Tips for Small Businesses Seeking Loans in the Face of Inflation

March 28, 2022

As inflation extends its hold on US small businesses with no end in sight, many owners are reaching their tipping points. In fact, a recent Small Business Survey found that nearly 80% of small business owners have already begun passing on costs to customers or will soon. Another shows that 48% of small business owners who said inflation was their biggest concern have less than three months of cash reserves on hand. 

With PPP, the Restaurant Revitalization Fund and EIDL program now in our rearview – and with no guarantee that additional relief packages 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 a difficult two years of supply chain issues, disruptions to profits, wage increases and more, many are having a hard time getting approved.

To help small business owners navigate the current economy and increase their chances of getting approved for the funding they need, the Small Business Administration (SBA) lending experts at St. Petersburg-based BayFirst have compiled the following list of steps 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 will be. To improve your credit score, consider getting a business credit card, opening a bank account or asking your vendors to report positive payments to your credit file.

2.  Turn to a proven SBA lender. Not all banks are created equal and when it comes to small business lending. Community banks specializing in SBA lending know the ins and outs and can provide the insight, advice and personalized approach needed to make a difference.

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

4.  File taxes early and research available tax credits. Filing early will ensure a faster turnaround for refunds. And if you owe money, you’ll have more time to figure out a plan or identify last-minute moves to lower your tax bill.
 
5.  Spruce up your business plan. Some lenders will require that you share a business plan as part of the application process, especially in the case of startups. So, be 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 to:

1. Refinance high interest rate debt to lower interest cost and improve cash flow
2. Borrow permanent working capital to support increased inventory and other costs
3. Fund the purchase of a building that is being rented and establish long-term equity with the building asset
4. And more

In the months to come, SBA 7(a) loans will serve as an essential component of our economic recovery and should be top of mind for small businesses in need of support.  BayFirst is a preferred SBA Lender and the top SBA 7(a) lender in the Tampa Bay area for SBA’s fiscal year ending 2021.  If you are a small business owner looking for a leg up when it comes to lending as inflation rates increase, please call us at 833-220-2792 to discuss how we can help.