Stressed and tired male small business owner

Will It Be Harder to Get Financing Post-COVID?

6 min read • May 28, 2020 • Ben Glaser

The NFL has released its 2020 schedule, which opens on September 10 when the Kansas City Chiefs host the Houston Texans. It should be an intense rematch of their playoff game from last season—if the game even happens. The NFL also sent out an internal memo explaining that they’d cancel games if necessary based on public health concerns.

This professional sports example highlights the challenges related to “getting back to normal” after COVID-19. It’s clear that some things might never be the same. Many small business owners have wondered whether financing falls into this camp.

Will Financing Be Harder to Acquire? 

There have been undeniable changes in the financing world as a result of this global pandemic. Lenders are approaching credit risk assessments with more scrutiny because of the increased volatility. It might seem harsh to tighten restrictions at a time when so many businesses desperately need funding, but lenders are obligated to be careful with their money. If they were to supply loans to every deserving business, regardless of the risk, they’d run out of money in a matter of days.

The financial experts at Experian have created the COVID-19 US Business Risk Index to help illustrate the various impacts of this crisis. The methodology accounts for business risk, anticipated impact on specific industries, and current COVID-19 case data.

Not only is this tool helpful as you plan short- and long-term operational strategies, but you can also use it to learn more about how lenders might view your business if you were to seek financing.

As the index reveals, some industries have been hit much harder than others. The 5 sectors with the highest risk rating are:

  1. Arts, entertainment, and recreation
  2. Administrative/support/waste management
  3. Information
  4. Accommodation and food services
  5. Retail trade

All of these industries are tied to functions that have been minimized or shut down during this pandemic. Other industries that may be flagged by lenders as high-risk include gas stations, dentists, daycares, bars, and nightclubs.

If your business operates within one of these industries, it doesn’t necessarily mean you will be a pariah to lenders. Rather, it suggests that they’ll take into account the upheaval around you when considering your loan application.

On the flip side, the COVID-19 US Business Risk Index identifies the following 5 industries as presenting the lowest risk:

  1. Educational services
  2. Public administration
  3. Healthcare and social assistance
  4. Agriculture, forestry, fishing, and hunting
  5. Utilities

Merely being part of one of these stronger industries won’t determine your fate when you apply for financing. But it means that lenders will consider the industry-related risks to be more acceptable, while still looking closely at the specific details of your operations.

Which Aspects of Your Business Matter Most

The COVID-19 pandemic has been a once-in-a-lifetime crisis. But those who have been in business for an extended time have weathered a fair share of other challenges, including the September 11 attacks and the Great Recession of 2008. The longer your business has been around, the more adept you become at surviving rough times and finding ways to succeed.

Lenders are now paying closer attention than ever to the length of time you’ve been in business. The requirements vary, but it’s common for qualified applicants to demonstrate 18 months of operations.

Your credit scores also play an oversized role in the COVID-19 era. Before you apply for a loan, you should always check the requirements for personal and business credit scores. If you don’t meet the threshold, you’ll only hurt yourself by applying: the credit check will negatively impact your score further, compounding the issue for your business.

Here are the best sources for checking your credit scores:

If your credit scores aren’t quite where they need to be, don’t feel dejected. Entrepreneurship is a challenging pursuit, and we all take some occasional knocks. You can start improving your credit situation by looking for errors on your reports. This problem happens more than you might think, with as many as 20% of Americans suffering from lower credit scores due to incorrect information in their reports.

The Federal Trade Commission (FTC) offers detailed instructions for how to correct such errors so that your scores can get a corresponding boost.

“Tell the credit reporting company, in writing, what information you think is inaccurate,” explains the FTC’s website. “Use our sample dispute letter. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected […] Send your letter by certified mail, ‘return receipt requested,’ so you can document what the credit reporting company received.”

Another strategy for improving your business and personal credit scores: signing up for automatic payments for business expenses. Given the demands of small business ownership, it’s not unusual to miss payments here and there. But these omissions translate into reductions to your credit scores.

Automatic payments eliminate the chance for human error. If you can’t set up such payments with the payee, at least add recurring reminders in your calendar so you won’t make unforced errors.

Finally, expect lenders to focus more on your cash flow as part of post-COVID application reviews. Many lenders are asking for more detailed financial records than they did previously. With the threat of future outbreaks looming, lenders will be keenly interested in how your business fared during the first lockdown.

Prepare for this scenario by carefully gathering all of your financial records ahead of time. The more organized you are, the more likely it becomes that your application will put a lender’s mind at ease. Your goal in this entire process is to put your best foot forward. While it’s true that financing may be harder to come by in the future, you can always make sure your application is accurate and professional. Attending to even the smallest of details can help compensate for this tighter lending climate, giving your business the highest chance for success.


While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.


Ben Glaser

Ben has almost a decade of experience covering personal finance and business. From 2014–2017, he was blog editor and spokesperson for the shopping website, where he regularly appeared on programs like Good Morning America and Fox and Friends to offer consumer advice. Ben graduated from Harvard with a BA in English and lives in the Hudson Valley of New York.