Above all else, the coronavirus pandemic is a human tragedy, affecting more than a million people around the world. Its growing impact on the global economy is being felt by everyone and is adding to the human misfortune and heartache of this devastating illness.

It’s our intent to provide business leaders with insights into the ever-changing coronavirus situation and the implications it has for your business. The outbreak is rapidly spreading, and its impact on the economy and your business is constantly shifting and remolding the landscape of business. As a result, some of the perspectives in this article may rapidly fall out of date. This article reflects our perspective as of April 6, 2020. Check back frequently for updated insights.

Just a few weeks ago, all of us were living our usual busy lives. Now, things normally taken for granted—an evening with friends, the daily commute, a plane flight home—are no longer possible. Daily reports of increasing infections and deaths across the world raise our anxiety and, in cases of personal loss, plunge us into grief. There is uncertainty about tomorrow; about the health and safety of our families, friends, and loved ones; and about our ability to live the lives we love.

Safeguard Our Lives and Our Livelihoods

In addition to the first and foremost concern for the impact on human lives, there is fear about a severe economic downturn caused by a prolonged battle with the COVID-19 coronavirus. Businesses are closing and millions have lost their jobs. We are in uncharted waters and some predictions are bleak.

Multiple sources say the shock to our lives and livelihoods from virus-suppression efforts could be the biggest in nearly a century. In Europe and in the United States, the required “lockdowns” of the population and other efforts to control the virus are likely to lead to the largest quarterly decline in economic activity since the Great Depression. We have never in modern history suggested that people not work, that entire countries stay at home, and that we all keep a safe distance from one another. This is not about GDP or the economy: it is about our lives and livelihoods.

We see enormous energy invested in suppressing the virus, while many argue that we must do more. We also see enormous energy going into stabilizing the economy through public-policy responses. To avoid permanent damage to our livelihoods, we need to find ways to contain this outbreak. We must think about how to suppress the virus and shorten the duration of the economic shock. And we must do both now!

Finding the New Normal

The coronavirus is both a health crisis of immense proportion and an unavoidable restructuring of the global economic order. Here’s insight into ways leaders can navigate to what’s next.

It is certain that this era will be defined by the coronavirus rift: the period before COVID-19 and the new normal that will emerge in the post-viral era. The unprecedented new reality will usher in a dramatic restructuring of the economic and social order in which business and society have traditionally operated. We are beginning to see discussions and debates about what the next normal will entail and how drastically it diverges from the previous normal that shaped our lives.

What will it take to navigate this crisis, now that our traditional metrics and assumptions have been rendered irrelevant?

The new normal will require action across multiple stages. The new normal will emerge after the battle against coronavirus is won. Be prepared for the new normal: take action, remain resolved, and protect your business.

Take Action

Globally, crisis-response efforts are in full motion. Public-health interventions are deployed in both the public-facing healthcare system and the not-so-visible business world. Business-continuity and employee-safety plans have been escalated, with remote work established as the default operating approach. Many companies are dealing with acute slowdowns in their operations, while some seek to accelerate to meet demand in critical areas spanning food, household supplies, paper goods, and personal protection gear. Educational institutions are moving online to provide ongoing learning opportunities as physical classrooms shut down. This is the stage where leaders are currently acting.

And yet, a toxic combination of inaction and paralysis remains, stymying choices that must be made. Lockdown or not; isolation or quarantine; shut down the factory now or wait for an order from above; these are decisions that leaders must make and act on. Leaders must determine the scale, pace, and depth of action required. Inaction is not an option.

Remain Resolved

The pandemic has spawned a growing economic and financial system crisis. The acute decline in economic activity, necessary to protect public health, is simultaneously jeopardizing the economic well-being of citizens and institutions. The financial downturn is proving resistant to the efforts of central banks and governments to keep the financial system functioning. A health crisis is turning into a severe financial crisis as uncertainty about the size, duration, and shape of the decline in GDP. Unemployment rates undermine what remains of business confidence.

The shock to our livelihoods from the economic impact of virus-suppression efforts may be the biggest in nearly a century. Experts believe that in Europe and the United States this pandemic may lead to the larger decline in economic activity in a single quarter than the loss of income experienced during the Great Depression.

In the face of these challenges, resilience is a vital necessity. Near-term issues of cash management for liquidity and solvency are clearly paramount. But soon afterward, businesses will need to act on broader resilience plans as the shock begins to upturn established industry structures, resetting competitive positions forever. Much of the population will experience uncertainty and personal financial stress. Public-, private-, and social-sector leaders need to make difficult “through cycle” decisions that balance economic and social sustainability, given that social cohesion is already under severe pressure from populism and other challenges that existed pre-coronavirus.

Protect Your Business

While the business community that services consumers directly is visibly grappling with the public’s reaction to the spread of the coronavirus, many business-to-business service providers are also affected. Often B2B companies rely on the financial stability of their clients to generate income, in that their clientele must have the means to employ their services. During times of turmoil, whether it be a pandemic or a recession, it’s not uncommon to see client lists shorten as more businesses forgo employing services to lessen their expenses.

Being resolved means looking for alternative ways to keep your cash flow healthy. A loan may be your best option to sustain your business during this downturn. However, not all lenders are equal. Use caution and consider these things when choosing a lender.

  • Prior to the coronavirus pandemic, banks were declining approximately 80% of all small business loan applications. That number has increased since the onset of the Covid-19 pandemic.
  • This week the FTC issued this warning, “Legal ‘loan sharks’ may be exploiting the coronavirus to squeeze small businesses.” Be leery of merchant cash advance companies that loan against future receipts at ultra-high interest rates.
  • Faced with complaints from small banks, the federal government has already doubled the interest rate for its emergency lending program for small businesses. As loan applications pour into the SBA for financing under the CARE ACT, there are predictions that the funds will run out and only early applicants will be funded.

B2B Financing from Allied Financial Corporation

While banks are tightening their lending requirements, predatory lenders are squeezing small businesses, and the CARE ACT SBA loans may not be a sure thing, Allied Financial Corporation is here to help small-to-medium B2B companies. Contact us today to discuss how you can use your existing accounts receivables to bolster your cash flow and ride out this economic downturn until we reach the new normal.

Read also:

COVID-19 Impact on B2B Businesses

Coronavirus Attack on B2B Companies: How to Survive