5 Ways to Combat Your Business Financial Emergency

Some say running a business is risky. The risks often start to surface as soon as you’re hit with an unexpected expense or a business financial emergency.


According to CB Insights, 30% of businesses fail because the owner runs out of money. Your computer breaks. Equipment needs to be repaired. A vital team member quits without giving any notice. Whether your emergency is large or small, it can have a significant effect on your cash flow and profit.


Here are 5 ways to combat your business financial emergency and recover quickly.


  1. Utilize Your Business Emergency Fund

Financial experts recommend maintaining a personal emergency fund that includes 3-6 months of living expenses. For your business emergency fund we recommend 6-12 months of business expenses. It’s wise to keep your business and personal emergency fund separate since you likely keep separate expenses for the two.


Analyze all your expenses and cash flow for each month. Then start by setting aside a percentage of your profit automatically until you reach your target goal. Anything you can save will come in handy in the event of a financial emergency. If you don’t have enough or don’t have any business savings at all, consider some of the other options below but realize how important it is to prioritize this.


  1. Start a Crowdfunding Campaign

Depending on the nature of the emergency, you could start a crowdfunding campaign as an effort to gain the funding you need to overcome the issue. For example, if a natural disaster severely damaged your equipment and office space, you could use sites like GoFundMe and Kickstarter to crowdsource the funds you’ll need to restore the business.


You can also reach out to past and current clients and customers to see if they could provide any support.


  1. Consider Taking Out a Loan

You always have the option to take out a small business loan when you’re in a financial bind. The Small Business Administration (SBA) offers multiple different types of business loans including working capital, new equipment, and real estate options.

The great thing about SBA loans is that the SBA works with your lender to back up the loans by guaranteeing up to 85% of the loan amount. This helps minimize the lender’s risk level so they feel more confident about granting you the loan.

These loans do require collateral and that you’ve been in business for at least two years, although this is common among other types of business loans as well.


  1. Use a Credit Card

As an alternative to taking out a loan, you can also use a credit card. You’ll still be borrowing money and you will need a good credit score to qualify for most card options.

Credit card interest rates are usually higher than rates for personal and business loans.

However, business credit cards can be used for most expenses so it’s a flexible way to cover a business financial emergency.

To qualify for a business credit card, you’ll need to submit:

  • A legal business name
  • Your tax identification number
  • The type of business/structure
  • Business address, phone number, and time length in operation
  • Number of employees
  • Annual revenue

A credit card could be a solid last-resort solution for a smaller business emergency. Depending on the size of your financial emergency, you may not get approved for a high enough limit to cover it completely. If you max out your credit card by spending up to or exceeding the limit, it could negatively affect your score. Plus, you’d end up paying a ton of interest.

If that is the case, consider a business loan first or a combination of the other options we’ve listed.


  1. Start Heavily Promoting a Product or Service

If you want to avoid or minimize debt, see if there’s a way to increase your profit to help combat your business financial emergency. In some cases, you may be able to offer a promotion on a current product or service to increase sales.

Don’t spend a ton of extra money on marketing when you’re already in a financial bind, but do consider ramping up your organic promotion strategy to boost sales. You can also cut other business expenses in an attempt to offset costs.


Business financial emergencies can be hectic and even devastating to deal with. However, you don’t have to resort to extreme measures like shutting down operations or filing for bankruptcy right away. Consider some of these solutions first to help you round up the money to deal with the financial emergency and bounce back.


About the Author: Christine Soeun Choi is an SEO associate at Fit Small Businessspecializing in digital marketing. Currently based in NYC, she has a background in business studies and math with a passion for business development. When not helping small business owners, Christine enjoys taking photos, exploring artwork, and traveling

Who is the NFCC?

We are the National Foundation for Credit Counseling (NFCC). Founded in 1951, the NFCC is the nation’s first and largest nonprofit dedicated to improving people’s financial well-being.

NFCC members help millions of consumers like you through community-based offices serving all 50 states and Puerto Rico. Each NFCC member agency has earned our seal by adhering to high standards and ethical practices designed to help you achieve financial stability.

For more on the NFCC, visit www.NFCC.org


Thank you to TD Bank, America’s Most Convenient Bank® and The TD Charitable Foundation, the charitable giving arm of TD Bank, for their exclusive support and commitment to NFCC’s small business owner financial coaching and education program.