The spread of the coronavirus (COVID-19) has caused severe problems for small businesses—as well as an explosion of efforts to help them out.

As retailers and small wholesalers navigate the current crisis, here are three things experts recommend they keep in mind.

– If you feel you need a loan, check in with your accountant and banker first, recommends Elizabeth Milito, senior executive counsel with the National Federation of Independent Business.

“Take stock of where your business is financially,” she says. “Try to determine if a loan is needed. Your banker may be offering some kind of flexibility.”

As with landlords, companies should check in with their bankers if they feel they can’t meet their obligations, she advises.

“It is so important to be proactive in this. It’s better to start the process now, if you haven’t already.”

Joseph Vann, an attorney with New York City law firm Cohen Tauber Spievack & Wagner who represents a lot of jewelry companies, says his clients have found lenders receptive to outreach.

“Every bank relationship is different,” says Vann. “However, as a general matter, our clients who have already reached out to their lenders have found that they’re willing to have flexibility until this thing has passed.”

He notes that following the 2008 financial crisis, bankers waited to take action until they understood the new landscape.

“The lenders would like to avoid massive defaults,” he says.

Y. Jerry Cohen, a founding partner with the same firm, says the key is being prepared. Businesses that come to bankers with solid financial information and future modeling may find willing partners, he says. But they will be less likely to lend a hand to businesses that were already having issues before all this started.

“The bankers will be asking for a lot of financials,” says Cohen. “Unfortunately, a lot of businesses in this industry have been through this before. They know the drill.”

– If you do need a loan, look to the government—both federal and local.

As we wrote Thursday, the Small Business Administration is offering $50 billion in loans to small businesses in states where the governors have submitted relief requests—which is, at this point, just about every state.

The loans can be for as much as $2 million and carry a 3.75% interest rate for small businesses. They can be repaid over a term of up to 30 years.

While SBA loans have a reputation for being slow-moving, Milito says that, given the current crisis, local offices are trying to speed the process up—though they are also being deluged with requests. Businesses can apply for SBA loans here. More information is available by calling 800-659-2955 or emailing disastercustomerservice@sba.gov.

But she notes that those SBA loans may not be the best options out there.

Cities like New York, Syracuse, N.Y., and Sacramento, Calif., are offering zero-interest loans to small businesses. There are also measures in states such as Connecticut and Pennsylvania to offer zero-interest loans on a state level.

A list of small business relief programs can be seen here.

There will also likely be small business loans included in the new federal stimulus package, which could contain some form of loan forgiveness if the money is used to retain employees.

“If your business can afford to wait, see what Congress comes to,” Milito says. “That may be a better option for your business.”

– Wholesalers should make sure they have the proper consignment protections in place.

Vann says the coronavirus crisis is a “healthy reminder” of the importance of “perfected” Uniform Commercial Code (UCC) filings.

“We are finding that jewelry clients that sell to retailers are taking the steps necessary to ensure that any consignment agreements that are in place are properly perfected,” he says. “This is a real wake-up call. Because you never knows when something like this may occur.”

(Image courtesy of the Small Business Administration)

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