Coronavirus: Help if you have a small business

Where to turn to for assistance with your small business during the crisis.

Updated

Young woman speaks to a man in an office.

If you’re worried about your small business amid the current coronavirus crisis, you’re not alone. Luckily, there’s support out there for you. To make things a little easier and help get through these tough times, we’ve put together a list of possible options and steps worth taking.

Important note: new measures and stimulus packages have been announced in Singapore since the outbreak of coronavirus. Visit the government’s website to find out how your SME could get funding support.

Can business insurance help me?

Business insurance will often exclude protection against losses and disruption as a result of a pandemic like coronavirus. If you have business insurance, there’s a chance you might be covered for business disruption as a result of infectious diseases. This usually includes infectious diseases like a measles outbreak. However, these outbreaks only affect small areas and most policies will only cover outbreaks that are isolated to the insured premises.

Most insurers have exclusions to insurance policies stating that ‘disruption from a number of highly effective diseases are not covered’. Coronavirus is now considered by the World Health Organisation as a pandemic, meaning business insurance will not cover you for any related losses.

Can you still get business insurance?

Yes, but you won’t be covered for any issues related to coronavirus. That’s because it’s a ‘known event’, which basically means providers won’t insure you for something that’s already occurred and you are well aware of. Insurance only covers you for unexpected events; coronavirus definitely doesn’t qualify for that anymore.

What will business insurance cover if I’ve already got it?

If you already have business insurance, you’ll still be covered for a lot. Even during the current coronavirus crisis, business insurance can cover you for the following:

  • Professional indemnity cover. This covers you from negligence if your business provides advice or a service.
  • Liability. This covers you from third-party injuries or damages caused by products your business sells. Similarly, public liability protects you in case you cause third-party injuries or damages in public.
  • Fire and theft cover. This protects your property and items from damage due to fires and losses from theft.
  • Business interruption. You might not be covered for coronavirus, but business interruption cover can still help recover your losses for other reasons, for example, if your building is damaged and you can no longer work in it.

Can I take out a business loan?

Business loans are always an option but do come with risk. Some state governments are offering interest-free loans to small and medium businesses in order to keep them afloat during the coronavirus crisis. Loans outside of these government schemes will be assessed on your businesses needs and whether you will be able to pay back the loan, plus interest.

In some cases you will have to secure the loan against an existing asset such as property. You will need to make sure your business will be in a position to pay back the loan after the crisis otherwise you may find yourself in large amounts of debt, worsening your situation.

Here are some other ways to raise finance for your company:

Microloans

Microloans are small-dollar financing available to all types of businesses, including startups. They can be used for short-term, low-cost expenses like buying office supplies or stocking up on your first set of inventory. Microloans in Singapore typically offer smaller borrowing amounts and shorter terms than unsecured loans, but they may also have higher rates.

Equity investments

Another way to access funding in Singapore is to take on investors in exchange for equity. Typically, small businesses can get an equity investment through a venture capital firm or an angel investor. While there is no limit on the borrowed amount and no repayment period, you could lose partial control of your company in the process.

Credit cards

An alternative to business loans in Singapore would be business credit cards. These can be useful for short-term, day-to-day expenses but watch out for typically high rates of interest.

Crowdfunding

Online communities have been flourishing, and raising money online is no longer a rarity. With equity crowdfunding, your company can start an online campaign to receive funding from multiple investors in exchange for partial ownership. An alternative model is rewards-based crowdfunding, where your business offers prizes in exchange for donations.

Where else could I get support?

If you run a start-up, there are a number of government schemes in Singapore aimed at assisting up-and-coming companies. Such schemes include the ACE Startup Scheme, the Capability Development Grant and Productivity And Innovation Credit. Besides providing funding for eligible startups, these schemes offer an array of benefits including mentorship and corporate tax rebates.

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