Superfit Hero is an activewear brand that sells plus-sized clothing. Price hikes have made it difficult for them. The Los Angeles-based company usually purchases its fabric from a vendor who imports it from Taiwan. After that, the local manufacturer makes the final product. Micki Krimmel is the chief executive and founder of the company.  

As with many other businesses, it closed operations in spring 2020. But, when things were reopened the factory Superfit Hero used was finally shut down. Between then and now, fabric prices went up by 20%. Krimmel was eventually able to find a new manufacturer. However, due to increased manufacturing and material costs the price of fabric has tripled since 2019. The company also had to store more materials and other items due to disruptions in supply chains.  

Small businesses can’t afford to have so many inventory items. This limits their cash flow. It’s impossible to invest in marketing. “It’s pressure from all directions,” she stated. 

Krimmel sought the Covid Economic Injury Disaster Loan (EIDL), which was $150,000 for the first round and half of a million for round two. This loan allowed Krimmel to ease his financial pressure and buy additional inventory, purchase fabric and create new products. 

Krimmel stated that EIDL was the reason why we are still in business. She said that she is more positive than last year because of the new products and cash infusions. 

However, the EIDL loan program ended. Small business owners still face financial challenges due to rising costs, poor supply chains, and goods inflation. 

The latest data shows that inflation is at its highest point in 40 years. CNBC|SurveyMonkey Small Business SurveyQuartile One showed that 47% of small business owners were passing on price increases to their customers. 32% said they expect to have to hike prices in the near future if inflation persists. Only 33% described current conditions as excellent. Recent surveys by Goldman Sachs, the National Federation of Independent Business, and Goldman Sachs paint a similar picture of Main Street’s outlook in an inflationary environment.

More businesses take out loans in order to deal with rising costs. 

The U.S. Chamber of Commerce conducted a survey and found nearly half (45%) of small businesses had borrowed money to cover higher inflation costs. According to the SBA 29.3% small businesses applied for EIDL loan since May 2020. 9.5% requested bank loans. 

According to Tom Sullivan of the U.S. Chamber of Commerce vice president of small-business policy, credit cards and family and friends have been a major source of capital for small businesses in the past. However, the Paycheck Protection Program (and EIDL) changed this with the Pandemic. 

Nearly all of the SBA products were distributed. $416 billion in emergency relief aid to 6 million small businesses through the PPP program, Restaurant Revitalization Fund, EIDL program and other programs in 2021. Many people now expect that there will be more bank loans after these programs end. 

Rohit Arora (chief executive at Biz2Credit), stated that although they have received a lot over the past two years, “now, with no additional government money coming into, their need to credit is going grow.”

As interest rates rise, so does the demand for bank loans. This is in addition to market volatility, increased geopolitical tensions, and Russia’s recent actions in Ukraine. credit markets may tighten.

Many small-business lending programs have floating rates, such as the SBA. Businesses that need cash injections may not be able to borrow at this time. Profit and loss statements for the past two years are likely to have been affected due in part by higher wages and supply chain problems. Covid EIDL offers a fixed rate of 3.75% and is based on pre-pandemic numbers. 

It’s basically a triple whammy. This storm is getting increasingly complex and more intense. Joe Wall is the national director of Goldman Sachs 10,000 Small Businesses Voices. “In normal times, you wouldn’t see businesses using capital to offset macroeconomic circumstances,” he said. According to the Goldman Small Business Survey, 73% small businesses are positive about the future financial prospects of their business, despite the negative outlook.

Although the EIDL program ended at the close of 2021 there was hope that Congress would reintroduce them as part of small relief packages for small businesses. However, experts in policy are not optimistic about their prospects on Capitol Hill. 

For many small businesses, the past two years were difficult. Low credit scores have led to increased borrowing costs. Like individuals, businesses also have to be able to afford a scoreThis is affected by factors such as payment history and amount of debt. Payouts to lenders, however, are not reported to all agencies as they do with consumer credit scores. If you want to improve your business’ credit score, make sure that it is properly incorporated and has a Federal Employer ID. Also, get a Business Credit Card and Bank Account. Work with vendors who will report payments on the business credit bureaus.

2. Get taxes done early

If you are looking for an urgent loan, businesses should be prepared. make sure their 2021 taxes are completed. Given the influx of government capital in the last couple years via PPP and EIDL loans, most balance sheets are holding up, said Arora, but profit & loss statements are another story. For those with weaker P&L statements, make sure there’s a solid explanation for why, said Arora, adding that “most lenders know P&Ls are lower because of Covid.”  

3. Get loans from multiple sources

Although banks can be a significant lender for small businesses, this does not mean they are big. According to Sullivan community banks finance 60% of small business loans and 80% for agricultural loans.  He stated that community banks play a vital role in small-business financing ecosystems.

The pandemic made small businesses more aware of digital alternatives and lenders. If more funds are needed, they may consider using online sources again. Due to the extraordinary volume of SBA loans, key Covid programs such as the Paycheck Protection Program included financial assistance companies from fintech in the loan process. This helped increase awareness about fintech lending sources.

According to a May 2021 report from the New York FedFintech lending increased by as little as 2 to 20% during the pandemic. Business owners who were not served by large banks and had no relationships with lenders and are often unable to access traditional lenders and have limited financial resources. According to the NY Fed, fintech lenders were approved by Black-owned small businesses at a high rate.

4. Use the SBA Resources and Helpline to get free help

Sullivan recommended that small businesses seek out resources through Small Business Development CentersFind a mentor for your business through SCORE. These are both public partnerships which don’t require payment. A small business administration was established. Community Navigator programCovid is a program that helps business owners in economically disadvantaged communities to access capital and other resources.

Click to find out more information and sign up at CNBC’s Small Business Playbook. here.