Travel is coming back, but the rebound continues to be very uneven, and many businesses are struggling. Have Covid-19 financial losses strapped you for cash to the point where you’re concerned about re-opening at all? If so, where can you get the funding you need to jump-start your drained business?
Here is a summary from Susan Doktor of Money.com of some financial solutions in the U.S. and around the world from both governmental and private sources.
The U.S. Paycheck Protection Program: Will It Rise Again?
Shortly after the global pandemic began to ravage small businesses in the United States, The Small Business Administration (SBA) launched an innovative extremely low-cost loan program designed to help struggling businesses remain open and keep employees working. Perhaps the most attractive feature of Paycheck Protection Program (PPP) loans was a forgiveness clause: so long as funds were used in compliance with SBA regulations, borrowers were not required to pay them back. To be eligible for loan forgiveness, businesses were required to use the funds they received for a limited number of purposes — payroll costs among them.
The PPP went through several rounds of funding. While it was extended through May 31, the program is officially out of money. It had its problems, but in the end, contributed a trillion dollars, give or take, to small business rescue. With vaccination rates rising and many health restrictions lifted, lawmakers are less focused on mass-scale small business relief. If you own an American small business, watch this space for updates on the PPP. But more importantly, for businesses that need help right now, the SBA still offers a number of other small business relief programs. One of them may be right for you.
The Shuttered Venue Operators Grant (SVOG) Program
This smaller and lesser-known Shuttered Venue Operators Grant (SVOG), recently amended under the American Rescue Plan Act, offers outright grants, rather than loans, to companies that were particularly hard hit by the coronavirus crisis. Also administered by the Small Business Administration, the program just got underway. With its first round of funding, $16 billion in grant money was made available. Eligible applicants include owners and promoters of live venues, so you may qualify for a grant equal to 45% of your 2019 annual revenue.
The Economic Injury Disaster Loan Program
While they don’t offer quite as many advantages as PPP loans, loans made under the Economic Injury Disaster Loan Program (EIDL) program are still a pretty good deal. They offer thirty-year terms and, currently, an interest rate of 3.75% for for-profit companies. That rate is fixed, regardless of your credit position. So for businesses who don’t have an established credit history or have been in debt difficulties before, EIDLs may represent a less expensive alternative to private small business loans.
What’s more, while there’s no EIDL forgiveness clause, there are fewer restrictions on how businesses can use the funds they receive. Normal operating costs, including purchasing inventory and even paying off credit card debt, are eligible costs under the EIDL rules. Loans of up to $500,000 are available. The amount each applicant can borrow is figured by taking the amount of money a business lost during one month of pandemic operation and multiplying it over 24 months.
Worldwide Government Assistance for the Travel and Tourism Sector
The World Travel and Tourism Council studied how governments around the world have responded to the Covid-19 economic crisis. It has identified 27 countries that have implemented comprehensive economic rescue and stimulus programs that included significant support for travel and tourism businesses and strategies for bringing workers back on the job. From Chile to China, they span the globe — though policies vary, of course. The amount of money committed, business eligibility qualifications, and how funds are appropriated — via grants, loans, tax credits, and other vehicles, are noted in the WTTC’s informative, helpful report. Nations included in the list are:
Australia • Brazil • Canada • Chile • Chile • Columbia • Croatia • Denmark • France • Germany • Hong Kong • Iceland • India • Italy • Japan • The Netherlands • New Zealand • Norway • Portugal • Saudi Arabia • Singapore • Sweden • Switzerland • Turkey • United Kingdom • U.S.A.
Affordable Private Lending Solutions
You’re likely aware that mortgage interest rates fell to record lows during the worst of the global pandemic. A year ago, rates fell to 0% in some European countries. Interest rates fall when governments make it less expensive to borrow money. Lenders can pass that savings along to borrowers and still earn money. Interest rates under 3% are common right now. While rates are rising, if you have a mortgage on your place of business, refinancing your property before rates inch higher, may help lower your operating costs.
Private business loans offer less uniform interest rates. It’s pretty much impossible to cite an average interest rate for business loans. Depending on an applicant’s length of time in business, total revenue, whether they apply for a lump-sum payment or a line of credit, and other factors rates can vary by tens of percentage points. Finding the best small business loan can be a complicated process, but you can be sure that improving your credit score will help you secure the best rate.
Position Your Business to Rise with the Tide
There’s no doubt that the tourism sector will rebound as the global pandemic subsides. But as you look ahead, leave aside your definition of normal. The world has changed immeasurably and customer expectations along with it.
Your old sales strategy may not deliver the same results. You may need to revamp your marketing program to focus on digital tactics and strategic partnerships. You may need to innovate operationally to be more competitive.
Before you spend the funds you borrow, do some soul searching. What was imperative in 2020 may not seem so urgent anymore. Your plan for revitalizing your business has to meet this unusual moment.