How to arrange funding for your small business Post-Coronavirus

We’re living in great economic uncertainties, and even the superpower is facing a dramatic downfall of the economy! The upcoming scene is expected to be even worse!

When we’re noticing some huge companies collapsing badly, how can we expect small businesses to survive the ruthlessness of this pandemic? Small merchants are feeling financially choked, and there is a heavy shortage of funding all over the globe, right now!

What efforts can you put to keep your small business survive this situation?

Waiting for new funding is all waste of time if you’re not putting in the right efforts. Assistance won’t come walking to you. Instead, you need to have the right knowledge regarding how to arrange to fund your small business Post-Coronavirus, so that your financial recovery takes place as soon as possible.

PPP or SBA loans aren’t the only options! 

In this guide, we’ve broken down several sources of funding to consider, such as grants, emergency loans, crowdfunding, and much more!

Wait no more for getting financed!

How to arrange funding for your small business Post-Coronavirus

Are you really wondering that arranging funds is going to be ultra-challenging, as everyone would be looking for the same? Well, need not to bother; we’ve covered something amazing down there!

Don’t be too fast here. Even if you find a funding source good enough for you, do consider cherishing other sources as well!

SBA Loans

The CARES Act brought four different loan programs for financially supporting small business owners. The Payment Protection Program is the first one, which we will go into in profound detail in the upcoming section, and is available through June 30, 2020. Congress is currently working to extend that deadline. 

Other options besides the PPP include the SBA EIDL (Economic Injury Disaster Loans). The EIDL grants provide an advance of a sum as big as $10,000 to businesses currently facing temporary difficulties. However, only a part of the business sector is able to reap benefits from it, as these grants are available just to the U.S. agricultural businesses

Small businesses currently having a business correspondence with an SBA Express Lender can enjoy SBA Express Bridge Loans, with the maximum access up to $25,000 quickly.

SBA provides funding just within 45 days of approval as it’s an “express” loan. The limit never extends over 90 days. If the Economic Injury Disaster Loan application is making you wait, then you may apply for an Express Disaster Bridge Loan. Your existing banking relationship on or before 13/3/2020.

Crowdfunding

Do you feel that none of the SBA COVID-19 assistance programs are going to work out for you, or your loan application isn’t yet decided, then we’d recommend you to consider crowdfunding here. It has worked amazingly for folks involved in launching new products or growing small businesses. 

Are you assuming that Indiegogo and Kickstarter are the only crowdfunding options? What if we say there are actually four main types of crowdfunding? Well, around one-fourth of the crowdfunding campaigns attain success, and that’s why we’d recommend you to put yourself to some deep research rather than diving blindly. 

Microloans

In Microloans, individuals issue small loans, and it’s a popular source of funding. If you wanna get your new business off the ground, you can use Microloans with mentorship.

A few cities are currently using microloans as a sort of COVID-19 relief. The SBA offers a microloan program as well, with loans up to $50,000. Nearly $13,000 is the average SBA microloan. You can get this loan for working capital, furniture, equipment, supplies, inventory, etc. Microlending is financial innovation about which, majority of people are familiar. 

Peer-to-peer economy and technology have made it possible. People looking to grant money to earn potentially higher returns may provide funding to borrowers who either cannot get credit from traditional sources (for example, banks or credit unions) or have no access to credit because of geography.

GoFundMe

In contrast to traditional crowdfunding, you’ll find GoFundMe pretty much different. Here, you’ve got the right to keep every donation you receive. Several crowdfunding sites will need you to hit a given dollar amount before permitting you to withdraw funds. Likewise, crowdfunding supports businesses in growth mode. Several Kickstarter campaigns provide exclusive access or new product in payback for funding. GoFundMe campaigns may ask for assistance concerning anything. GoFundMe is a for-profit company, charging just a 2.9% payment-processing fee on every single donation, besides 30 cents for every donation.

So, in case a campaign generated $1,000 through 10 donations counting $100 each, GoFundMe would gather about $32, which is acceptable. The process of accepting funds is pretty straightforward. You’ll receive an invitation email, in which you have to select “Accept Money.”.Set up their GoFundMe password to create your account.

Confirm your email via a 2nd separate message that they send to you. After logging back into GoFundMe, follow the steps they mention to receive the funds.

Payroll protection

Since Congress passed the CARES Act in March, the government has issued over 4.4 million loans issued under the Payment Protection Program (PPP), which total over $500 billion. The PPP provided loans of max $10 million from banks and various other lenders.

 The federal government recompense off the loan in case your business uses the majority of the loan money on the payroll within a given time period. It took just 2 weeks for the first round of PPP funding to run out. The second round, weighing $310 billion, still comprises $140 billion left a month later. 

The PPP received a few bad presses for evidently providing these loans, which were actually for small businesses to bigger organizations, for instance – Shake Shack and Potbelly Sandwich Shop

That was certainly going to bring impact, and it did! Consequently, there was a significant decrease in the size of loan applications opened to even the smallest businesses. Growth in the demand for these loans isn’t recorded. 

PR reports state that while there are still a few businesses waiting on funds, we feel that the majority of that wanted PPP money have actually gotten it. It’s an amazing option if you’re looking for funding via a loan to cover your payroll. 

The approval of these loans is relatively quick. Congress is working on an extension currently to continue offering PPP loans through December 2020. Many small business owners are finding it awesome!

Industry-specific loans and grants

There are several private funding sources your business potentially be able to reap the advantage of, as per your industry. 

Service providers, including fitness studios, freelancers, landscapers, salons, etc. need to consider things like the Aveda Cares program, Salon & Spa Relief Fund, the Freelancers Relief Fund, and the AICPA Benevolent FundSalesforce CareFacebook’s cash grants fund, Verizon, and Hello Alice are great sources of assistance for retailers. 

Similarly, for restaurant owners and workers, we’d recommend the Restaurant Workers’ Community FoundationSpill the DishGo Tip ‘Em, and James Beard Foundation Relief Fund as the best financial aid options for restaurant workers and owners.

Venture capital funding

Generally, venture capital funding means financing provided by investment banks or well-off investors to small businesses and startups in order to thrive. Venture capital was a highly dependable option for businesses passing through their high growth phases; however, since March, the uncertainty brought by Coronavirus has made venture capitalists pull back.

The senior lecturer at MIT Sloan – Joseph G. Hadzima, Jr, wrote that COVID-19 slowed dedications to VC funds that were in the stage of fundraising, and it made VCs assess the financial statuses of their portfolio companies. Dissimilar to that, in the short term, VCs are going to offer funding for growth.

One may have the chance to work with a VC to survive, keeping the work-together promise to reach a bunch of new customers after the economy improves.

Angel investors

Venture capitalists generally invest other people’s money, hoping to achieve a high-growth return, but angel investors bring financial backing to companies they consider promising. Several angel investors are looking to expand their portfolio by adding new businesses.

 As per one expert in Forbes – They are not unaware of concerns around COVID-19. Still, they may look for chances to enhance their portfolio because more novice investors are waiting on the sidelines. 

If you’re an entrepreneur determined to start a business, we’d recommend you to approach an angel investor with a plan explaining what you’re looking for in the upcoming 18 to 24 months. 

Under general circumstances, you might ask for funding for six months to a year; but due to Coronavirus, recruiting new customers and operating your business won’t be easy as usual. Update your pitch accordingly and perfectly.

The conclusion

Obviously, those were tons of options through which you can ensure funding for your small business. It’s known that many of you might be struggling deeply to make the business run efficiently after the Corona crisis, but in that case, if you’re able to bring on-time funding, it can actually change your life! 

Most importantly, there are many out there to help you out, and you just have to fulfill their requirements and follow the right procedures. Also, ensure that the money that you’re getting as your business funding is used for the same purpose only!  

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