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5 tips for SMBs to keep cash flow positive amid COVID-19 interruptions

Even during blue-sky times, access to the cash small businesses need to make purchases and pay expenses like payroll and rent can be a major struggle. During a pandemic where critical systems like the global supply chain are affected, B2B businesses can be particularly vulnerable to cash flow gaps. A recent Goldman Sachs survey of 1,500 small businesses found that 96% of small businesses have already been impacted by COVID-19, and 51% of small businesses only have enough cash to operate for 0-3 months right now. We've gathered five tips small businesses can use right now to keep their cash flow positive, and make sure it stays that way.

1. Check in with your partners, vendors, and customers

This should be your first move no matter what your cash flow currently looks like. Make a list of all your contacts and connections that are critical to your business. Proactively reach out to every one of these key business relationships and ask how they're doing. Let them know how you're doing, and that you value your business relationship and want to continue working together, even if it means finding creative new ways to maintain business. This is helpful for many reasons: it maintains communication with key partners, it is a show of empathy and humanity (which may be reciprocated down the line if your business needs a little help), and it allows you to understand the full state of your business so you can best forecast and prepare for the future.

2. Forecast cash flow and boost liquidity

It's true - those who fail to plan, may plan to fail. If you can understand where your problem areas may come from in the future, you can try to get ahead of them. James Cassel, Co-founder and Chairman of investment banking firm Cassel Salpeter & Co., told the US Chamber that your company's survival depends on addressing financial/liquidity issues during this crisis. "Create a 13-week cash flow forecast, which should be stress-tested to explore likely scenarios, including worst-case scenarios," he said. "Here, you must consider your cash needs looking ahead after thoroughly reviewing fixed and variable expenses. You also want to make what you have last longer. To help, reschedule where you can toward a longer payment period for outstanding expenses. And head to the negotiation table with your vendors, keeping in mind that many of them are facing the same issues you are," added Cassel.

3. Consider gift cards - no matter what type of business you are

While unorthodox for B2B businesses, you can think of a gift card simply as a cash advance from your regular customers. Kabbage, one of's partners in the financial services space, launched, a free program to help US businesses get cash immediately. This service enables anyone to purchase an online gift certificate for your business. While the gift certificate is redeemable at any time, your business receives the money as soon as the next business day. Multiple gift certificates can be purchased for any amount between US $15 and US $500. US small businesses can sign up in minutes and begin offering gift certificates. Here's how it works:

  • Create a free Kabbage Payments account
  • Receive a unique URL
  • Share your URL through social media, email, or however you can reach customers
  • Access your funds immediately — as fast as one day after purchases are made
  • Use free technology offered by Kabbage to scan, verify, track, and fulfill gift certificates when redeemed

4. Secure traditional small business funding

Don't forget to consider the time-tested approach to getting cash for your small business fast. You can open a small business line of credit to get quick access to working capital without taking on a large amount of debt. Another option to consider is a traditional small business loan. Interest rates are exceptionally low right now, making a loan a bit cheaper than usual. Finally, the government enacted federal stimulus bills last month, including a bipartisan US $2 trillion economic relief plan, to help small businesses impacted by COVID-19. In many states, small business owners impacted by COVID-19 can apply for a US Small Business Administration (SBA) low-interest loan — but use this option cautiously, as there have been reports of many issues with the process, as well as third-party providers.

5. Attend a National Small Business Town Hall

Virtual Q&A's are hosted weekly by Inc. and the US Chamber of Commerce. They review how to access the US $350 billion allocated by the federal government as loans to help small businesses hurt by COVID-19. You can register for their upcoming events here. Your state and local chambers are also great resources for information on a wide range of topics.

Watch our fireside chat with Denisha Kuhlor of Grasshopper Bank and Jae Zhou of Lowenstein Sandler LLP as they discuss the CARES Act. They cover how to apply for the Paycheck Protection Program and other financial resources that small businesses can leverage during the COVID-19 crisis. You can view some of our other fireside chats here.

This week's #B2BTuesday Tip:

Apply with multiple lenders at the same time until you get pretty far in the process with one of them.

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