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The COVID-19 pandemic led to a considerable shock to corporate revenue streams. It left many firm owners with less available working capital to cover accounts payables.
The Consumer Financial Protection Bureau (CFPB) issued a report concluding that as of June 2020, there wasn’t a notable increase in pandemic-related credit delinquency. The report attributed this fact to payment assistance from federal, state, and local programs targeted at furnishing payment assistance to borrowers.
U.S. banks stepped up to offer multiple financial initiatives. Programs intended to aid business owners impacted by the coronavirus pandemic with their lines of credit and other funding products. Financial institutions took these actions to spur recovery and curb economic damage.
Open-ended lines-of-credit work like a credit card in that when approved by a lender, business owners receive a set credit limit.
They give business owners the flexibility to borrow money as needed up to a preset limit. This limit can be decreased or increased at the bank’s discretion.
When economic uncertainty hits, business owners draw from their business lines of credit to fund operations. During the COVID-19 crisis, bankers and lenders modified their lines of credit policies to help small business owners stay afloat. They offered:
A typical financial assistance arrangement many lenders offer to small business owners is the opportunity to defer business loan and line of credit repayments. For example, some banks have allowed a 30-day payment deferral with no late fees, while others have increased this to 90 days. Still, other banks have offered an extension in addition to payment deferrals.
Some banks have cut their business lines of credit rates to ease COVID-19-related cash flow stress for small business owners. For example, U.S. Bank temporarily dropped interest rates by 1% on newly established unsecured and secured lines of credit through its Cash Flow Manager program.
Other banks have extended interest-free and short-term lines of credit to assist small business owners during the pandemic.
A handful of banks have offered interest-free lines of credit for small business owners during the crisis. That includes lenders extending five-year lines of credit for up to $200,000 with three months of no interest for COVID-19-impacted firms. Other lenders have created interest-only and emergency lines of credit options for affected customers.
Whether it’s online lenders or traditional brick-and-mortar banks, most institutions waived late charges on various financial products. These include term loans, lines of credit, and credit cards. Moreover, many banks extended their late fee forgiveness into late 2021.
Another typical COVID-19 response initiated by lenders and banks were credit line increases. Depending on the institution, an increase could be on new or existing business credit lines.
These are only a few of the methods lenders used to help firm owners who felt the fiscal impact of COVID-19. We suggest contacting the institution where you do your banking for details regarding any small business relief programs they provide.
Banks often provide more information over the phone than what is listed on their websites.
In addition to lines of credit, many banks continue to offer relief programs, including:
Getting a line of credit to boost your bottom line during the pandemic may be challenging if you have poor credit or have been in business for a short time.
Despite programs helping small business owners, many fail to qualify. The reason for this comes down to how the lender evaluates your risk level.
To qualify for a line of credit, most banks and traditional lenders require:
Additionally, compared to other financing methods, lines of credit often offer lower borrowing limits. If the coronavirus pandemic heavily impacted your firm, you need financing to help you recover day-to-day operations.
Consider an alternative financing source like the Revenued Business Card.
The impact of COVID-19 put tremendous pressure on you, as a small business owner, to continually source ways to fund your firm as working capital dries up. But what happens if you can’t qualify or if your line of credit was closed or maxed out?
The new Revenued Business Card is here to help. Our business card provides short-term funding for firm owners with poor credit but strong sales.
With the pandemic interrupting commerce, you must have access to a flexible form of funding. Use our business card to cover utilities, mortgages, payroll, and more while you re-establish your financial footing — or use it as a readily available source of emergency funds.
It is easy to qualify, and you only pay for what you use.
Your company can qualify for the Revenued Business Card if it:
While lines of credit are an excellent option if you have good credit, the Revenued Business Card gives peace of mind for the rest of us during these uncertain times.
Find out more information or sign up for the Revenued Business Card by filling out our online form or dialing +1-877-662-3489.
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