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How to Recover Your Business from COVID-19

Whether you’re seeking financial help for your small business in response to the recent Coronavirus (COVID-19) outbreak or simply wondering how to sustain, a loan from a financial or government economic development organization helping Small Businesses may be just the solution you need. Around the world, government organizations at various levels and private banks have stepped up to assist.

In Canada, the financial institutions like six major banks are introducing offers for businesses to get through these difficult times. The offers range from cashing your long term GICs to assist with required liquid cash to meet day to day expenses to interest free or low interest loans. The offers differ from institution to institution. Low-interest long-term loans are a viable option for business owners suffering substantial emergency-related physical or economic damages.

In NWT, there are certain funding programs available for businesses including start-ups and expansion with non-repayable funding. The limits are different, and the amounts are determined on case by case basis and are criteria based. Even though in many cases, the amounts are not too large, every dollar can help in short term in these critical times, specifically when the amounts are non-returnable. Small scale businesses and artists can also apply for these funds.

There are options to get loans for building infrastructure and working capital respectively. The maximum terms, interest rates and specific terms depend on risk, security and management experience. Whether you have access to credit elsewhere is also considered on case by case basis.

For loans, in many instances, emergency assistance loans are direct loans with funds provided by the government. In Canada, both the federal and provincial and territorial governments are introducing emergency assistance loans for businesses impacted by the Coronavirus (COVID-19). The introduction is fast and in many cases the implementation is with immediate effect while in others effective April 1, 2020 or later. You may qualify for the interest free terms for such loans. However, in certain cases you may qualify only if you can't obtain credit elsewhere which will mainly be the top financial institutions in Canada. While previously lower interest rate loans from Banks were attractive, interest-free or low interest government loans may be new alternatives and worth exploring. Avoid paying high interest in these difficult times by using the offers.

Emergency assistance loans are generally designed to help businesses and homeowners recover from declared emergencies such as wildfires. In certain areas, Coronavirus (COVID-19) Emergency Assistance may consists of low-interest loans to businesses, renters, and even homeowners in affected areas. A new area to explore for governments will be introduction of home-based businesses as more and more businesses are coming with creative ideas to serve the public from home while respecting others by self-isolating.

Specifically, COVID-19 relief loans may be used to pay payroll, accounts payable and other bills you can't pay due to the economic impact of COVID-19 on your business. This is a time when you may also be looking for long term loans with low interest rates.

Microloans, where available, could provide small, short-term loans for small businesses and certain types of not-for-profit childcare centers and home-based businesses. Among others, these loans may be used to buy supplies, pay utilities or rent or to provide working capital. Such loans are provided by micro-lenders and government agencies with each having its own lending limits and credit requirements.

Another popular program is Guaranteed loan program. If, where and when available it provides financial help for businesses with special requirements, such as franchises, farms and agricultural businesses, and fishing vessels. There is no minimum loan amount, but the maximum could be set at $2 to $5 million. Terms could be extended to provide financing for businesses to purchase real estate, major fixed assets and equipment. The asset purchased could be used as collateral and so with security offered the interest rates offered could be lower.

If you are a business looking to use the offers and programs available, you might want to start preparing your paperwork with business plans as it may be first come first serve basis.

Stay tuned on further articles on economic development and tips on applying for funding…….

Dr. Pawan Chugh

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