Earlier this year, when the COVID-19 pandemic struck, the Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. One of the most critical provisions of this act, the Paycheck Protection Program (PPP), was a critical incentive that helped small businesses to maintain their payrolls.
The PPP loan provision expired earlier this month, and small businesses have been forced to look elsewhere for funding. An economic downturn also brings a freeze of capital flow. Options are limited and small businesses are not looked upon in favorable terms by borrowers.
Hang on to the Government
The federal government hasn’t entirely closed the doors on small business owners with the PPP. The Small Business Administration (SBA) offers up to $150,000 in aid, plus an emergency grant of up to $10,000, to small businesses under the Economic Injury Disaster Loan (EIDL) program. The EIDL program is designed to provide economic relief to businesses affected by a disaster such as a pandemic or an earthquake.
The SBA also has loan programs such as 7a for business debts or 504 for commercial real estate and heavy-equipment purchases for small businesses. Both the loan programs offer up to $5 million in funding. 504 loans are especially handy if business owners are looking to purchase occupied commercial real estate.
Private Grants and Bank Loans
The Salesforce Care Small Business Grants is offering $10,000 to eligible businesses to navigate the challenges presented by challenges from COVID-19. Additionally, GoFundMe, Godaddy, US Bank, Bank of America, Zapier, Google, etc. are offering various resources that small businesses can take advantage of.
Short-term or long-term business goals through banks or financial institutions are also worth looking into. Term loans cover business-related expenses in various forms and most banks are presently offering COVID-19 specific relief loans for small and medium-sized businesses. These loans can be used to fund capital flow, inventory or equipment purchases, payroll financing, premise remodel/renovation, business expansion, etc.
Understandably, venture capital and investor fund was a more reliable option for small businesses before the pandemic. The market slowdown has limited how many and how much investors are willing to pump in the markets. It still is an option worth exploring.
It is unlikely VCs will fund businesses for growth in the present scenario, but if business owners present their case backed by data and reasonable arguments, some investors might be ready to support business operations through the pandemic and downturn.
Similarly, angel investors too will be very cautious about investing in the present scenario. But in the absence of big-shot VCs, many angel investors will be looking at the present situation as an opportunity to add some specialized products or services to their portfolio. This might just work in favor of small business owners.
Local business associations and chambers are also worth exploring in the present scenario. As always, they remain the best places to network and pitch your business requirements to potential investors. In the present scenario, many associations might also be offering special networking or funding services to business owners.
COVID-19 has thrown many businesses in a cyclone of uncertainty. Small business owners must look at this situation as an opportunity to get creative and thrive in the new normal, rather than be devasted by it. There are still plenty of non-PPP funding options for the taking and business owners should go all out to take advantage of them.