BayFirst Financial: Advice for small businesses looking for loans in the face of inflation

Tips for Small Businesses Looking for Loans in the Face of Inflation

March 28, 2022

As inflation extends its grip on America’s small businesses with no end in sight, many owners are reaching their tipping points. In fact, a recent survey of small businesses found that nearly 80% of small business owners have already started passing costs on to customers or will soon do so. Another shows that 48% of small business owners who said inflation was their top concern have less than three months of cash reserves.

With the PPP, Restaurant Revitalization Fund and EIDL program now in our retrospective – and with no guarantee that more relief programs are on the way – many small businesses have exhausted all other options and are relying on loans to help manage higher costs and increase their capital. And, after two tough years of supply chain issues, profit disruptions, salary increases and more, many are struggling to get approved.

To help small business owners navigate today’s economy and increase their chances of getting the financing they need, Small Business Administration (SBA) lending experts at St. Petersburg, have compiled the following list of actions to take now, as interest rates continue to rise.

1. Keep an eye on your credit score. The higher your credit score, the lower the costs associated with borrowing. To improve your credit score, consider getting a business credit card, opening a bank account, or having your suppliers flag positive payments on your credit file.

2. Use a Proven SBA Lender. Not all banks are created equal and when it comes to small business lending. Community banks specializing in SBA loans know the ins and outs and can provide the information, advice and personal approach needed to make a difference.

3. Look for free resources to improve your position. The SBA provides counseling and training through the Small Business Development Centers at no cost to the business.

4. File your taxes early and research available tax credits. Filing early will ensure a faster turnaround time for refunds. And if you owe money, you’ll have more time to come up with a plan or identify last-minute measures to reduce your tax bill.

5. Liven up your business plan. Some lenders will require you to share a business plan as part of the application process, especially in the case of startups. So make sure your plan is in tip-top shape and includes a clear five-year roadmap before you apply.

6. Consider all the ways to use your loan. SBA 7(a) loans can be used for:

  1. Refinance high-interest debt to reduce interest costs and improve cash flow

  2. Borrow permanent working capital to support increased inventory and other costs

  3. Finance the purchase of a building that is leased and establish long-term equity with the building’s assets

  4. And more

In the months ahead, SBA 7(a) loans will be an essential part of our economic recovery and should be a priority for small businesses in need of assistance. First Home Bank is an SBA Preferred Lender and the Top SBA 7(a) Lender in the Tampa Bay area for the SBA fiscal year ending 2021. If you are a small business owner looking for a a head start on lending as inflation rates rise, please call us to discuss how we can help you.

James V. Hayes