - Paycheck Protection Program (PPP)

The Small Business Administration's Paycheck Protection Program offers incredible incentives to keep your employees on payroll during the COVID-19 Quarantine. Manage this correctly and this loan can be FORGIVEN. In other words, it can be free money.

COVID-19 SBA EIDL

SBA - Economic Injury Disaster Loan (EIDL)

The Small Business Administration's Economic Injury Disaster Loan will offer up to $10,000. THIS LOAN WILL NOT NEED TO BE REPAID.

COVID-19 SBA Bridge Loans

SBA - Bridge Loans

The Small Business Administration's Express Bridge Loan can provide up to $25,000 if you have an existing SBA relationship. This loan is designed to provide fast cash while you wait for other loan programs to get funded. This loan can be repaid in full or in part by the EIDL loan described above.

COVID-19 SBA Debt Relief

SBA - Debt Relief

The Small Business Administration's Debt Relief program can provide loan payment deferments up to December 31, 2020. Deferring payments can help you get through the COVID-19 Quarantine.

2. Ask for Rent Abatement to Get Your Business Through the COVID-19 Quarantine

In the immediate time frame, if you are a business owner or entrepreneur and you currently rent your commercial space, you should ask for a period of Rent Abatement. This is also know as "free rent."

This could be the fastest economic assistance you can receive because you negotiate this directly with your landlord. One of the best ways to handle this is to ask for 2 or 3 months of free rent now, but offer to extend your lease end date by the equivalent time period. By getting free rent now, you can then pay your landlord back by staying longer in your current location.

If you have rent escalators in your lease, which most leases have, your landlord will benefit from a larger overall lease value because the rent you add on at the end of your lease will be at that higher rate.

Another thing you can do is offer to provide some of the PPP funds described above to your landlord as you receive them. Currently, up to 25% of the PPP funds can be used for rent payments, utility payments, and interest costs.

3. Ask your utility providers and other vendors, such as credit card companies to assist you with your monthly expenses

Call your internet service provider, phone company, water delivery service, cleaning service, and any other vendors and negotiate discounts. If you use credit cards in your business, contact your credit card providers and ask to delay payments, remove late fees, or freeze interest expenses.

4. Renegotiate Your Lease to Get Through the COVID-19 Quarantine

Now could be a great time to renegotiate your lease. If you have several more months or even a year or more on your lease term, now might be a good time to negotiate new terms.

As part of this negotiation, build in some free rent up front to help you through these challenging times.

5. Consider a Sale/Leaseback

Do you own your business and the real estate in which your business is located? Now might be a great time to sell your real estate to an investor and lock in a long term lease. In this way, you can receive a large cash infusion now for various expenses, but also keep your business in the same location and ready to thrive once the COVID-19 Quarantine ends.

6. Think of New Ways to Deliver Your Products and Services

If you own a gym, consider offering online course and classes. Do you own a restaurant or bar? How can you deliver food and drinks by delivery or curbside pickup? Could you canvass neighborhoods and offer food delivery to an entire neighborhood through a neighborhood delivery program? Perhaps offer group discounts or referral programs to get the word out.

7. How can you pivot your company During the COVID-19 Quarantine?

Do you offer products or services that are no longer in demand due to the quarantine? How can you leverage your infrastructure and labor to reach new market demands? Distilleries are offering hand-sanitizer. Textile companies are manufacturing masks, gowns, and face shields. What can your company do?

8. Are You A Service based Professional or Company?

Zoom has quickly become a must have. How can you leverage online video conferences and meetings to continue providing your services? Can you create classes or "How To" content for a fee or to continue building your brand during these times?

BONUS COVID-19 Quarantine Survival TIP:

Without question we are facing difficult times. Now, more than ever, you need to take care of yourself. Fill your plate with healthy food. Fill your day with doses of healthy exercise. And perhaps most importantly, fill your mind with positive thinking. Discover some new podcasts to get an angel on your shoulder boosting your morale. Find a podcast or YouTube channel to teach you new hobbies or learn something you have always wanted to find the time for.

And last but not least, ENJOY YOUR FAMILY TIME! These days can be filled with special joys you wouldn't normally get. As a business owner, you are a leader and role model for everyone around you. Take some time to lead those you love most.


David Haug

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About the Author

David Haug is a Madison WI commercial real estate broker. He is passionate about helping clients, customers, and friends succeed in finding property, selling and leasing property, and investing in real estate. He is also a raging Badger fan. #OnWisconsin Baby! Connect with David on LinkedIn: https://www.linkedin.com/in/davidnhaug/

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