We are so used to hearing about business giants that we forget the fact that nearly 99% of businesses in the country are small ones. The thing to remember here is that these business owners do not have access to liquid cash all the time like Apple, Google, and Microsoft. These business owners look up to traditional lenders like banks and angel investors for money to stay afloat. The Covid-19 pandemic has broken the back of a vast majority of these small businesses, especially the startups that are most vulnerable to the shortage of capital. This article contains information about quick sources of business funding during the pandemic.
The Confidence of Investors has Shaken Badly Because of Coronavirus
It has never been easy for entrepreneurs to secure equity capital. Still, there were a number of public and private sources of capital to fulfill the requirements of small business owners. The outbreak of the Coronavirus pandemic has hurt the economy of the country badly. Even well-established businesses are shutting down and applying for bankruptcies in the wake of lockdowns, restrictions, and depleting sales figures. In such a scenario, it is not unnatural for investors to be holding back and not writing checks as they were doing before Covid-19. The situation is worse for business owners having low credit scores. You have to work hard to secure funding if you have low credit scores. The funding environment is difficult for entrepreneurs. Still, there are many quick sources of funding for businesses during the pandemic.
Look for Federal Assistance
The federal government is offering relief to small business owners negatively impacted by Coronavirus. Small Business Administration (SBA) is a federal agency offering soft loans called Disaster Assistance Loans to business owners at a low-interest rate of 3.75%. Even nonprofit organizations can get loans from this scheme of SBA and that too at a very low interest of 2.75%. These loans can be repaid in long periods up to 30 years by business owners. However, these loans are only for business owners who cannot find credit anywhere else. As part of the $2 billion Coronavirus aid package, the government was running a scheme called Paycheck Protection Program, a loan forgiveness program for business owners for retaining employees. Another program under which small business owners can seek financial assistance is an Economic Injury Disaster Loan. Under this scheme, loans for long periods are being given to eligible business owners.
Tap State and Local Resources
Besides the federal government, there are large numbers of state and local resources offering financial relief to business owners during the pandemic. These programs are different for different states. Even within one state, different schemes are running for business owners in different cities and counties. For example, business owners of Washington State are getting interest-free loans for economic hardships they had to endure because of Covid-19. Similarly, the residents of New York City can apply for a loan under a scheme called Employee Retention Grant Program to pay the salaries of their employees if their businesses have been badly hit because of Covid-19. You need to contact the Chamber of Commerce of your state to know the details of the financial help programs run by the state government for small business owners.
Better to Tap Local Resources
These are indeed special times requiring special efforts from the government and the authorities to provide relief to businesses hit hard by Coronavirus. Even though the federal government is coming up with aid packages one after another, one needs to understand that there is a limit to what the federal government can do for people living in faraway states. Also, states are coming up with funding opportunities that are tailor-made according to the requirements of their citizens. Therefore, the chances of finding financing opportunities that are best suited to your business needs are more likely to be found if you search for financial help in your state, city, and county.
Another important thing to keep in mind for entrepreneurs in present times is that they should forget to apply for grants like they do in normal times. Securing a grant is a very time-consuming process. You can wait for the money in normal times but now that it has become a question of survival, it is prudent to apply for loans at low-interest rates. Your business needs quick financial relief. It doesn’t matter whether that help is in the shape of a grant, loan, or debt relief. Try to secure the money whichever source and manner it comes from.