5 Ways to Preserve Capital During Slow Times

Ways to Preserve Capital During Slow Times

During slow times, many businesses focus on preserving capital rather than taking out bad credit business loans (although loans can still be a smart option). However, the emphasis is usually on asking for rent relief and putting a hold on vehicle insurance. Here’s a look at these two approaches and three other ways to save money.

1. Ask Your Landlord for Rent Relief

Communicate with your landlord sooner rather than later about rent relief. Landlords appreciate having the time to think through requests. They might feel pressured if you ask for rent relief right before the money is due.

Explain why you need relief and what form you want it to take. Unexpected situations such as earthquakes, hurricanes, or the COVID-19 pandemic are easier for landlords to understand and sympathize with. Still, it’s not enough to say, “I need rent relief because of the hurricane.” Explain how the unexpected occurrence is affecting your business and when you expect normalcy. For instance, maybe a hurricane is causing sales to drop by 50%, but you anticipate normal sales to resume within three weeks.

Forms of rent relief include deferral, reduction, abatement, and even a loan conversion. With deferral, the due date is postponed to a later date. Reduction means the due date is the same, but the amount of rent is less. Abatement is when your landlord forgives some or all of the past due rent, and you pay on time from now on. Loan conversions occur instead of abatements when landlords turn the rent past due to a loan. During slow times, deferral and reduction may be your best bets.

2. Look into Mortgage Relief from Lenders or Fannie Mae, If Applicable

capitol building

Perhaps you own your business space instead of renting it, or you run the business out of your home. Like you would with a landlord, get in touch with your lender or mortgage servicer as soon as possible.

Before calling, gather as many financial documents as you can, such as your income information, balance sheets, financial projections, and so on.  You may be able to qualify for a Fannie Mae or Freddie Mac payment deferral program starting in July 2020. It’s similar to a landlord’s loan conversion in that missed payments come due when the mortgage matures, the payoff date arrives, or you sell the property. Other programs should be available, too. Make sure you call as soon as possible.

3. Turn Off Unneeded Utilities

During slow times, some of the space in your business may go unused. There might be no need to leave the lights on in certain rooms or to maintain five bathrooms when two will do fine. Similarly, if all of your employees are teleworking, for now, you might want to temporarily suspend water, electricity, sewer, internet, and other services.

4. Put a Hold on Insurance for Multiple Vehicles If They Are Not Being Used

white car parked on the driveway

It’s frustrating to pay insurance on vehicles that aren’t being used. Luckily, you might be able to put a hold on insurance. Contact your insurer, explain the situation, and request the hold.

If that does not work, reduce or suspend coverage, remove certain drivers or cancel the policy altogether. If canceling occurs, reinstate the insurance when your business needs the vehicles again. Alternatively, your insurer may agree to special payment plans, including deferred payments.

5. Cut Down on Meetings and Travel

people on conference call for Business Loans

When times are slow, businesses must prioritize their spending. Can any trips be delayed or replaced by video conferencing? Even replacing in-town meetings with video chat can save a lot of money.

Suppose your business has four locations within an hour radius of one another. The managers at each location meet twice a month. These meetings require gas money and business vehicles. Could you replace them with telework and suspend vehicle insurance?

Bad Credit Business Loans

During slow times, some companies apply to get business loans for bad credit or start-up business loans. Your company might need to meet criteria such as a $10,000 monthly minimum in gross revenue for the past few months. Depending on the type of business you do, your organization might qualify for a loan to weather these times. For instance, if you normally pull in $25,000 a month and are making $13,000 a month during slow times, a loan could be done even if you have bad credit. Get in touch with First Capital Business Finance today to prequalify.

5 Ways to Preserve Capital During Slow Times | First Capital Business Finance



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