Using a Business Line of Credit During Emergencies From an Alternative Funding Source

When you’re operating a business, you will face emergencies. One of the biggest difficulties is how difficult these situations are to predict. There is no way of knowing when an emergency will engulf the business or what financial damage it can do. Because of this, you must be prepared for anything. Here are some of the ways you can do this.

What Common Emergencies Do Businesses Face?

There are plenty of emergencies that your business might need to overcome. Sometimes, it can be from a situation that is outside your control. For example, you might be the victim of a natural disaster. These can happen suddenly. Often, you will just get a few days of notice to prepare. The damage to the building, equipment, and stock can be extensive.

Another potential issue is a public backlash. Sometimes, your company might have done something wrong. This can taint your image. As a result, people will stop shopping with you. If you hire a skilled public relations advisor you should be able to weather the storm. But it can take a few months for the sales to return to normal.

As technology improves, it becomes a more important part of the business landscape. However, this can also leave you vulnerable. If a hacker infiltrates your systems, they can do a lot of damage.  Sadly, these cyber attacks are becoming more common, so there is a greater chance that your organization will be targeted by these criminals. You might also face a power shortage, which can take your business offline.

Unfortunately, you can face a family crisis. When this happens, you’ll often need to spend time away from the business, caring for the ones you love. If you are a sole proprietor, this can mean shutting down for a few months.

Finally, some businesses will go through seasonal dry spells. For example, a water park will be busy during the summer but it will have a hard time attracting guests during the winter. At these times, they might need a boost to their operating capital to get through these times. When the weather warms up again, people will start to come back again.

How Can You Prepare Your Business For An Emergency?

Though we’ve seen some of the emergencies that your business can face, there are dozens more. Most of them will come out of the blue. For example, no-one saw a global pandemic coming. But that doesn’t mean that you can’t take steps to make your business more resilient.

The first thing you need to do is assess the risks. This will tell you what emergencies you should be preparing for. For example, businesses in Florida might need to be prepared for flooding events. But you won’t need to worry about earthquakes.

Once you know what emergencies you are most to face, you will be able to take out insurance. This will provide some financial assistance if the worst should occur. When selecting your policy, be clear about what is covered and what isn’t. Check that you are only getting covered for the most relevant events.

You should try to prepare the office for an emergency. There are a few simple ways that you can do this. For example, you can purchase and maintain a first aid kit. It’s also important to make sure that employees know CPR and other basic emergency training. This won’t take too much time and money but it can save someone’s life.

Finally, you’ll need to think about your business’s financial future. Because of this, you might want to start up an emergency fund. If something goes wrong, you’ll be able to tap into these funds. The size of the business will determine the size of the emergency fund.

How Can You Recover From a Business Emergency?

These tips can be a good way to protect your business from future emergencies. But what should you do if you are facing a current crisis? Here are some tips that you might want to try.

The first thing you need to do is assess the situation. Though it might seem like everything is going wrong, getting panicked isn’t going to help. Instead, clear your head and sit down to look calmly at the problem.

Next, you’ll have a lot of bills coming in. This can be a problem if you aren’t making any money. Even if you have an emergency fund, you’ll only have a limited amount to spend. Because of this, you should start to prioritize the expenses. Think about what costs your business can go without for a while.

As you’re doing this, you’ll need to start coming up with a plan to reopen. For example, after a natural disaster, you’ll need to start the clean-up process. Depending on the extent of the damage, this can take a few months.

Once you have reopened, you’ll be able to start recouping some of the money you spent during the emergency. You can come up with a plan to make sure that you never have to go through anything like that again.

How Can You Get Funding During An Emergency? 

When you’re dealing with an emergency, you’ll need to raise operating capital. Often, you’ll need to do this fairly quickly. There are a few ways that you can do this.

First, you might want to approach a bank. This is the most traditional option. These institutions have a long history. But they also tend to be fairly slow. You’ll need to fill out a lot of paperwork. Then, you’ll need to wait a few weeks for the bank to check over the paperwork. By the time they are satisfied, you could have waited for a few months. Also, you’ll be expected to have a good credit score. If you don’t, your application will likely be rejected.

In a financial emergency, you’ll need to get the money quickly. Ideally, within the week. Because of this, the bank often isn’t a good option.

Another potential option is turning to friends and family. They will often be willing to help you out during an emergency. However, there are a few major downsides to this approach. Most notably, you don’t want to jeopardize your relationship because of an inability to repay the loan.

To overcome these problems, you can turn to an alternate lender, like the South Florida Funding Group. We offer multiple programs to help people who are struggling to overcome an emergency. The best one for you will often depend on the situation you are in. But one of the best options to explore is a business line of credit.

What is a Business Line of Credit? 

Once you are approved for a business line of credit, you’ll be given a pre-approved withdrawal amount. Unlike a loan, you’ll be able to use your line of credit repeatedly. You will only be charged interest on the money that you are borrowing. This makes it easy to repay the funds when it suits your budget.

This is a good way of getting capital quickly during an emergency. It offers a lot more flexibility than a loan. Once approved, you’ll be able to get the money within three days.  You will be able to get a minimum of $10,000. On the upper end, you’ll be able to get $500,000. This will be more than enough to get through a difficult time.

You’ll often be expected to repay these loans within six to 12 months. The interest rate can vary. But it will often be around 12 percent.

What Do You Need to Qualify For a Business Line of Credit? 

It’s fairly easy for you to apply for a business line of credit. You’ll just need to fill out an application. This will only be one page. You’ll also need to provide the bank statements from the last three months.

For the loan to be granted, you’ll need to have a FICO score of at least 620. You’ll also need to have a monthly revenue of at least $25,000. Third, you’ll need to have at least six months of experience running the business. You will know within 24 to 48 hours whether you have been approved for the loan and how much credit you will be able to access during an emergency.

What Other Types of Loans Can You Access? 

Though a business line of credit might be one of the most popular options during an emergency, there are a few other loan alternatives to consider.

First, you might want to think about equipment financing or leasing. If important equipment was damaged during the emergency, this can be a good way of replacing it. These break up the costs of purchasing the equipment into smaller chunks, so it’s easier to afford. Often, the equipment will be used as collateral, for a more affordable interest rate.

Alternatively, you can use a merchant cash advance. This can give you a quick loan. The repayments will be a percentage of your future credit card sales. This can make payments more affordable. However, if the emergency has impaired your business, it might be a few months before you’ll be able to open again. Because of this, you might not be eligible for this type of loan.

You can consider going through the SBA to get a loan. This is backed by the federal government. However, it will take a lot more paperwork. It can also take a few months to get approved. If you need to get the money quickly, you might want to consider one of the other federal relief programs. We’ll discuss these later.

Finally, you can consider a business loan. This can either be secured or unsecured, depending on whether you want to use collateral. This is most similar to a bank loan. However, when you go through an alternative lender, you’ll get the money a lot faster. It can be approved within 24 hours. From there, it can be in your bank account in three days.

What Can You Use Emergency Business Finance For? 

Once you have got a business line of credit, you’ll have a few ways that you can spend the money. This will often depend on what caused the emergency.

If you were affected by a natural disaster you can use the funds to clean up. You can also use it to replace any equipment that was broken. You will also be able to refurbish the business. This will let you get your business opened as quickly as possible.

If you had an equipment breakdown, you could use the funds to replace or repair the devices. Sometimes, you might want to use it to hire new staff members. At other times, you will be able to use it to clear off a tax lien. There are plenty of ways that you will be able to use the funds to recover from a financial emergency.

What are Some Tips to Find the Right Loan for You?

Before you get a loan, you need to make sure that you’re taking out the right one for you. There are a few things to consider making sure that you’re getting the right one.

First, you’ll need to check that you are getting the right type of loan. This will depend on your financial situation. There are a few things to consider. For example, you’ll need to think about the amount of money you’ll need. It’s important to understand the repayments. Make sure that you’ll be able to afford them.

Secondly, you’ll need to ask about the costs. Sometimes, there will be a few other costs, outside of interest. You need to get clarity about any hidden fees. At South Florida Funding Group, we are upfront about what you can expect when you take out a loan. But other lenders won’t be. You’ll need to be prepared to dig through the fine print to understand how much you’ll be getting charged.

Finally, you must be selective about the lender you are using. Sadly, there are people out there who will pose as lenders to get you to hand over sensitive financial information. They can then use this to steal your identity and get your money. Before you use a lender, make sure that you are choosing a business that has built a good reputation.

What Government Assistance is Available During an Emergency? 

Depending on the situation, your business might qualify for assistance from the federal government. There is a wide range of these programs available. Let’s look at some of the most prominent options that you can explore.

First, you might want to see if you can apply for the Paycheck Protection Program (PPP). This is available through the Small Business Administration (SBA). This is designed to help you get through Covid-19. You’ll be able to use these funds to pay for payroll costs and other expenses. This will ensure that you don’t need to lay off staff to cover costs.

The government will also offer a range of grants.  You’ll need to search through them to find one that could apply to your business. Then, you’ll need to write and submit an application. While this might take a while, it will be worth it. Unlike a loan, you won’t need to pay back the grant. Some private companies will also offer grants. An online search should help you find any grants that you will be eligible to apply for.  

The SBA has a range of programs designed to help people recover from natural disasters. For example, you might be able to get a disaster loan. This will be able to help you recover and rebuild after any damage. You might be able to get an Economic Injury Disaster Loan (EIDL). This is a long-term loan for a substantial amount of money. Often, you will be able to get a low-interest rate for these. Generally, they will be approved fairly quickly. You might be able to get the money within one to three weeks.

Finally, it’s worth looking at state and local government websites. Occasionally, they will put up loans and grants that you can use to get back on your feet. In Florida, you’ll need to turn to the DEO. They can provide short-term loans to help bridge the gap between when your business is affected by disaster and when you can get longer-term funding. Often, these loans will be interest-free. Sometimes, they can provide targeted loans after a natural disaster.

Get in Touch With South Florida Funding Group

South Florida Funding Group is dedicated to helping small businesses get the operating capital they need. By doing this, we’ll be able to help you overcome a business emergency. There are many loan options we provide to get you through this difficult time. This includes a business line of credit. If you want to get more information or to apply, give our friendly team a call today on 786-544-2700. Or you can start the application process online.