As Utah’s small businesses transition from “survival mode” to the post-pandemic “new normal,” the opportunities are looking bright. It’s a great time for many business owners to begin planning the next steps to thrive and grow in the coming months.
In Utah, 99 percent of firms are small businesses — and they really are the lifeblood of our economy. They create jobs. They give our neighborhoods their unique flavors. And they bring our communities together.
Despite the challenges of 2020, Utah’s small businesses have shown incredible resilience through the pandemic. They’ve reinvented themselves and reimagined ways to safely serve customers. In fact, 71 percent of Utah small businesses report they are operating at or above their pre-pandemic capacity, according to the Census Bureau’s most recent Small Business Pulse Survey.
Small businesses have also shown up for their communities in amazing ways, from giving free meals for healthcare workers to donating supplies for students learning at home. The good news is that now Utahns are ready and able to show up for small businesses. Freshly vaccinated or soon to receive a shot, more of us are ready to drop by the dry cleaner, call the travel agent or go back to the bowling alley.
Small businesses are feeling optimistic. The most recent Small Business Pulse Survey also reports:
• Almost half (48.8 percent) of Utah small businesses have fully recovered or expect to be fully recovered by mid-July.
• 44.5 percent of these businesses are already operating at pre-pandemic levels.
• Another 20 percent of small businesses expect to return to normal within six months.
As small-business owners transition to a brighter future, they can take five steps to position themselves for success and growth:
1. Learn about different sources of capital available as you prepare to meet increased consumer demand.
The U.S. Small Business Administration’s Paycheck Protection Program offered a lifeline to small businesses through forgivable loans that helped them retain workers and keep their doors open during the COVID-19 pandemic. For instance, Zions Bank approved 16,645 Utah loans in 2020 and in 2021 that preserved payrolls for tens of thousands of workers — a testament to the resilient spirit of the Beehive State’s entrepreneurs.
Now, with a major economic rebound expected and PPP funds largely exhausted, it’s wise for small-business owners to educate themselves on additional sources of capital, including SBA 7(a) loans, business lines of credit and other SBA programs.
The 7(a) loan is one of the most versatile options offered by the SBA. This loan’s maximum amount is $5 million and is frequently used for business acquisitions, working capital, debt refinance or to purchase furniture, fixtures and supplies. With the boom in construction, many companies are also using 7(a) loans for equipment purchases.
A business line of credit can help buffer companies from unexpected challenges or cashflow issues. Borrowers may withdraw funds up to their approved limit and they are only charged interest for the amount withdrawn. After making repayments, the funding becomes available again.
The SBA administers other programs to help businesses reeling from the effects of the pandemic. The COVID-19 Economic Injury Disaster Loan (EIDL) is a direct loan through the SBA that helps businesses meet operating and other expenses. Funding is available for loans up to $500,000 and businesses may apply even if they already received a PPP loan. However, funds from both loans cannot be used for the same purpose.
The SBA’s Restaurant Revitalization Fund provides eligible businesses with funding equal to their pandemic-related revenue loss, up to $10 million. If recipients use the funds for eligible expenses — such as payroll and rent — before March 11, 2023, they will not be required to repay the funding. Businesses may apply at restaurants.sba.gov.
The Shuttered Venue Operators Grant program allocates $16 billion in funding for live venue businesses that had to close during the pandemic. Applicants may apply if they were in business as of Feb. 29, 2020, and funds may be used for expenses such as payroll, rent and production expenditures. Businesses may apply at www.svograntportal.sba.gov/s/.
2. Continue innovations and partnerships that emerged in the pandemic. Small businesses demonstrated they could be agile during the past year. The adoption of new innovations, ramping up of e-commerce, digitization and automation should continue. While these upgrades can be costly, they can provide a competitive advantage. Contactless payment and fulfillment solutions will continue to be attractive to consumers. Our business environment is changing, and the better companies can position themselves to roll with the changes, the better shape they will be in.
It may also make sense to nurture partnerships that may have emerged during “survival mode.” An example is an ice cream shop that had to close a few days a week during the pandemic. They were creative and formed a new alliance with a restaurant, which started serving their paletas. They were a big hit at the restaurant, which led to additional restaurant locations offering the product.
3. Commit to keeping good records. The PPP process showed the importance of keeping good records. Business owners will want to make sure their income statement, statement of cash flow, cash flow forecasts, payroll records and tax documents are up to date. These records were critical in determining how much a business could borrow through the PPP. Even though the program is over, it makes sense to keep business paperwork organized. Keeping documents in order will help business owners better predict cash flow and future expenses.
4. Invest in your workforce. If the pandemic taught us anything, it was that we may find we have to cover the tasks of our colleagues. In a challenging labor market, small-business owner can focus on their existing workforce and invest in upskilling and cross-training them. Employees need to understand the value they contribute (or should be contributing) to a small business. At the same time, many employers may need to recruit new workers with new skills to enhance their existing team and help you scale up the workforce. A business is only as good as the people operating it. Employers can make sure they have a well-trained, productive staff and address any weak links.
5. If you haven’t already, cultivate a strong relationship with a banker. Many business owners, particularly in the early weeks of PPP, found it advantageous to have an existing relationship with a banker. Bankers who knew their client’s business model and structure helped support them through the process. A banker can help serve as an advocate for their business client during the underwriting process. They can help small-business owners meet credit requirements and successfully apply for capital.
It’s been a challenging time for many small businesses, but there is light at the end of the proverbial tunnel. The Conference Board Consumer Confidence Index recently surged in April to its highest reading in 14 months. As more people become fully vaccinated against COVID-19, consumer spending will also return to normal levels. Locking down your capital needs will help position your business for success in the post-pandemic economy.
Yrene Luque manages Zions Bank’s Business Resource Center, which provides tools and resources for those interested in starting or expanding their businesses.