As Covid-19 makes its way around the world, some industries have been hit hard economically by lockdowns. Even for us as an SEO agency, some of this is still happening. Our clients include restaurateurs and self-employed people whose business has come to a virtual standstill. We are now feeling this too. In times like these, liquidity can sometimes become scarce and you quickly slide into overdraft credit. This in turn is subject to double-digit interest rates per month and can accelerate the path to bankruptcy. How do you avoid getting into this situation as a self-employed or freelancer. Here are our tips.
Credit instead of Overdraft Credit
One possibility to avoid the overdraft credit is to take out a so-called consumer credit. Such loans are designed for a relatively short term and their maximum amount is limited upwards. Depending on the provider, perhaps on 10.000-50.o000 francs.
In contrast to the overdraft credit, the interest rate is also about half or one third. The repayment can usually be spread over 6-12 months. Such a credit makes it possible to compensate for short-term loss of sales. Of course, it is possible that banks are tight in this respect. But if they see that you have some assets as collateral, they will not miss the opportunity to do business. This could be, for example, a car or a property that has already been paid off for the most part. Also people with assets sometimes get into liquidity bottlenecks. That is completely normal.
Trigger rent deposit
Who rents an apartment, usually deposits a deposit of two to three months rent. This is intended to protect the landlord from payment defaults. This money is then usually completely interest-free somewhere around and acidifies there. Talk to your landlord. Ask whether it is OK for him or her if you provide a certificate of taking out a rent deposit insurance. This costs an annual / monthly fee, but would secure the payments even better in case of problems. This means that both sides would have an advantage. If you live in a rented apartment, try to pay the rent deposit. You can use this to quickly balance the your overdraft credit.
Temporary work / temporary jobs
If sales slump and you don’t get any orders, don’t be afraid to take a job quickly. Temporary employment agencies will help you. Even if it is about stacking boxes somewhere in the warehouse – take it. The placement is fast, there is fast money and you will be socially insured. Even as an academic you can bridge a few months like this, but don’t be shy. If you don’t like that, you can try tutoring, for example. Because the nice thing about tutoring is that in the worst crisis there will always be bad students. This is also a secure job and brings immediate income.
The important thing is that you should make money as quickly as possible, because otherwise the overdraft credit will eat the hair off your head and you will get caught in a whirlpool of interest and compound interest, from which you cannot always get out easily and quickly.