The pandemic affected everyone, with many businesses struggling to survive and some even having to close up shop for good. However, to try and support them through this challenging time, the government started a loan scheme called the Paycheck Protection Program (PPP), which was set to provide small US businesses with eight weeks’ worth of cash flow. Then in December 2020, another loan scheme was added for a further $285 billion to help businesses that had used up their first PPP loan. Lots of businesses made use of these loans as they didn’t require any collateral or personal guarantees, and they had the potential to be turned into a non-taxable grant.
With only so much funding available and the pandemic starting to slow, PPP loans ended in 2021. You might feel stuck without other funding options if you miss out on them. However, there are a lot of PPP alternatives out there.
Crowdfunding
Crowdfunding is a fantastic option for you if you’re looking for a way of raising money for your business without getting into debt. Using a crowdfunding digital platform, you can set a financial goal and ask public members to donate. You don’t have to repay the money, but giving them a little something in return is a good idea. Some people like to offer vouchers, discounts, first looks at new products or even small shares in your business. Whatever you decide, showing your investors that you appreciate their donations is vital. The only downside to crowdfunding is that you might not meet your goal. However, this isn’t a given, and you may be surprised at the generosity of people.
Angel investors
Angel investors are a blessing for small businesses. They’re usually willing to invest for no return, but some may ask for a small percentage of equity. They often have valuable market knowledge, which will be a massive benefit to you. Angel investors will be able to provide you with all the funding you ask for upfront in one lump sum. It appeals to many business owners over a loan, as there’s no intention of paying it back, and you’re not bound by rising interest rates. So, if you don’t want a loan and are happy to lose a portion of ownership, then angel investors could be perfect for you.
Venture capitalists
Venture capitalists love to help out up-and-coming businesses, so they could be a great option if you’re still finding your feet. They will provide you with large sums of money for the equity of your business. This means that they will be involved in a lot of the decision-making moving forward, but they probably have a lot of expert advice that you’ll benefit from and make wise decisions. Again, you don’t pay them back as they will make it back through their stake in your business. If you’re prepared to go into business with someone else in exchange for their capital and expert knowledge, you should seek out a venture capitalist.
Small business loans
One of the most common forms of business financing is a loan through a bank. If you missed out on the PPP loans, looking at a business loan from a financial institution could be just as helpful. It will have very different terms to the PPP, but it will still provide you with the money you need upfront. You need to be careful of the terms and conditions and know exactly what your interest rates will be. Some loans come with fixed rates for a specific time, so try looking out for those to try and keep your total repayments as low as possible. Many banks have small business loans, so be sure to contact your local branches to see what they can offer you. It’s always a good idea to shop around before committing to a loan, as some may have better conditions than others.
If you didn’t utilize the PPP loan, there’s no need to fret! There are so many options out there to provide your business with funding. Crowdfunding and investors give you a debt-free way of raising capital, and bank loans can offer competitive interest rates and a lump sum of cash. If you’re still in need of funding, check these viable options, and you’ll soon have your business back on track!
