By Chad Otar
Lending Valley
Businesses emerging from the pandemic are finding the ground is shifting financially. Many now need help to pay extra costs of products and staffing without cutting hours or raising prices. It turns out, there are new ways to fund businesses that didn't exist a few years ago, including government-initiated loans, grants and fintech funding.
Traditional funding includes loans from the Small Business Administration and banks. However, many business owners cannot accommodate the strict criteria required to access them. You must have a solid credit score, for example. Another option many don't know about is the Small Business Lending Fund, a government fund created to grow the economy and provide small business loans using specific lenders in every state—and with better rates and terms. You apply through the U.S. Treasury website, https://home.treasury.gov.
Typically, bankers and small business experts say there are no grants for small businesses. But they do exist. One such program is small business grants, which are specific to certain industries. Information is available through the SBA website, < ahref='www.sba.gov/' target="blank">www.sba.gov.
Also given through the SBA, the Small Business Innovation Research Program, is designed to help businesses involved with research and development projects. The process for those grants is lengthy with strict oversight. Also under the SBA, the Targeted Economic Injury Disaster Loan Advance is for entrepreneurs who lost revenue during the pandemic. It will advance up to $10,000 and doesn't need to be repaid under certain circumstances.
The National Association for the Self-Employed has doled out $650,000 since 2006. Those who become members for $120 a year can apply for up to $4,000. Grants must be used for hiring employees, marketing, advertising or expanding facilities. Nav, an online marketplace that matches entrepreneurs with financing choices, awards three grants every quarter. The largest amount given is $10,000. The grants are designed to help struggling small businesses and the application is easy.
Women can apply for the Amber Grant, which awards $500 initially and can later rise to $2,000. The National Institute of Health Funding has money for tech or research businesses. FedEx offers a yearly small business grant contest that awards 12 businesses with $250,000, and printing services to the top winner. American Express offers grants of $5,000 to brick-and-mortar businesses, with 250 awards given over four cycles. It is focused on those impacted by the pandemic.
Financial technology opened a door for many to get loans or credit lines they couldn't obtain through traditional means. Stick to well-known names when going this route; some outfits push high interest or predatory loans.
Kabbage is a good option for those who have online stores through Amazon or eBay. You'll need documented financial data, but Kabbage focuses on reputation as an online seller rather than credit score. A number of alternative lenders familiar with merchant businesses and known within the payments industry offer loans and credit lines, too. They look at revenue for eligibility and tailor loans and payments to your situation.
PayPal offers business loans and working capital and bases lending decisions on how many sales come through its site. You must use a PayPal business account to apply because repayments are made automatically through future PayPal sales.
Those who feel they won't qualify for any of these options can turn to crowdfunding to raise money. Indiegogo, Kickstarter, Causes, Fundable and Patreon are several of a growing number of options. Peer-to-peer lending is another possibility. Prosper has given more than $3 million in loans. Other P2P platforms are LendingClub, Upstart, Peerform and Funding Circle. Venture capital and angel investors are among the more challenging funding options to obtain. Funders Club and Gust are a couple of websites that offer help. Microloans are small business loans that help businesses with operational costs and projects. Accion and Lift Fund specialize in these loans. Whatever option you choose, finding the right financing option isn't as hard as you think as long as you have all your business records.
Note: I used the following in researching this article:
Chad Otar is CEO of Lending Valley Inc. For information about the company, please visit
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