
Where to Get Funding to Survive the Pandemic
Most small businesses are seeking for funds to sustain their operations that have been badly hit by the Covid19 pandemic. With many states having enforced the lockdown, businesses are struggling to raise money to pay salaries, rent or service their debts. Those which had some buffer of savings are running low and will soon be in need of funding. Venture capitalists are not as generous as usual given the overarching uncertainty. They are few and selective only interested in businesses with a high potential for growth post Covid19. The Federal government has committed over $2trillion to boost businesses with different states also providing credit lines but these are only some of the sources businesses will be looking at to shore up operations even as the world looks at ways to reopen businesses and get back to normalcy.
Small Business Administration Loans (SBA)
This is an on-going facility that focuses on giving credit to qualifying businesses to support operations in difficult times. They are most attractive for their low interest rates and flexible repayment periods but they have astringent application and qualifying process. Moreover, they consider businesses with a good credit rating. The application process takes time and might not be helpful to those with dire need of funding especially now when most small enterprises have closed down and need immediate assistance to sustain their staff.
Term loans
Traditional term loans are an easy way to get financing if your business has a good history with the lender. Lenders mainly rely on your profitability to advance credit and can be flexible in a number of ways. The downturn is that they require security for loans and small businesses don’t have much of this. This will be a good option where the business is well established and has been in operation for some time enough to earn the trust of the lender.
Family and friends
There are still people with enough spare cash despite the closure of most businesses. This is a great time to reach out to your network in the family and friend circles for funding to keep going. This is a good source mainly because there will be minimal conditions and most lenders in this category might not charge interest on the money advanced. They might also allow you flexible time to pay back. The downside of it is that there is no guarantee that you will get the amount required to get you out of the crisis. You could consider using the amount to reduce your requirement for interest earning loans.
Alternative financing
There are many lenders in this category who focus mainly on financing working capital without a need to surrender equity. They are a good choice for those still in operations and need to keep business running as they wait for better times. Lenders in this category major on areas like Inventory financing, Purchase Order financing, Merchant Cash advances, Invoice factoring and Asset based financing. They are quick and liquid enough to finance as per the customer’s need but are usually high on interest charges. They also give very short repayment periods which in the current circumstances might not be friendly to businesses.
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