If your household is suddenly in dire straits, here are things you can do right now:
Be proactive about deferring housing costs
- HUD has enforced a foreclosure and eviction moratorium for 60 days
- Reach out to your bank or landlord ASAP; let them know you won’t be able to pay and work out a plan to get back on track – they’ll appreciate this!
- Save your cash for more immediate needs like food, utilities, gas and healthcare
Get cash in your hands for necessary expenses
- Apply for unemployment immediately: Unemployment is skyrocketing and many more layoffs are expected. Most companies will freeze hiring until things settle down. Get on the unemployment list in your state now. Most states pay up to $300-500 per week for up to 6 months
- It looks like the Senate relief package that’s coming will include ~$1k checks sent out to American taxpayers; watch the news to find out what gets approved
- IF YOU ARE OWED a tax refund, file right away – the IRS is going to rush out refunds to get cash in peoples’ hands. IF YOU WILL OWE MONEY on taxes, wait to file;tax day is bumped back to July 1st instead of April 15th..
Ask for help with credit card debt
Most issuers say contact them to talk through options; some (i.e. Capital One) are letting people skip payments interest-free.
Defer student loan payments
- For Federal Loans: President Trump has issued an executive order allowing most federal student loan borrowers to skip payments for two months, and the government has lowered interest charges to 0% until May 12th. Some Senators are pushing for further support in the Senate relief package.
- For Private Loans: You should reach out to your lender and ask for help:
- Request a deferment or forbearance
- Request an income-driven repayment plan to lower your payments
- Cancel auto-debit to keep money in your bank account if you need it to cover your necessary expenses now
Make sure you still have health insurance
- If you or a spouse has just lost a job that provided your health insurance, consider using COBRA to keep coverage
- Many states are reopening ACA exchanges to help people get coverage; ACA premiums average ~$450/mo for individuals, $1200/mo for families. Remember
Start reviewing your personal expenses
Determine what you will cut, in what order – cut more, sooner than you think you need to
Rates are up and down, sometimes at all-time lows.
Unfortunately, people are trying to take advantage of the pain of others. If something seems too good to be true, it probably is. Stick with reputable companies and news sources you know and trust.
- Huge SBA loan package approved. Apply at: http://disasterloan.sba.gov/
- Long-term loans up to $2M at low interest rates
- May be forgiven under certain circumstances
- Some states (Michigan) or cities (SF, LA, Denver, Chicago, NYC, Portland) have additional emergency loan assistance programs; see if yours does – and keep checking as more may be announced in the coming weeks
- Get on the list for Facebook’s grant program information ($100M, 30,000 SMBs)
- Shopify store owners in select states can apply for Shopify Capital loans
Maximize Cash Flow
- If you have a team (employees, VAs, freelancers), negotiate pay or rate reductions to avoid having to let people go entirely
- This will be VERY uncomfortable, but if you’re honest about the situation, it may be a win-win, as new work may be hard to come by for them
- If your business can support it, try to make them whole later when you have the cash; be careful on how you set expectations here to not overpromise on something you won’t be ready to fulfill later
- Liquidate inventory to get cash on hand, especially on products that aren’t selling; recessions are a bad time to sit on a lot of inventory
- Push to get open receivables paid by your customers; consider a small discount for quick payment (if that won’t hurt you further)
- Reach out to repeat / loyal customers; ask them to prepay / pre-purchase for future goods or services, even promotions / content
- If clients or sponsors are cancelling projects, try to defer them instead of cancelling outright; maybe you can save the income long-term
- Reach out to other businesses like yours – do they have work they can hire you on as freelance for now? Can you collaborate?
- Explore vendor financing to maintain relationships
- Ask vendors if you can get credit extensions to pay them late, conserving your cash
- Ask for discounts or reduced pricing – they may also offer significant discounts now if they think you’re likely to be unable to pay
Pivot your business to retain or replace revenue
- Can you deliver your service remotely?
- Can you bring your product or service to customers in their homes?
- Are there new products or services you can offer that meet changing needs?
- Can you take your offline business online to generate more sales?