How to Protect Your Small Business Financially During a Crisis

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Last updated on April 2nd, 2024

Small business finances are often closely tied to the funds and credit scores of their owners. When a pandemic, like the COVID-19 (coronavirus) strikes, it can leave companies – and their management – financially stretched. Fortunately, there are things you can do to protect yourself – and your business – during these tough times. Here’s how to safeguard your small business financially during a crisis like the coronavirus pandemic.

Separate Your Personal Credit from Your Business Credit

Small business credit differs from personal credit. Despite this, however, companies can use a personal credit score to apply for business credit cards or loans.

Why use your personal credit for your business? If your company is new, it likely doesn’t have a long enough credit history to gain the funding it needs. In instances like these, using your personal credit score is an easy way to access the loans and credit cards you need to succeed.

While using your personal credit to get business credit cards provides benefits, it can leave you overextended. Where possible, separate your personal and business credit. When your company experiences hardship due to pandemics or crises, your personal credit score won’t suffer.

Work Closely with Your Local Bank

For a small business, selecting a local bank or credit union may be a better option than a national bank. Because smaller banks have a local focus, they are more forgiving than national banks in times of financial crisis.

Building a close relationship with your local credit union or bank can pay significant dividends when companies find themselves feeling the effects of events like the COVID-19 pandemic.

Take the time to speak with your account officer regularly. Keep them up to date on your financial situation. As Andrew King of the Bastille Group states, “there is nothing more important than real relationships.”

Contact Creditors Quickly

Communication is key. Communication is especially crucial during a crisis. Most lenders are reacting to the COVID-19 pandemic with financial relief for those impacted. To receive these payment relief offers, however, you must contact your lenders.

If your business is struggling due to the economic slowdown, communicate with your lenders early and often. Financial institutions, like banks, credit unions, and other lenders, make their money through your payments. If you can’t pay, it’s in their best interest to help you. Contact your bank when financial issues arise – if you lose, they lose.

Closely Monitor Your Cash Flow

Cash flow is the net amount of cash going in – and out – of your business. Keep a close eye on your finances, with a particular eye to your credit utilization with credit cards. Because credit cards offer easy access to funds, they can leave companies overstretched if they over-rely on them during a pandemic or crisis.

Make sure your spending matches your incoming cash flow and that you can cover your debts. Reducing your expenditures can help maintain your business’s bottom line – and protect your company during a crisis.


Pandemics are frightening, and not just because of the damage they cause to human lives. These crises also have severe financial ramifications for individuals and small businesses. Fortunately, there are proactive steps you can take to safeguard not only yourself, but also your company.

The most basic steps you can take include separating your personal finances from those of your business and not using personal credit cards for business. Other measures include forging strong relationships with your lenders, keeping them up to date on your company’s situation, and being practical by contacting them when problems arise.

Related Article: Here Is What Happens If You Don’t Pay Your Credit Card Bill


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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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