As the Eastern Washington economy slowly returns to pre-pandemic levels, consumers are eagerly spending on the products and services they were forced to forgo during the COVID-19 pandemic.

It’s some much-needed good news for the regional businesses that have endured difficult times over the last 17 months. Yet, as business owners ramp up to take advantage of this long-awaited resurgence in demand, several obstacles remain.

In particular, two main challenges are playing out across the industries we serve in Spokane and throughout Eastern Washington. The first major challenge is recruiting new employees and paying them appropriately. This issue is most acute in hospitality and restaurants—one of the region’s hardest-hit industries. Many of these businesses are still unable to open because they can’t find employees or afford to staff appropriately.

Supply-chain constraints make up the other challenge holding a lot of sectors back. The cost of raw materials has gone up significantly due to global supply chain issues, causing local businesses to pay more and wait longer for supplies. 

Many local manufacturers have plenty of orders but can’t fulfill them without the required materials. One client waited four weeks for drywall, and then had to wait another four weeks to get the corresponding drywall screws. We’ve also seen some niche suppliers go out of business during the height of the pandemic. Since these gaps haven’t been filled yet, local manufacturers are left with few options other than to wait.

The challenge of appropriately funding the workforce, coupled with increased costs to manufacture and deliver products, has been difficult for many businesses to overcome. On top of that, Paycheck Protection Program funds that many organizations relied on have now been exhausted. As a result, one of the biggest trials facing Washington businesses is how to find funding for the next 12 months.

The good news is there are still many ways for business owners to access capital. Funding from financial institutions right now is abundant. Community banks across the state—and across the nation, for that matter—have ample deposits on their books, and those deposits need to be deployed in loans. It follows that there is a lot of loan funding available to small and medium-sized businesses.

Even though PPP funds are now exhausted, there are other available programs that may help qualified businesses. 

For example, the Small Business Administration’s Economic Injury Disaster Loans provide economic relief to small businesses and nonprofit organizations currently experiencing a temporary loss of revenue due to a declared disaster. These loans would be appropriate for businesses impacted by the recent drought. Another program to consider is the Shuttered Venue Operators Grant program, which is reserved for theaters, live music venues, and talent representatives, as well as some museums, zoos, and aquariums that can show a revenue drop of at least 25%.

Another option to consider is financing from community development financial institutions, or CDFIs. Banks and other financial institutions can serve as CDFIs, which are dedicated to delivering responsible, affordable lending to low-income, low-wealth, and other disadvantaged groups and communities. 

This typically means they can provide higher-risk loans to small businesses and have fewer concerns with being undercollateralized or working with organizations with historical losses. First Interstate has a long-standing partnership with MoFi, a 501(c) CDFI with a large presence in Washington and Idaho, but there are plenty of local partners, like SNAP here in Spokane, that provide similar microloans to community businesses.

While considering your options, I’d advise any business owner to first have a conversation with their banker. Whether you are looking for a traditional loan or government-guaranteed financing with partnership from the SBA or U.S. Department of Agriculture, a bank is going to be involved in that loan. 

The government relies on community banks to deliver financing from emergency programs to qualified businesses. While these programs aren’t available to every organization, the number of small businesses that qualify for government-guaranteed loans is broader than many realize. Your banker will know what programs are available and can guide you in getting your business the capital it needs.

With the economy on an upturn, it’s easy to focus on using this capital to fund expansion or quickly ramp up production. However, it’s important to not overlook that the future is uncertain, given that COVID-19 and the variants of the virus that causes it are not behind us yet. 

Now is not the time to forget the business lessons learned during the pandemic—especially when it comes to managing finances and being efficient.

We’re optimistic about what the future holds, but we also know that companies focused on building liquidity, strengthening their balance sheet, and streamlining operations before the pandemic were the ones that weathered 2020 best. 

To prepare for the next downturn, consider reviewing your 2022 plans with your banking partner. They’ll be able to help guide your business toward a more stable financial foundation, making you better prepared for whatever comes next.