The COVID-19 pandemic has changed the way small businesses handle their finances. Stay-at-home orders and limited occupancy has forced businesses to completely transform the way they operate. As we slowly begin to return to everyday life, things will once again shift to reflect the new normal.

How will the way small businesses seek financing change?

We asked 10 thought leaders to share the ways in which small business financing will shift once we’re back to normal.


Getting Creative with Offers

Getting creative with the services and products offered is definitely a practice that will continue well beyond the COVID-19 crisis. The pandemic has proved that flexibility and quick decision making is possible for businesses that traditionally offer limited options. The key to future financing will come down to how willing and how quickly businesses are able to roll out new offers to adapt to changes in demand.
Carey Wilbur, Charter Capital

Heightened Awareness of Alternatives

There’s been an avalanche of financing options to help small businesses make it through the crisis. Grants, credits, matches, donations, low-interest loans - the list goes on. If anything, small business owners have gone through an intensive training period where the outcome is more awareness about alternative money options. I think you’ll see more small businesses think about researching local programs and resources offered in their community as a way to bootstrap a business. By leaning on local financing, small businesses may be able to extend the runway to get a new business started.
- Brett Farmiloe, Markitors

Offering New Products or Services

Many small businesses have already started pivoting or diversifying their products and services to generate an additional stream of income. I believe this trend will continue to grow. For instance, many of my clients have launched digital products like e-courses and training webinars to cash in on the increasing popularity of digital learning. Plus, I think small businesses will now be more cautious about how they spend their money. They are going to implement strong emergency or bailout plans to help them stay afloat in times of crisis.
- William Taylor, VelvetJobs

Budgeting For Emergencies

Creating a budget around COVID-19 supplies will continue on for the near future. The pandemic caused our business to have to adjust our budget to ensure that we have masks, gloves, and proper sanitation methods in order to keep our customers safe. Seeing as the pandemic is ongoing, those supplies will continue to have space in our budget for months to come. It is an overall good practice to keep money supply for extra unexpected expenses.
- Vanessa Molica, The Lash Professional

Loans Will Be Tricky

People should be immensely cautious about taking out loans that they will not be able to handle in the next year or so with rising interest rates. There will be waves of devastation following a recession such as this one. If you are not careful, you will be taken out in subsequent ones, if not the initial.
- Andrew Taylor, Net Lawman

Stricter Standards for Credit

Small business owners are not using financing to sustain an unprofitable business in the hopes that it will turn around. The owners are cutting all expenses first. If the business is doing well on an accrual basis but not on a cash basis, usually due to a delay in getting paid, then owners are setting up a business line of credit.

Banks have really tightened up their lending standards for business. You have to have solid collateral to back up your business loan or line of credit along with a very good financial history to be approved. Many small businesses are going to survive or grow based on reinvesting profits instead of through business financing. This isn't a bad thing. It often makes a business stronger.
- Stephen Halasnik, Financing Solutions

Government Assistance Will Stay

The EIDL, Economic Injury Disaster Loan, will for sure be around for at least five years. I also think the Main Street Lending program will be a huge catalyst for the economy and be around for the foreseeable future. The MSLP has great terms and will more than likely be utilized by a lot of very smart people to keep their businesses moving forward during these unprecedented times. In turn, these will help companies and their leaders become way more in tune with their expenses and what they actually need to run their companies successfully. We have slashed expenses and now realize we don’t need a lot of little things that add up to a lot once you sit down and look at everything from an objective point of view.
- Ben Walker, Transcription Outsourcing, LLC

The Opportunity To Digitize

The Paycheck Protection Program (PPP) provided the catalyst for financial institutions to digitize their onboarding and verification processes. The call to participate in providing a safety net to Small Business owners saw formerly reticent institutions adopt new technology and processes more readily. Thankfully, at this stage, underwriting was not necessary. The likely permanent effects are two-fold. First, institutions will be more open to continuing down the path of digitization and more confident in their approach to selecting new technologies. Second, small business owners will expect a more comprehensive and friendly digital approach.
- Sherif Hassan, Capiform

Changes in Payment Plan Terms

Many small businesses, prior to the COVID-19 crisis, were not very aware of the credit terms that they offered to their customers or, conversely, their suppliers offered to them. As cash flow has become tight, businesses have started to offer less generous terms to their customers. For example, payment in fifty days versus sixty days or having larger penalties for late payment. Likewise, many businesses are starting to take advantage of the late payment terms offered by suppliers. Paying 1% or 2% per month in late fees to suppliers may not appear to be a good financial option. In short, as the commercial credit market gets tighter, trade credit becomes more important.
- Marc Prosser, Choosing Therapy

Delays in Seeking Financing

We’re still in the throes of the pandemic and will be for some time, so making firm predictions about the future is difficult. That said, one of the big long-term changes we expect to see as a result of the pandemic is greater hesitancy among entrepreneurs and small businesses to seek financing early in the business lifecycle. You might call it an increased willingness to “bootstrap” — to invest the resources available to you and your partners or team in your growth, rather than give up too much control (and expose yourself to financial shocks like the one we’re living through) early on.
- Brian Martucci, Money Crashers

About the Author(s)

 Brett  Farmiloe

Brett Farmiloe is the Founder & CEO of Terkel, a Q&A site that converts insights from small business owners into high-quality articles for brands. Brett Farmiloe Founder & CEO,

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