According to the U.S. Chamber of Commerce, one out of every four small businesses are temporarily shut down. Even if you’re still operating, social distancing efforts have surely slowed your business to the point where you have cut costs or will need to cut costs in the very near future.
I know it’s tough but usually the first place you look to cut expenses is labor cost, that’s because labor is typically the #1 expense of a business. In fact, labor costs could account for as much as 70% of your total expenses.
It’s not right, these employees who gave you their blood, sweet, and tears had to be laid off or furloughed. And the reason is simply for being an exceptional employee who happened to be working for you in the worst economic downturn in almost 100 years.
You’re not the only business that’s needed to make this extremely difficult decision to ensure you have the cash flow to survive. Over 17 million people applied for unemployment in just a three-week time frame.
Imagine what your former (or furloughed) employees are going through right now. They’re scared, frustrated and mad. But you can still help them and maintain a positive relationship by providing them cost saving tips during the coronavirus pandemic.
We’re here to help you. We’ve done all the research, so you don’t have to. Here are the biggest cost saving tips during the coronavirus pandemic to help your former employees.
Mortgage Payment Relief
Just as labor costs are your number one business expense, mortgage payments are any household’s #1 expense. So naturally, that’s the first place to look when you need to save money due to a reduction in income.
If your employees have a mortgage, many of the banks and lenders are offering relief. It is recommended to have them reach out to their lender. Here’s how some of the larger lenders are willing to work with homeowners.
Freddie Mac and Fannie Mae
Freddie Mac and Fannie Mae back approximately half the mortgages in the U.S. If your employee’s mortgage is owned by one of these agencies, they will be eligible for mortgage relief due to the impact caused by the coronavirus outbreak:
- Suspend mortgage payments for up to 12 months
- Modification of loan options to lower or keep payments the same after the forbearance period
Relief is also available to renters if the landlord or management company finances the property through Freddie Mac or Fannie Mae. Your employees can ask their landlord or management company if they are participating in the Freddie Mac Multifamily COVID-19 Relief Program or Fannie Mae’s Disaster Response Network.
Ally Bank is allowing customers to defer their home loans for up to 120 days with no impact to your credit.
Charles Schwab Bank
You can suspend your mortgage payments for up to 90 days with Charles Schwab Bank.
Chase is offering 3 months forbearance, meaning if you miss a payment you won’t be penalized.
Citi is allowing a 90-day forbearance on mortgage loans.
PNC Bank will work with homeowners by postponing your monthly payment with no late fees, you simply need to complete their “Hardship Assistance Application”.
TD Bank is offering a deferred payment program as well as waiving late payment fees.
Truist Bank (formerly BB&T and SunTrust)
Truist Bank is offering mortgage forbearance for a minimum of 90 days.
U.S. Bank’s assistance program will allow you to suspend payments for up to 180 days with no late fees.
Wells Fargo will allow you to place a temporary, up to three months, pause on your loan payments. However, they are asking this pause should only be used when absolutely necessary because you may need to repay those missed payments at the end of the three-month relief period.
Car Payments Relief
The second largest expenditures for most people are loan payments on their vehicles.
Most car manufacturers are offering assistance to customers who purchased or leased a car and are having difficulty making payments due to the coronavirus outbreak, as long as you financed through that automakers’ preferred lenders.
The assistance programs vary by automaker, however most automakers have options to defer your car payments for several months or to extend your lease.
Several of the automakers are asking you to call their customer service or financing services department to discuss what options are available to you such as BMW, Chrysler, Dodge, Ford, General Motors, Nissan, and Toyota.
Other automakers are have made public their COVID-19 assistance policies such as:
- Honda, Acura – 60-day payment deferral, as well as waived late-fees.
- Hyundai, Genesis – Six months of payment relief.
- Kia Motors, Volkswagen – 90-day payment deferral
- Mitsubishi Motors financed through Ally Financial can receive 120-day payment deferral
For those employees who financed their car independently they can talk to their lender. Many lenders have dedicated hotlines in response to the COVID-19 crisis.
Car Insurance Payments Relief
Car insurance companies use how much you drive to calculate their premiums because the more you drive, the higher risk you have of getting into an accident. Your laid off or furloughed employees will not be driving, so their risk is naturally reduced. Tell them to contact their insurance provider and ask for a temporary reduction in their monthly payments.
Some auto insurance companies have already announced that they will be issuing refunds to drivers since most of the country is in quarantine and as such not on the road.
Credit Cards Payment Relief
Credit Card Issuer’s are also offering relief such as deferred payments, waived fees, or debt relief which could benefit your former employees. While it is recommended to call your credit card provider, here are programs some of the larger providers have made public.
American Express has stated they may waive your credit card interest and potential late fees.
Bank of America
Bank of America will address each COVID-19 support request on an individual basis but has stated two potential options include deferred payments and refunds on late fees.
Chase will allow you to defer up to three payments. They recommend enrolling for this assistance online due to high phone volume.
Citi requests that you complete an online form for credit card holders to have minimum payment and late fee requirements waived. In addition, there may be some circumstances where longer-term payment arrangements may be an option.
Navy Federal Credit Union
Eligible members can apply for a loan extension, deferred payments, or credit card line increases with Navy Federal Credit Union.
With PNC Bank you may be able to postpone monthly payments with no late fees.
On a case-by-case basis Wells Fargo is offering waived fees, deferred payments, and other assistance.
Utility Payment Relief
Utility companies, such as electric, water, gas, are also offering relief to individuals affected by coronavirus. Each company has their own programs, so encourage your employees to reach out to each of their utility providers.
The coronavirus outbreak has been difficult for everybody. As a business owner, you are dealing with your own set of challenges including making sure your company survives. But your employees that may have seen a reduction in pay or loss of employment, are trying to figure out how to pay the bills.
They may be aware of some, and perhaps all of all the assistance programs available, but I’m sure you reaching out to them with these cost savings tips during the coronavirus pandemic will mean a lot. It shows you care.