Facebook made good on its promise to support Black-owned businesses Wednesday by announcing that applications are now open for $40 million in grant funding.
Any business that is majority Black-owned and has between one and 50 employees may apply for grants worth $4,000 each — $2,500 in cash and $1,500 in Facebook ad credit. This means that Facebook plans to support up to 10,000 Black-owned businesses through the grant program.
According to Facebook’s web page for the grant program, funds can be used for (but aren’t necessarily limited to) rent, operational costs, employee payroll, customer engagement, and community support.
Interested business can apply now for the grant money. Applications close on August 31.
The funds come via part of Facebook’s $100 million promise to Black communities in the business sector. The other $60 million will go towards nonprofits and social media creators.
We’ll break down the program’s eligibility requirements below, as well as what your business needs in order to apply.
Facebook’s Black-Owned Business Grant Eligibility
The eligibility criteria for Facebook’s grant program is fairly straightforward. Businesses interested in applying must:
Be at least 51% Black-owned.
Be owned by someone above the age of 18.
Be legally registered within the US (excluding US territories).
Employ between one and 50 people.
Have been in operation for at least one year.
Have been impacted by COVID-19.
Additionally, grant funds must be used in a way to benefit the business and its community.
Those who have already applied for grants from the Facebook Small Business Grants Program may re-apply for a Black-owned grant. However, prior recipients of a Facebook grant are ineligible to apply.
Applicants also do not need to be using Facebook products in order to apply.
How To Apply For A Facebook Black-Owned Business Grant
Like the eligibility requirements, applying for a grant through Facebook’s Black-owned grant program is pretty straightforward. Let’s go over a basic outline of what you need to do to apply for a Facebook Black-owned business grant:
Head on over to the program’s portal on Submittable, a third-party submission management platform Facebook has partnered with for the program.
Create a Submittable account, if you don’t already have one.
Answer a series of basic questions to determine if your business is eligible for a grant.
Fill in the contact information of the majority owner as well as the business’ information, which includes name, online presence, legal address, and business description and industry.
Optionally submit additional demographic information about your gender, sexuality, veteran status, or disabilities.
After going through the basic paperwork, you must then:
Share in under 300 words how your business was impacted by COVID-19.
Select from a list of options how you’ll use the grant for your business.
Describe in under 300 words how Facebook’s grant will impact your business.
Select from a list of options how you’ll use the grant to support your local community.
Describe in under 300 words how Facebook’s grant will impact your local community.
Once that information is filled out, you’ll need to e-sign the document, agree to the terms and conditions of the program, and certify that you are not a government official nor related to a government official before submitting the application.
Facebook also accepts applications that are in Spanish.
The application window will close at 9 PM ET, August 31. Applications will be sorted through “as quickly as possible” after that date. Facebook has partnered with Accenture to handle the administration role of the grant program.
Other Grant Options For Small Businesses
Besides Facebook’s grant program, we recommend that businesses impacted by COVID-19 look into potential avenues for grant funding. Black-owned businesses may be helped by our guide to grants for minority-run businesses. We also have a general guide to getting grants for your business.
For other routes of scoring money for your business, check out the nine ways a minority-owned small business can get financing.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Venture capital: As an entrepreneur, you’ve undoubtedly heard of it, but you may not be familiar with exactly how it works or whether it could be a good option for your business. You may be wondering if your startup is even eligible for venture capital. Keep reading to learn what venture capital is, what sorts of businesses and entrepreneurs are good candidates for VC funding, and how to go about tapping into this resource!
What Is Venture Capital?
Venture capital is a type of equity financing where investors provide capital to a young business with high growth potential in exchange for equity in the business. In addition to ponying up startup funds, VC investors also give direction to the companies they invest in to help them succeed. The venture capitalist’s long-term goal is to make a profit when the company they invest in goes public or is sold to another company.
Venture capital firms are usually looking to invest in tech companies, though some may specialize in healthcare or other industries. Most VC firms specialize in a specific type of industry, focusing on businesses that are in a particular stage of growth. VC firms are often located in or near tech metropolises, such as New York City, San Francisco, Boston, and Austin, and usually (but not always) focus on businesses in their immediate region.
How Venture Capital Works
Most everyone has seen Shark Tank, but in actuality, there’s a bit more to VC than making a quick pitch to a room of hyper-critical rich people. Securing VC funding is a little less intimidating than defending your life’s work to Mark Cuban in under five minutes, but it’s also a long, multistage process. It requires a significant amount of patience, diligence, and flexibility, as you may have to change your company to fit your investor’s vision for growth. You should also keep in mind that VC funding is extremely competitive, and your company must have a lot to offer potential investors â only about 0.05% of startups are able to obtain this coveted form of capital.
Venture capital is not a loan; venture capitalists invest in companies in exchange for equity or ownership in the company, betting that they will make money if your company does well. So what are these entities that supply venture capital? Generally, they are investment firms (rather than individual investors). Venture capital investment firms raise and pool funds from a range of sources, from corporations to nonprofits, pension funds, and wealthy individuals. These investors are limited partners in the venture capital firm.
VC financing is risky for the investor, which often loses money when a company fails. However, they know that not every company they invest in is going to be the next Uber or PayPal. The VC investor can offset their risk by investing in many different businesses, some of which may deliver a phenomenal profit. Most VC firms make a profit of about 20% a year.
How Venture Capital Compares
Venture capital shares similarities to certain other types of startup financing, but there are also some important differences you should know about.
Venture Capital VS Debt Financing
As mentioned, venture capital is a form of equity financing. Equity financing differs from debt financing in several ways. Namely, debt financing is structured as a loan, which you have to pay back with interest. However, the debtor is just a debtor; they don’t own any part of your company or have any say in your business decisions. Some examples of debt financing include lines of credit, business credit cards, and SBA loans.
Venture capital is not a loan, so the recipient does not have to pay it back or pay any interest or fees. VC also includes more than just capital â you also get business guidance and mentorship. But in exchange for the help getting your business off the ground, you have to forfeit some control over your company to the venture capital firm. Also, unlike debt financing, which serves a wide variety of business types, only certain kinds of businesses â technology and innovation businesses with high growth potential â are good candidates for venture capital.
ReadÂ Pros & Cons Of Debt VS Equity Financing to learn more about the differences between debt financing and equity financing (such as venture capital).
Venture Capital VS Private Equity
Venture capital and private equity are both types of equity financing and are similar in several respects. PE investment firms and VC investment firms both provide capital to privately-owned companies, using pooled funds from investors that are limited partners of the firm. The main difference is that VCs invest in startup companies in exchange for a minority stake in the company (less than 50%). In contrast, PEs invest in mature companiesÂ for a majority stake (more than 50%).
Also, while VC-backed companies tend to be innovative and tech-focused, PEs tend to invest in traditional industries, such as retail, restaurants, and manufacturing. The types of mature companies PEs invest in need capital to expand, address inefficiencies, or fix stagnation related to lack of capital.
Venture Capital VS Angel Investors
Angel investors also have a lot of things in common with venture capitalists. Angel investors invest in privately-held companies in exchange for equity, but these investors tend to be high net-worth individuals or groups of individuals (rather than investment firms). Most angel investors are entirely profit-motivated, but some angel investors are at least partially motivated by philanthropy. For example, there are angle investment groups dedicated to helping fund underserved business owner demographics, such as women-owned businesses or veteran-owned businesses.
Angel investors typically offer smaller investments and have a more hands-off approach to supporting your company. They also tend to serve a wider variety of industries than VC companies and offer more flexible terms.
When Venture Capital Is The Right Choice For Your Business
The following are attributes of business owners who are well-suited for venture capital investment:
Your business is related to technology or innovation (some examples include web-based tech, sustainable energy, fintech, healthcare technologies, scientific research, software development, electronics, and telecommunications)
You are fine with eventually selling your company, and you have an exit plan if you do sell
You can see your company going public at some point, and you have considered the pros and cons of doing so
You are okay with divesting some control over and stake in your company to an investor (control freaks and VCs aren’t a good mix)
You are a serial entrepreneur (or aspire to be one); that is, you develop companies with a plan to sell them or take them public and then start another one
You have a lot of business connections, and, ideally, some of these connections are in VC
Your company is located in or near a venture capital hotspot (such as the Bay Area, Silicon Valley, LA, NYC, etc.)
If Venture Capital Is The Right Fit: Next Steps
Do you fit the above criteria? Here’s what the process of obtaining venture capital might look like for you.
The beginning of your venture capital journey is all about finding the perfect fit. It’s a lot different than getting a bank loan, where you simply apply to various lending institutions that provide financing for a variety of business types. With venture capital, you need to find an investor that caters to your specific type of business in your particular stage of growth â for example, semi-established fintech companies or healthcare technology companies that haven’t gone to market yet. Location matters, too â whether your company is based in the Bay Area, Silicon Valley, or elsewhere, you will want to find and nurture VC contacts in your local market.
Once you have found a suitable VC firm to approach â and, ideally, you should already have a relationship with this firm rather than contacting them out of the blue â you can pitch your idea/company and see if they will consider funding you. If it’s a good fit, and they decide to move forward and invest in you, the investor will perform a valuation of your company, both before and after the cash infusion. The valuation will determine the percentage of stock the VCs will own in the company and may also determine the amount of influence the investors have in steering the company before your IPO or sale.
Stages Of Funding
After a deal has been agreed on, funding begins. This usually happens in several rounds, the first of which is called seed funding. Seed capital is meant to get a very new business off the ground (the average seed round is $2.2 million) and may be used to do things, such as develop a prototype, assemble a management team, or create a business plan. Successive rounds of funding, called series, may become available as the business expands. Series A funding and Series B funding, for example, focus on somewhat-established businesses that are already offering a product and have a customer base, whereas Series C funding helps mature companies expand or even acquire other companies. Different venture capital firms usually cater to different specific phases.
From sending your pitch deck to attending meetings with investors to performing due diligence, it can take from six to nine months or longer to get your first round of seed funding.
Learn About Other Types Of Financing For Startups & Entrepreneurs
If VC isnât the right fit, that’s okay. There are many other types of financing that might be better suited for your small business. Some options include small business loans, small business grants, crowdfunded loans, personal loans, and lines of credit. Start your research by checking out these resources with relevant information about various forms of startup financing.
8 Alternative Funding Sources If Venture Capital Isn’t The Right Fit For Your Startup Or Small Business
6 Financing Options For Up & Coming Entrepreneurs (Plus 4 Expert Funding Tips To Get You Started)
20 Best Ways To Finance A Business Start-Up
What Is Venture Debt & Is It The Right Type Of Financing For My Startup Business?
What Is Debt Crowdfunding & When Is It The Right Choice For My Small Business?
Small Business Startup Loans: Your 8 Best Options
Do I Qualify For A Startup Grant?
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As the COVID-19 pandemic continues its decimation of the US economy, many small businesses have been left in the lurch. The Paycheck Protection Program (PPP) is no longer an option — it shut down to new applicants on August 8 — and the federal government has been locked in a stalemate over the program’s replacement since July.
Thankfully, many state, county, and city governments are attempting to stimulate their local economies by dipping into funding delivered by the CARES Act, the same $2 trillion-plus piece of legislation that ushered in the PPP. Most commonly, local governments have been setting up grant programs for nearby small businesses.
These programs can range in size depending on the area, but frequently offer small businesses the ability to receive grants worth up to $10,000 (or even more in some situations). Grants can be especially lucrative for small businesses — unlike a loan, a grant is essentially “free money” that doesn’t need to be repaid.
There may also be requirements regarding how funds can be used — such as on covering employee payroll, paying rent, or making COVID-related safety improvements. Additionally, only businesses that can show how COVID-19 has impacted their revenue or business model may be eligible.
Here’s a few examples of CARES Act small business grant programs recently announced by local governments:
Atlanta: More than $18 million in funding is provided for small businesses located in Atlanta. Up to $40,000 per grant is available and applications are open until August 31. The city is running the grant program through its development authority, Invest Atlanta.
Blue Earth County, Minn.: This southern Minnesota county is offering $10,000 grants to cover three months of expenses for locally owned businesses. Applications via the county website are open until September 2.
Harrisonburg, Va.: The city’s economic development wing has set aside $750,000 in funding for area businesses. Grants of up to $10,000 are available. Applications will be accepted through August 27.
Henderson, Nev.: $1 million has been allocated for small business grants. Local businesses with 20 or fewer employees can apply for grants between $2,500 and $10,000 through Henderson Now, the city’s economic development branch. Applications close on August 24.
Onondaga County, N.Y.: $500,000 in grant funds is available through the county’s industrial development agency. Companies with fewer than 50 employees may apply for up to $10,000 grants.
States are also getting in on the act. For instance, the state of New Jersey just announced that over $15 million in funding will go to businesses located in counties that didn’t receive direct federal aid.
Illinois recently dispersed $46 million in grant money to several thousand businesses. The state has plans for additional funding rounds in the future.
Pennsylvania received over 50,000 applications during an initial round of grant funding. With such a keen interest surrounding the $200 million earmarked for business grants, the state is currently accepting a second slate of applicants through August 28.
Where To Find CARES Act Small Business Grants
Every local government introduces and announces its grant programs differently. This makes it difficult to provide blanket advice to cover every situation. However, there are still a few general tips that may help businesses in need of grant money.
The first place to look is on local government websites. In many cases, government sites will have an easy-to-spot link to COVID-related coverage right on the front page. Local governments may also use alert banners near the top of their sites to highlight relevant COVID-19 resources.
Local news outlets are another great resource for discovering regional grants. City newspapers, regional magazines, and local news stations often post articles on their websites when a local government announces a grant program. By reading local news sites daily or following their social media accounts, business owners may be able to stay on top of local grant programs better than they might otherwise.
Other Small Business Grant Ideas
Businesses have other avenues to seek grant funding. Visit Merchant Maverick’s guide to small business grants for more inspiration. Startups may want to check out our article on startup-specific grants. There are also grants aimed at minority-owned businesses.
Women-run businesses have a few grant options as well. The nonprofit Women Who Tech is accepting grant applications for startup firms led by women through August 23.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Tech startups led by women now have a new avenue for grant funding thanks to a program run through Women Who Tech, a nonprofit focused on helping women grow their startups.
Two grants are on offer — one for $10,000 and another for $3,000. Applications will be accepted until 11:59 PM, August 23.
The new program, dubbed the COVID-19 Tech Challenge, was announced Wednesday by Women Who Tech.
“During this pandemic, we have seen how societal and industrial vulnerabilities have been exposed, and diverse perspectives are vital to address these unique challenges,” Women Who Tech founder Allyson Kapin said in a statement. “If we want to find safe and effective treatments while also addressing the critical challenges that have emerged, then we need to fund the best startups to bring these products to market.”
The COVID-19 Tech Challenge is open to North American tech startups that have at least one woman founder or co-founder. Eligible startups must also have a product that solves a problem stemming from the coronavirus pandemic.
Suggested areas of focuses for eligible startups include:
HealthTech and BioTech
Future of work
Civic engagement tech
In total, five finalists will be chosen, with two of those winning the grants. One-on-one pitch coaching is also offered as a prize.
Related: Women-led Businesses More Impacted By COVID-19, Survey Says
How To Apply For Women Who Tech’s COVID-19 Grant
Those interested in receiving funding through Women Who Tech’s COVID-19 Tech Challenge can apply online until the end of August 23.
Besides needing to have been founded or co-founded by at least one woman, eligible tech startups must also have:
A COVID-19-related tech product that’s at the prototype stage or already launched.
Raised at least $50,000 in a seed round of funding or be generating monthly recurring revenue.
Raised less than $5 million combined.
Additionally, eligible applicants must be:
A full-time team with at least two or more people.
Located in North America.
Women Who Tech also asks for startups to be “fast growing with degrees of innovation” as well as presenting original ideas, or ideas that build upon something without infringements.
Note that previous winners of Women Who Tech grants aren’t eligible to apply.
Sponsors Hope To Help Bridge The Gender Gap
While the gender divide in the business world is often discussed, this gulf is quite drastic among tech startups. This is something the COVID-19 Tech Challenge’s sponsors — which include Craig Newmark Philanthropies, RAD Campaign, and Donna Griffit Corporate Storyteller — aren’t overlooking.
“When it comes down to funding diverse-led startups, we as an industry continue to not do enough to lay the groundwork for equal access to these opportunities,” said Craig Newmark, the Craigslist founder and a member of the Advisory Board for Women Who Tech, in a statement. “Look at the data — women entrepreneurs continue to bring in more revenue with less money invested. Itâs time to put our money where our mouth is.”
The data Newmark references comes from PitchBook, a financial data company that reported that only 2.7% of venture capital investments in 2019 went to women-backed startups.
Women in leadership roles also report more difficulties in raising funds. A 2019 survey by January Ventures (then Jane VC) discovered that 55% of female founders said their gender held them back during fundraising stages. That’s compared to the 60% of male founders who said their gender benefited fundraising.
Businesses led by women have also been hit hard by COVID-19. For instance, Facebook found last month that only 71% of US women-led businesses are operational or engaging in any sort of revenue-generating activity versus 83% of those helmed by men.
Other Startup Grant Options For Women
For more on grants for businesses led by women, venture on over to Merchant Maverick’s guide on the topic.
Startup firms may also find some help via our guide to finding startup-dedicated grants.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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Minority-owned small businesses will have the chance to dip into $1.5 million of funding this week thanks to a new grant program announced Monday by Citizens Bank.
The money will be doled out to 100 minority-owned businesses in the form of $15,000 grants. Besides being minority-owned, businesses will need to be located within a community where Citizens Bank operates.
Citizens Bank is currently accepting applications through its website. The window for applications will close on Friday, August 7 at 5 PM ET. Funds for grant winners are slated to be dispersed in mid-September.
In a press release, Citizens Banks said that this program was started to provide “recognition of the value that [minority-owned businesses] bring as a vital part of our communities.”
Grant winners will also be offered the opportunity to be partnered with a business mentor through SCORE, a nonprofit organization that operates a volunteer mentorship network.
This latest grant program is part of Citizens’ ongoing financial aid initiatives for underserved communities. In June, the Providence, R.I.-headquartered bank pledged it would invest $10 million “to promote social equity and drive economic advancement in underserved communities.”
Grant Program Has Simple Application Requirements
The grant eligibility requirements for the Citizens Minority-Owned Small Business Grant program are pretty simple. Eligible business must be at least 51% owned by an individual who is a minority (defined by Citizens Bank as “Asian American, Black American, Hispanic American or Native American”), been in operation for more than one year, and have an annual revenue of at least $1 million.
While applicants don’t have to be Citizens Bank customers, they will need to reside within one of the 11 states the bank operates in:
Interested parties will need to write a 150-word essay that answers the question, “How would you use this grant to strengthen your business and community?”
According to Citizens Bank, each applicant will be judged on their plan to use the grant to strengthen and sustain their business (40% of the judgement criteria), how they intended to use the grant to help their community (40%), and how the applicant conforms to the program’s theme and the Citizens Bank brand (20%).
Funding For Minority-Owned Businesses Is Much-Needed
Citizens Bank’s program comes at a time when minority-led businesses are particularly struggling hard.
Most notably, an analysis of government data by UC-Santa Cruz economics professor Robert Fairlie found that the number of Black business owners within the US decreased by 41% between February and April of this year. Latinx business owners saw a 36% decline while the number of Asian owners dipped 26%. All those numbers are starkly higher than the national average of 22%.
“The COVID-19 recession is disproportionately hurting these minority businesses, making their communities more vulnerable to gentrification pressures than they already were before,” UCLA economist and urban planner Paul Ong told the Washington Post last week. “The expectation is that minorities will lag behind in the recovery, putting them in a weaker position to hang onto their businesses.”
The federal government’s own aid programs have reportedly struggled to help as well. For instance, the Small Business Administration’s inspector general failed to find “any evidence” that the SBA directed lenders to prioritize business owners within underserved communities, per a report from early May.
Among Black small business owners specifically, 77% of the 29,000 who applied for emergency grants through Hello Alice have reported the need for emergency cash to survive COVID-19. 34% said that grants between $10K and $25K would ensure their business’ survival through COVID-19. This data comes from a recently released impact report from Hello Alice that highlights the struggles Black-owned businesses face in a pandemic-stricken world.
Other Grant Options For Small Businesses
Beyond Citizens’ newest offering, there are a few other grant programs out there for small businesses.
You can take a peek at Merchant Maverick’s general guide to small business grants. For those struggling due to the pandemic, check out our previous coverage of COVID-19 relief grants.
Minority-led businesses may also find help via our guide to the best small business grants for minorities.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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$1 million is now available for US-based small businesses thanks to a grant program announced today by financial firm The Hartford and Main Street America, a nonprofit focused on revitalizing older and historic commercial districts.
The HartBeat of Main Street Grant Program, as the program has been dubbed, will sponsor grants ranging from $5,000 to $15,000 in size. Brick-and-mortar small businesses with fewer than 20 employees and located within commercial districts are eligible to apply.
Applications are open now through August 23, or after the program has received 500 applicants. Additional funding rounds may be announced later this summer.
The $1 million in funding has been donated by The Hartford.
“The incredible resilience and innovation our small business customers have shown as theyâve adapted to a new normal has been inspiring,” The Hartford’s head of small commercial and personal lines Stephanie Bush said in a statement. “We are committed to providing them with support as they continue to navigate these challenging times.”
The Hartford and Main Street America have also geared this grant program towards helping underserved communities — they’ve pledged that 50% of funds will go towards diverse-owned businesses. This includes ownership by minorities, women, veterans, disabled people, and those identifying as LGBTQ.
Related: Women-led Businesses More Impacted By COVID-19, Survey Says
The HartBeat Aims To Aid COVID-19 Recovery
Like many financial aid programs launched recently, the economic struggles stemming from COVID-19 inspired the HartBeat program.
“COVID-19 has had a devastating impact on small, locally-owned businesses and they need our support like never before,” said Patrice Frey, the president and CEO of Main Street America’s National Main Street Center. “We are thrilled to partner with The Hartford to alleviate some of the financial burden small businesses are experiencing and support the resilience and recovery of older and historic main streets and commercial districts.”
With its focus on COVID-19 recovery, the HartBeat does have a set of eligible grant expenses for awardees. These requirements include things such as physical improvements to meet COVID-19 safety regulations, equipment for public safety, fees associated with launching eCommerce sales, and business plan modifications. The grants may also be used for rent, payroll, and other operating expenses.
The program’s application notes that final awards will be given out based on “a case by case basis” as well as listing a set of criteria for eligible applicants. To be eligible for the HartBeat’s grants, applicants are required to:
Run their business within the same state that it does business
Own a US brick-and-mortar location within an older or historic main street, downtown, or commercial district
Have been in operation since at least January 1, 2019
Employ fewer than 20 employees
Be an owner of the business
Be over 18 years of age
Note that applicants don’t need to be customers of The Hartford to be eligible for funding, nor is an applicant’s relationship to The Hartford considered.
This is far from the first grant venture from Main Street America. In June, the nonprofit awarded $10,000 each to 10 different businesses as part of its Future of Shopping Small Grant Program, which was run jointly with American Express. Earlier in the year, Main Street America doled out $10,000 apiece to eight different small business programs focused on helping local businesses survive COVID-19.
Other Small Business Grants
Beyond the HartBeat program, small businesses have several other avenues to pursue for grant funding.
To get up to speed on the world of small business grants, check out Merchant Maverick’s primer on the topic. Some may also find our article covering COVID-19 relief grants helpful, too.
Women who own a small business may want to take a peek at Merchant Maverick’s guide to the best business grants for women. We’ve also written about grants for minority-owned businesses as well.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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COVID-19’s destructive wake has damaged small businesses of all kinds, but those led by women have been disproportionately affected, based on a new report.
This report, released earlier this month by Facebook, found via a survey that 71% of women-led businesses in the US are operational or engaging in any sort of revenue-generating activity compared to 83% of those run by men. The survey, which Facebook jointly ran with the Organisation for Economic Co-operation and Development and the World Bank, considered the responses of more than 30,000 small business owners, managers, and employees from over 50 countries.
One reason for the disparity could be the cultural focus on gender roles in domestic settings.
According to the survey, female business leaders were more than twice as likely to spend at least six hours a day on domestic tasks when compared to their male counterparts — 23% to 11%. Facebook also noted that women were 10 percentage points more likely than men to have their work affected by caring for children, homeschooling, and doing household chores.
North America has also been the hardest hit region for closures of businesses run by women.
In the US and Canada, women were 14 percentage points more likely to close their businesses than men due to COVID-19. That’s compared to an 11 percentage point gap in Latin America and six percentage-point gaps in both Asia and Europe.
Micro-business — defined in the report as businesses with no employees — have also been hit hard. Based on the survey’s numbers, 30% of micro-businesses have closed compared to 25% of businesses with one or more employees. Of those surveyed, 37% of female-led businesses were considered “micro” while only 24% of male-led business fell under that category.
You can read Facebook’s Global State of Small Business Report in its entirety via PDF.
Women-Owned Businesses Are Struggling Worldwide
The Facebook report arrived shortly before the International Monetary Fund (IMF) called on governments to support women during the financial fallout caused by COVID-19.
“It is crucial that policymakers adopt measures to limit the scarring effects of the pandemic on women,” IMF director Kristalina Georgieva wrote in a blog post on July 21. “This could entail a focus on extending income support to the vulnerable, preserving employment linkages, providing incentives to balance work and family care responsibilities, improving access to health care and family planning, and expanding support for small businesses and the self-employed.”
The IMF’s blog post also noted the domestic discrepancy — according to previous research done by the organization, women spend 2.7 hours more per day on unpaid household work than men.
Facebook’s findings further echo similar data.
According to a June report commissioned by the National Bureau of Economic Research, the number of self-employed female business owners dropped 25% between February and April of this year. That pales in comparison to the 20% decline male-owned firms saw.
“The disproportionate losses in April 2020 to the number of female business owners will only further increase gender inequality in business ownership and perhaps broader economic inequality,” wrote Robert W. Fairlie, the UC-Santa Cruz professor who led the report’s research. Fairlie also called the number of lost women-run businesses “unprecedented.”
More globally, an impact report published this month by Women in Cloud and sponsored by Microsoft found that women entrepreneurs in the tech sector estimated their businesses will lose an average of $500,000 in revenue over the next year. It also revealed that 100% of the 57 executives surveyed reported that their businesses had lost income due to COVID-19.
Where Women-led Businesses Can Look For COVID-19 Support
Luckily, a number of organizations have stepped up to provide businesses owned by women with financial support during these coronavirus-infested times.
For instance, the Red Backpack Fund (run by The Spanx by Sara Blakely Foundation) will be giving out $5,000 grants to 1,000 female-owned businesses. The next application round is set to begin August 3.
There’s also the Moms as Entrepreneur’s COVID-19 fund, which is giving out grants of $500-$1,000 to mom-owned businesses financially impacted by the pandemic.
Microgrants can additionally be found for Black women who own businesses, such as through the Doonie Fund or Barefoot Wine’s COVID-19 recovery program.
For more general advice, check out Merchant Maverick’s guide to the best business grants for women. We also have an article covering the best business loans for women.
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
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You have a great idea, and you’re ready to take action and turn that idea into a thriving business. Maybe you have a new product that’s unlike anything on the market, or you’ve hashed out the details of a much-needed business in your area. No matter what type of business you have in mind, all startups have one thing in common: the need for capital.
Unfortunately, new businesses find it challenging to find funding. You can’t just walk into your local bank, produce a few financial statements, and get a business loan. A lack of revenue and business credit history works against you, as traditional lenders see you as a big risk.
However, this doesn’t mean you have to put your dreams on hold. It simply means that you need to get a little creative with your funding. Not sure where to start? You’re in the right place. This post is going to focus on startup funding.
This goes beyond just small business loans. We’ll look at a few unique types of funding for your business, as well as provide you with tips to get started. Use these ideas to get the money you need to get your business off the ground. Ready to get started? Let’s dive right in.
Use Startup Funding To Take Your New Business To The Next Level
Before we delve into the different types of funding, let’s first evaluate why you need startup funding for your business.
Every business needs capital. The amount of capital you need varies based on a number of factors. Your type of business, specifically, influences your costs. If you’re creating a new product, your initial startup costs will differ from those of someone opening a store or restaurant. An online business will have different costs than a brick-and-mortar business. One of the first steps to launching your startup is to identify potential costs and then estimate how much capital you need to cover the costs to get your business off the ground.
When launching your business, some of the startup costs to keep in mind include:
Rent or mortgage
Supplies & inventory
Research & development
Securing capital is the first step to launching a successful business. Just take a look at some of the businesses and products you may already be familiar with. The wildly successful card game Exploding Kittens had one of the biggest Kickstarter campaigns in history, raising over $8.7 million in 2015. Since its launch, its become a top-selling game across retailers such as Amazon and Target with over 9 million games sold. Expansion packs and other card games are also available, making this business even more successful.
Or perhaps you’ve heard of the food delivery service Grubhub. By 2011, the company had received five rounds of investment funding, transforming the company from one that simply offered online restaurant menus to a food delivery service in cities across the nation. Grubhub was just sold to Dutch company Just Eat Takeaway.com for a cool $7.3 billion.
Maybe you want to grow your business this large … or maybe you just want to kick your 9-to-5 to the curb, make your own money, and be your own boss. Whatever your ultimate goal is, securing funds can help you get there.
How Does Startup Funding Work?
There are two main types of startup funding to consider: debt financing and equity financing. There are a number of funding sources that fall under each umbrella, but for now, let’s focus on the general meaning of each.
Debt financing means that you receive a lump sum of money that is paid back over a period of time. In addition to paying the principal (in other words, what you borrowed), you’ll also pay interest to the lender. You may also be required to pay fees, such as an application fee or origination fee.
Lenders look at several things when determining whether you qualify for funding, the amount you qualify for, and the rates and terms. This may include your personal and/or business credit history, revenue or personal income, and personal or professional references.
There are several types of debt financing to fund your startup, including:
Loans: You receive a lump sum of cash that is paid back over a period of time (anywhere from a few months to 20+ years).
Business Credit Cards: A business credit card works like a personal card. You’re assigned a credit limit by the lender. You can use your card as often as needed provided you haven’t hit your credit limit. Interest is charged only on borrowed funds. As you pay down your balance, funds are once again available to borrow.
Lines Of Credit: Lines of credit are similar to credit cards. A lender approves you for a set amount, which can be used as needed. Interest is charged only on borrowed funds. As you repay your line of credit, funds may become available to use again.
Debt financing has its benefits. Paying back your lender helps build your credit so you can qualify for higher limits and lower rates in the future. Your lender also doesn’t have a stake in your business, so you retain ownership.
On the other side of the coin, there are a few drawbacks to consider. Interest rates and terms — particularly for startups — may be less-than-favorable. If your business doesn’t succeed or you’re otherwise unable to repay your loan as agreed, your credit score will plummet. Your business and/or personal assets may also be at risk if you put up collateral, signed a personal guarantee, or have a blanket lien attached to your loan.
You can also get startup capital through equity financing. Like debt financing, you receive capital to use for startup costs. However, equity financing is different in that you don’t have to repay the funds. Instead, your investor receives a stake in your business in exchange for this capital. In the reality TV series, “Shark Tank,” the sharks invest money in products in exchange for ownership in the company — this is classic equity financing.
The good news is that you won’t have to repay funds, even if your business isn’t a success. The bad news is that you do have to give up partial ownership of your business. Not only does this mean that you have to share the profits, but you may also have to consult with stakeholders before making big decisions, such as making a large purchase or expanding your business.
5 Ways To Get Funding For Your Startup
There are a few ways to get funding for your startup. You may even opt to try several different methods to get the capital you need. Read on to learn more about getting funds for your startup.
Think about a seed. It starts off small. But over time, that seed grows into a plant or tree. Now, think of this seed as your business. The seed money — money given by investors — helps start your business. Over time, your goal is to grow this seed (the investment) into a thriving business.
Because this is a type of equity financing, your investors have a stake in your business in exchange for their seed money. Once your business has grown, the investors may opt to sell their stakes and move on to another opportunity. They may sell it back to you or to other investors that are interested in being a part of your business.
Access To More Capital:Â The sky is the limit when it comes to seed funding. Unlike loans and other more traditional forms of funding, you don’t have to worry about limitations being put on the amount of funding you receive — provided, of course, that you find the right investor.
Requirements:Â No business credit history? Low personal credit score? No revenue from your business? No problem. While some investors may have their own requirements before investing their funds, many are simply looking for the next big idea that has a potential for profit.
No Regular Payments: You won’t have to worry about making regularly scheduled payments and high interest rates and fees when scoring seed funding from investors.
Additional Skills & Knowledge:Â It’s highly likely that your investor will at least have some experience with your industry and can provide valuable skills and knowledge to help you grow your business to its full potential.
Giving Up Part Of Your Business:Â In exchange for funding, your investor will take a percentage of your business. This means that they have a right to some of your profits and, depending on their level of involvement, may be involved in making major business decisions.
Finding An Investor: Finding an investor that is willing to invest in your product/business (and, ultimately, you) can be a challenge. Other sources of funding may be acquired in just a few days…finding an investor can take weeks, months, or even longer.
The internet has changed business funding for the better in many ways. One way is through crowdfunding. You most likely have heard of (or maybe even donated to) campaigns on sites like Kickstarter or GoFundMe. These crowdfunding platforms have opened up financial opportunities for many startup businesses, and yours could be next.
There are two main types of crowdfunding to consider: equity-based and rewards-based. Equity-based crowdfunding means that investors get a stake in your business in exchange for their financial contributions. Rewards-based crowdfunding provides each investor with a reward or perk — think, first dibs on a new product or a deeply discounted price at launch.
Few Limitations:Â You won’t encounter maximum funding limits like you would with loans or traditional financing. Although some crowdfunding platforms do have limitations in place, ultimately you can find a platform that lets you raise as much capital as you need — no matter how much that is.
Keep Your Equity:Â If you opt to run a rewards-based campaign, you don’t have to give up ownership in your business.
Tests & Builds Your Market:Â In addition to drawing in interested investors, you’re also putting your name out there to others — even those that don’t contribute — to begin building interest in your business before you even launch.
Requires A Lot Of Work:Â Crowdfunding isn’t as simple as starting a campaign and waiting for the money to roll in. Instead, you will need to promote your campaign through social media, email, your website, or through other means in order to successfully raise funds for your business.
May Not Be Successful:Â Sure, you didn’t raise all the money you needed, but you raised some, so that’s okay, right? It depends on what platform you used. Some platforms require you to meet your goal in a set period of time in order to receive your funds. If you fall short, you’re back at square one.
Negotiate With Suppliers
Another way to get your startup off the ground is to negotiate with suppliers. If you need supplies to create a product or open your business, negotiating is a smart tactic you need to master.
First, start by estimating supply costs. Get quotes from suppliers, do your research, and understand what costs are associated with your supplies. Next, find reputable suppliers and begin negotiations. If their pricing is too high, for example, use the data from your research to get a better deal. You can also inquire about discounts — i.e., for bulk or recurring orders.
Next, consider the payment terms. If payment is due immediately, try to negotiate net-30 terms; in other words, your payment will be due in 30 days. If the supplier isn’t willing to extend terms this much, even net-10 or net-5 terms can be helpful as you try to secure financing, sell products, or find an investor. Some suppliers may even offer in-house credit programs that are easier to qualify for than bank loans or credit cards.
Lenient Requirements: As a startup with no business credit or revenue, proving your creditworthiness is pretty much impossible. But when you work directly with a supplier to get a reduced cost or improved repayment terms, these requirements may not even be a consideration.
Building Business Relationships: As you build relationships with your suppliers, it’s possible that you may get additional discounts, better terms, and other perks in the future.
Doesn’t Always Work: Getting a supplier to come down on the price of products or offer longer repayment terms isn’t guaranteed. Any savings or credit options and the requirements that come with vary by supplier.
Other Funding May Still Be Needed: Even if you get the cost of your supplies negotiated to a more reasonable rate or score longer terms, you’ll still need capital to pay the supplier. If you launch your business and start making cash, great! If not, you may be required to find some form of financing in order to pay for your supplies.
We can’t talk about funding your business without at least mentioning loans. Of course, obtaining a loan through traditional lenders may be difficult, but it isn’t impossible. The Small Business Administration (SBA) offers funding programs for small businesses, including startups and underserved communities. There are also a number of alternative lenders that may be able to help you now or just a few months after you begin bringing in revenue.
Another option to consider outside of small business loans is a personal loan. If you have steady income and a solid personal credit profile, you may be eligible for a personal loan to use toward startup expenses — a loan with longer terms and lower rates than you’ll find with many alternative lenders.
No Hard Work Required: Getting a small business or personal loan is as simple as submitting an application with requested documentation. Lending marketplaces make it easier than ever to compare rates and terms by filling out just one application.
Keep Your Equity: When you receive a loan, you don’t have to give up ownership in your company.
Can Be Expensive: Depending on the lender you select and criteria such as your credit score and income, the interest rates and fees of loans can get pretty expensive.
May Require Collateral: Many lenders require risky borrowers (including startups) to put up collateral for a loan. This could be a specific business asset or personal asset. Some lenders use blanket liens, which covers everything owned by your business. Failure to pay your loan as agreed could result in losing these assets — and putting your business underwater.
Requirements Not Met: Your application may be rejected if you don’t meet the requirements of the lender, which may include business credit score and history, personal credit profile, time in business, revenue, personal income, or type of industry.
Small Business Grants
If you have an innovative business idea, you may qualify for a startup grant. Not only can you score the capital you need with a grant, but funds don’t have to be repaid. However, don’t just think that grants are an easy way to get free money. Most small business grants have pretty strict requirements, so finding ones you qualify to receive is difficult. Once you find grants that are a good fit, competition is pretty stiff — so be prepared.
Startup grants are available for tech companies, innovative new products, and even underserved communities like minority-owned businesses. In addition to submitting information about yourself and your business or product, you may also be required to create a video, write an essay, submit a business plan, or complete other steps before being considered for a grant.
Grants Don’t Have To Be Repaid: You don’t have to worry about repaying a lender if you receive a small business grant. If you qualify and are awarded a grant, funds do not have to repaid.
Not Just Monetary Awards: Depending on the grant that you’re awarded, money isn’t the only thing you’ll receive. Many grants also include access to resources, such as industry-specific workshops, training, and mentorships.
Finding Grants Can Be Difficult: Most grants have requirements that your business may not meet. You also have to keep an eye out for application deadlines to ensure your application is received on time.
Competition Is Tough: You aren’t the only aspiring business owner to seek out grants. Competition is tough, and most people that apply won’t receive a grant, so make sure you have a backup plan in place.
On a farm, an incubator is used to create the perfect environment for the successful hatching of eggs. In business, a startup incubator works in a similar way — metaphorically, of course.
A startup incubator is a program designed to foster the growth of new businesses. An incubator provides a number of resources to help startups grow into a successful business. A single company or organization may act as a startup incubator, but more commonly a number of businesses and organizations come together to provide the resources startups need to succeed.
These programs don’t just open up new opportunities for capital but also may provide your startup with resources including mentorships, office space, and training to ensure your business starts on the right path.
Looking for a startup incubator? Start your search online or contact your local SBA office.
More Than Just Funding: Your business needs funding, and a startup incubator can give you opportunities you couldn’t find on your own. In addition to just capital, though, you can also take advantage of the numerous resources and expertise offered through these programs.
Find Your Focus: The benefits you’ll receive from a startup incubator can help you become more structured and focused on launching and growing your business.
Finding & Being Accepted To A Program: Unfortunately, startup incubators won’t just flock to you. It’s your job to do the research and find incubator programs, learn more about joining, and ensuring you meet all requirements. Once you do find suitable programs, actually being accepted over competing startups is another challenge.
Requires Commitment: Your program may require you to attend training, workshops, or meetings with investors or mentors. This time commitment may prove to be too much if you have other obligations, such as a full-time job.
Tips To Get The Startup Funding You Need
Once you’ve determined the method (or methods) you’ll use to acquire your startup funding, there are a few things you can do now to improve your odds for success. Before reaching out to that lender, investor, or supplier, keep these tips in mind.
Understand The 5 Cs Of Credit
Whether you plan to apply for a business loan now or in the future, it’s important to understand what lenders look for — specifically, the five Cs of credit. Those are:
Character: Lenders want to work with borrowers with good character traits. This may include personal work experience, industry experience, and personal credit history.
Conditions: Are the conditions favorable for lending? Lenders will consider this, looking at things such as industry trends, the state of the economy, and even pending legislation to determine if lending to your business is a smart move.
Collateral: Do you have collateral to secure your loan in the event that you default on your loan agreement? Equipment, real estate, and even accounts receiveable can be used as collateral.
Capital: Have you invested in your business? If so, you have skin in the game and will have something to lose if your business goes under. Lenders will consider how much capital has been invested in your business when determining if you qualify for funding.
Capacity: Does your business have the capacity to take on a loan payment? Lenders will consider factors such as your debt-to-income ratio (DTI), debt service coverage ratio (DSCR), and cash flow to determine if your business is financially prepared to take on additional debt.
Is your business falling short in one of these areas? Learn more about the 5 Cs of credit and how you can make sure your startup is prepared before approaching a lender.
Create A Business Plan
You have your business ideas in your head and maybe even jotted down in a notebook somewhere, but it’s important to have an actual business plan. Not only is this essential for drawing in investors or securing funding, but it also serves as a blueprint for your business. Think of your business plan as a road map, outlining the details of where you’re going (your goal) and how you will get there.
Since every business (and the goals of each business owner) is different, no two business plans are the same. However, there are a few common sections that each business plan shares. These include:
Products & Services
For some businesses, a one-page business plan may be sufficient. For others, however, a more comprehensive plan may be needed, particularly if you’re looking for investors or to obtain a small business loan.
Evaluate The Cost Of Borrowing
It may be tempting to jump on the first funding offer that comes your way, but it’s important to stop and weigh out the cost of funding.
For instance, if you get approved for a startup loan, look at factors such as fees and interest. Calculate how much you’ll pay to borrow funds, and determine if this is feasible or if it could potentially sink your business.
If you have an interested investor that wants equity in exchange for capital, consider how much of your business you have to give up. Are the funds you’ll receive today worth giving up a large portion of your profits in the future? Look at the cost of borrowing over the long-term to determine if you need to find another source of funding.
Don’t Be Afraid To Get Creative
When it comes to starting (and growing) a business, acquiring funding takes some creativity. Maybe you’ll use one (or more) of the methods suggested in this post to fund your startup. Or maybe you’ll do something else entirely. The key is to find what works best for you.
Don’t be afraid to get creative. Tap your friends and family that could be potential investors. Attend industry events and network with like-minded entrepreneurs. Keep an open mind, be flexible, and have a backup plan in place in the event that your
Hold Up Your End Of The Bargain
Once you do get funding, your work doesn’t stop there. Whether you agree to repay a lender each month or you’re using a supplier for recurring purchases, make sure that you always keep your promises (whether they’re on paper or not). Word travels fast among the small business community, and the last thing you want to do is burn your bridges. Repay your debts as agreed, hold up your end of every deal you make, and build a reputation as a business owner with integrity and strong character.
An added bonus? Paying your debts on time helps raise your credit score, making it easier to qualify for additional funding with better terms in the future.
Go Out & Get Funded
Now that you have a better idea of the funding opportunities open to you, it’s time to get out there and find that capital. Remember, it pays to be patient, do your research, and explore all funding options before making the giant leap into owning and operating your own business. Good luck!
The post How To Get Startup Funding: 5 Types Of Funding For Startups & 5 Tips To You Get Started appeared first on Merchant Maverick.
In much of the US, small businesses have been given the green light to reopen after several weeks of closure due to the COVID-19 pandemic. But with new cases and deaths still rising and no vaccine on the immediate horizon, experts warn that the coronavirus will likely be with us for some time. Though some types of businesses may be able to implement adequate provisions for social distancing, it is feared that the loosening of social distancing restrictions throughout the country could result in another wave of cases.
There’s still so much we don’t know about the novel coronavirus, but we know a lot more than we did a few months ago. Every day, we are learning more about how businesses can safely reopen, and how they can pivot to stay profitable in these new times. As the weeks go on, we’ll also learn more about what’s not safe and what does not work. In this post, we’ll take a look at some precautions you can take to prepare your business for a possible second wave of COVID-19.
Why The Second Wave Of The Coronavirus Could Be Harder Than The First
You’ve probably heard a lot about the coronavirus possibly being in our lives for 18-24 months. The reason is that this is the amount of time it could take for us to either a) develop a vaccine or b) develop herd immunity against the virus. But what exact course the virus will take in those 18 months to two years is unknown.
A new report from the Center for Infectious Disease Research and Policy (CIDRAP) presents three possible scenarios for the coronavirus, which are based on what scientists know about COVID-19 as well as historical pandemics. Scenario 1 is that after the spring 2020 wave subsides, we get that big dreaded “second wave” we hear so much about this fall or winter, with some smaller waves occurring periodically thereafter. In that scenario, which emulates the 1918-1919 Spanish flu pandemic, the second wave is even bigger and deadlier than the first. This model also reflects the warning from CDC director Robert Redfield, who cautioned that a second wave of the coronavirus in fall or winter could potentially be even more devastating than the first, partly because it will coincide with flu season.
Another scenario presented in the report is that after spring 2020, we’ll see a series of peaks and valleys of the virus over a one- to two-year period, varying by geographic region. CIDRAP says that, depending on the height of the wave peaks, this scenario could require “periodic reinstitution and subsequent relaxation of mitigation measures over the next 1 to 2 years.”
The third scenario posited by CIDRAP is that we’ll see more of a “slow burn” with ongoing low levels of transmission but no major spikes. While this hasn’t happened in past pandemics, the scientists say it remains a possibility for SARS-CoV-2 and one which likely would not require reinstitution of stay-at-home orders or strict social distancing measures.
So it’s pretty clear to see how second waves, third waves, and so forth, will impact businesses and potentially require new lockdowns restricting business activity. While we can be cautiously optimistic that the worst-case scenarios won’t come true, we also need to be prepared for the possibility of a second wave of the virus that could result in more business restrictions and lockdowns.
It’s also a sad reality that even if the second wave is less severe from a health perspective, the economic toll of another prolonged closure (partial or otherwise) could be the final nail in the coffin for many small businesses still trying to recover from the economic effects of the first closure.
Is It Safe To Reopen Yet?
With no national quarantine or coronavirus-related business restrictions in place, states are each making their own decisions about reopening businesses. Individual counties and cities have their own business restrictions as well, with some cities and counties requiring masks at places of business and others having no such requirement. As both the pandemic and the recession continue to deepen, there’s a lot of discussion about how to balance economic health and public health, and also whether local governments are being too hasty about reopening businesses.
When you look at what businesses are doing now, there is a lot of variance from one region to the next, with some states, such as California, maintaining stricter social distancing protocols. For instance, California restaurants can offer takeout and delivery but not dine-in service. California is also doing some phased reopening — such as allowing curbside pickup for retail — in response to effective curve-flattening measures that have slowed the growth of new cases and deaths. Higher-risk businesses that require close contact with other people, including salons, barbers, gyms, and theaters, remain closed.
Meanwhile, in states such as Tennessee, dine-in restaurants are already open, as are salons and gyms. Tennessee is also lifting the 50% capacity restrictions on retail and restaurants, effective May 22. The state is even allowing large attractions, such as theaters, amusement parks, water parks, museums, and auditoriums, to reopen, also on May 22.
So, sticking with those two examples, are Tennessee businesses jumping the gun on reopening, even inviting a second wave? While California does have more than four times as many cases as Tennessee, the share of the population that’s infected is actually higher in Tennessee — one in 391 in Tennessee and one in 489 in California, according to New York Times data.
While time will tell the true impact of business reopenings during the pandemic, based on what immunologists tell us about where you are most likely to be infected by COVID-19 — indoor spaces with lots of people — it’s easy to see how even a single transmission event in a crowded gym or restaurant could cause a local outbreak and resulting business closures.
Again, some types of businesses may be able to reopen a lot more safely than others. It’s possible that, given the right circumstances, even higher-risk businesses such as salons may be able to safely reopen with stepped-up health and safety measures. It will be largely up to business owners (and their local governments) to decide if and how they can safely reopen, but generally, the better safety measures you can put in place, the better protected your business will be against a second wave of the coronavirus.
8 Things You Need To Do To Prepare Your Business
What do business owners need to do to get ready for future outbreaks? What should you have learned, and what should you be prepared to do the second time around? Let’s look at some specific things business owners can do to prepare for another wave of COVID-19.
Invest In Safety
Both to reassure customers and prevent your business from being a source of infection, it’s essential that you step up the health and safety policies of your store or restaurant. Whether that means investing in better personal protective equipment for your staff, putting up signs to encourage social distancing, or improving your building’s ventilation system, you can’t go wrong with a cleaner, healthier business. While most businesses have already implemented some enhanced safety measures, it’s likely you still have some room for improvement, especially if you initially implemented safety measures made for short-term/temporary use.
If you’ve received an EIDL or PPP loan from the SBA, you might consider spending some of it on safety-related supplies, such as PPE, or enhanced sick leave for your staff to discourage them from coming into work sick. (Note that you can only spend 25% of a PPP on non-payroll expenses.)
Revisit Staffing Plans
As businesses reopen, they are having to reevaluate their staffing needs going forward. In some cases, businesses have received PPP funds, but their employees don’t want to come back; other businesses are shutting their doors for good because their loan still hasn’t come through. As the crisis drags on, it’s necessary to view staffing with a long-term view and consideration of what you will do if a second wave forces you to close again. For example, if you’re currently seeing an uptick in demand after reopening, do you need more staff urgently, or can you wait to hire till later to avoid laying people off in the event of another closure?
A POS with employee management can help you make smart scheduling decisions. It’s also a good idea to communicate openly with your employees about your staffing plans because they are probably just as anxious as you about what will happen.
Work On Your Online Presence
If it wasn’t clear already, the pandemic has shown us that having an online presence is an essential tool for communicating with customers about changes to your hours, policies, and other crucial information customers need. Before visiting a business these days, we are more likely than ever to check the business’s website or Yelp profile — we want to make sure they’re still open, and in what capacity. Ahead of a possible second wave, it’s absolutely necessary to get in the habit of routinely updating your website and social media profiles with your current information. You can also use your website and social media for marketing, including offering special online sales during a closure.
If you don’t have a website for your business, you may be able to set one up through your POS — for example, Square POS lets you set up a basic website in minutes. You can also use a website builder to set up a professional website; read Best Website Builders For Small Businesses to learn about options.
Set Up eCommerce Sales
Small business websites have also become an increasingly vital sales channel during the coronavirus pandemic, as eCommerce = socially distanced commerce. If your business doesn’t have eCommerce options, it’s time to set them up. Depending on your business model and industry, you may want to implement the following eCommerce options:
Online Ordering/Local Delivery: Customers can order items or food from your website and have the items shipped or delivered to their homes.
Curbside Pickup/Order Ahead: Customers order from your website and then visit your store to pick them up without having to go inside.
QR Code Shopping: Customers can scan an item’s QR code in your store or store window and then buy the item online.
Online Gift Cards: Customers can buy digital or physical gift cards from your website and spend them on your website or in your store at a later date.
Contactless Payments: This is more of a POS option that can allow for socially distanced payments, but adding a digital payment option, such as Apple Pay,Â can also add another convenient option for customers to pay on your website with one click.
Social Media Selling: Even if you don’t have a full-on eCommerce website, you can sell products and services on social media. Multichannel POS systems, such as Shopify, make it easy to sell on social media, and Square also has a new Square Online Checkout payment option that makes it easy for customers to buy straight from your social media page.
Gather Important Paperwork In One Place
Being organized is key when applying for financing or any kind of aid. If you need a second round of emergency loans, speed will be essential. Make sure you keep all your important paperwork in one place, so you can access it when you need it. If you have received a PPP loan, you’ll also need to keep good documentation practices for when it comes time to apply for PPP forgiveness or if you are unlucky enough to face a PPP audit.
Look At Sales Data
When you need to pare-down operations (reduced business hours, limited customer capacity, online-only, etc.), you need to be super-strategic about what you sell. To this end, your point of sale system should have a wealth of POS data about when you were busiest, what sold well, slow-selling items, etc. You can leverage that data to do things, such as raise prices on hot sellers, lower food costs on a higher-cost dish (for restaurants), adjust your hours and staffing based on your busiest times, and much more.
Small businesses that can use data wisely to adapt quickly are in the best position to survive a second wave of the coronavirus and even a prolonged economic downturn. If you do not have a modern cloud POS with good reporting and analytics, now might be the time to upgrade. Check out our top POS software comparison to look at some of your best options.
Prepare For Shortages & Price Fluctuations
The pandemic has drastically affected the global supply chain, and it is very likely that your business could see shortages of products, supplies, ingredients, or raw materials. Even if you can get the items you need for your business, you may have to deal with price increases. These shortages and resulting price increases could be exacerbated by future waves of the virus, even if your immediate region is not affected. For example, restaurants are now seeing meat shortages and higher meat prices due to outbreaks at meat-processing plants.
In some cases, however, you might get lucky and see price decreases for some supplies, due to decreased demand and possible deflation. For example, gas prices tumbled during the early days of the pandemic. Overall, US producer prices posted their largest annual drop in five years in April 2020. The downside to falling prices is that customers will expect lower prices as well.
For more insight into the supply chain and COVID-19, read Why Small Business Owners Need To Understand Supply Chain & Risk Mitigation: COVID-19 Edition.
During times of uncertainty, it’s important to keep a close eye on your business finances and your cash flow in particular. Crunch your numbers and project your future earnings under different scenarios. If you’re facing another closure, how could your cash flow be affected? What about debts? If you’re not used to making these sorts of calculations, it might be a good idea to employ the services of a financial advisor who can offer a cash flow analysis and give you sound advice about how to handle your business’s finances in the current climate. Accounting software can also help.
15 Resources To Help You Weather Another Wave Of COVID-19
Here is a list of resources you can use to adapt your business to the new times we’re living through. Use these resources to learn more about socially distanced selling, emergency financing, and software that can help you sell smarter during COVID-19.
Take Advantage Of These Small Business Grants For Coronavirus Relief: Find out if your coronavirus-affected small business is eligible for a COVID-19 relief grant from an organization, such as Facebook, Amazon, Spanx, or others.
5 Clever Marketing Tactics For Small Businesses During The Coronavirus Pandemic: Keeping in touch with customers is even more important as businesses temporarily close or switch to online and delivery. Here are five marketing tactics to help.
Social Distancing For Small Business: How You Can Adapt & Survive The Coronavirus:Â Social distancing can help contain the COVID-19 pandemic, but it has hit small businesses hard. Your business can weather the storm by getting creative.
Coronavirus Payments Guide: Everything You Need To Know About Switching To Online & Phone Payments: This article has everything you need to know about accepting payments online and over the phone instead of in-person.
Quick Business Loans: The 6 Best Lenders & 10 Tips For Fast Approval:Â Looking for fast cash for your business? Read this one for a look at six reputable lenders that provide quick business loans and fast approval.
What The Coronavirus Means For eCommerce & What Your Business Can Do About It:Â What does the coronavirus mean for eCommerce business? Learn the top eCommerce trends and how your small business can leverage them.
Everything You Need To Know About NFC Technology & Why NFC Payments Are The Future:Â Are you ready for the future of payments? Business owners should learn how NFC works and adopt contactless to protect customers — and yourself.
The Business Owner’s Retail Guide To Surviving The Coronavirus:Â Are you a small business retailer worried about the state of your business? Check the top tips and resources to keep your business strong during COVID-19.
Coronavirus Survival Guide For Restaurants:Â Learn how your restaurant business can adapt to new business conditions in the age of coronavirus, including resources on how you can save your business from closing and continue serving customers during this crisis.
5 POS Systems With Exceptional eCommerce Integrations For Online Sellers:Â eCommerce sales are growing, but retail stores arenât going away any time soon. Get the best of both worlds with these great eCommerce-friendly POS systems.
Restaurant Delivery Guide: Everything You Need To Know About Implementing In-House Delivery: Considering expanding your restaurantâs services to include delivery? Hereâs what you need to know to implement restaurant delivery successfully.
What Is Square Online Checkout? Your Guide To Using This New Square Payment Option:Â Square just launched a brand new payment service called Square Online Checkout. Learn about this online payment option and how it can help businesses in the age of coronavirus.
Why Point Of Sale Data Is The Secret To Understanding Your Business And Making More Sales:Â Your small business is sitting on a gold mine of information locked away in your POS system. Learn how to use that point of sale data to your benefit.
Easy Accounting Software For Small Businesses: Find easy accounting software for your business no matter what your level of accounting experience is. These top seven choices are easy to learn, set up, and use.
Employee Management With A POS System: The Secret To Simplified Timekeeping, Scheduling, & Reporting:Â Your POS system probably has employee management features that can make timekeeping and scheduling much easier. Hereâs how to make the most of these tools.
The Bottom Line: Your Business Isnât In The Clear Yet
We are starting to see some signs of small business recovery, and that’s a great thing. But business owners must stay vigilant and be prepared for the very real possibility of more pandemic-related business disruptions in the near future.
It can be difficult to plan for the future when you’re still working through the first wave, and there is still so much uncertainty. You might also have the thought that you don’t want to over-prepare for something that might not happen (at least, not in your local area). But the fact of the matter is that even before the pandemic, businesses were moving in the direction of eCommerce, contactless payments, online ordering, cloud POS, etc. The pandemic only accelerated the changes that were already in motion. Also, even after COVID-19 is over, customers will likely remain more mindful of health and safety and will continue some socially distanced shopping practices that they relied on during the pandemic (e.g., curbside pickup). So even if you get lucky and don’t have to deal with a resurgence of this particular virus, your business will benefit from adapting to modern sales technologies, safer health practices, and data-driven ways of making business decisions.
For more information on COVID-19 and small businesses, be sure to check out our Coronavirus (COVID-19) Guides & Resources.
The post Is Your Business Ready For A Second Wave Of COVID-19? appeared first on Merchant Maverick.
The COVID-19 pandemic has left the small business world reeling, with businesses forced to shut their doors, lay off staff, or change the way they operate. These sudden and unexpected changes have hit many business owners hard as they struggle to follow social distancing guidelinesÂ and comply with government orders. Unfortunately, many small businesses are already struggling financially or may be in the near future.
Small business aid made available through the Coronavirus Aid, Relief, and Support Act has been making headlines, but many small business owners missed out on funding, do not qualify, or did not receive enough money to sustain their business for an extended period of time. The good news, though, is that many companies and organizations are offering millions of dollars in grant money to small business owners.
Instead of spending hours scouring the web for legitimate grant programs available to businesses affected by the coronavirus, keep reading. We’ve done the hard work for you by finding the best grants available to help your business clear the hurdles that this year has thrown at us … and the inevitable challenges that lie ahead.
Sam’s Club Small Business Relief Grants
Eligibility Criteria: Small businesses that have been affected by COVID-19, particularly underserved communities
Open & Close Date: Round 3 of funding will open on May 14, 2020
Sam’s Club has provided a $1 million grant through the Local Initiatives Support Corporation (LISC) that will be distributed to small business owners affected by COVID-19. Through this program, small business owners can receive up to $10,000 to cover immediate expenses. Qualified uses for grant funds include payroll costs, rent and utilities, outstanding debts to vendors, upgraded tech infrastructure, and other operational expenses.
Any business that has been affected by COVID-19 can apply for the grant. Priority will be given to underserved communities including businesses owned by women, minorities, and veterans, as well as businesses that are particularly challenged by the COVID-19 pandemic.
Two rounds of funding have already been closed, and the third round opens on May 14. A close date for submitting applications has not yet been announced. Interested business owners can visit the LISC website to learn more about this grant, sign up for email updates, or submit an application.
Verizon Small Business Recovery Fund
Eligibility Criteria: Small businesses that have been affected by COVID-19, particularly underserved communities
Open & Close Date: Round 3 of funding will open on May 14, 2020
Verizon Wireless has donated $7.5 million in grant funding that will be distributed through LISC. Businesses may qualify to receive up to $10,000 to use for immediate operational expenses, including outstanding debts to vendors, rent and utilities, payroll costs, and other purposes.
Businesses that have been affected by COVID-19 can apply. However, priority will be given to business owners in underserved communities that are unable to secure funds elsewhere. Businesses that have been particularly challenged during the pandemic will also receive priority.
The grant funds will be distributed through three rounds of funding. The first two rounds are closed, and the third opens on May 14. A close date for the submission of applications has not yet been announced. If you’re interested in this grant, you can apply, sign up for email updates, and learn more through LISC.
GoFundMe Small Business Relief Fund
Eligibility Criteria: Available to independently owned and operated businesses affected by COVID-19. All recipients must raise at least $500 through the GoFundMe platform.
Open & Close Date:Â Currently open; submissions will close when funds have been depleted
GoFundMe has launched its own fundraiser to help small business owners. The GoFundMe Small Business Relief Fund has raised over $2 million that will be used to provide matching grants of $500 to qualified business owners.
Any business is eligible to apply provided they meet a few requirements. Businesses must be independently owned and operated. Businesses that are nationally dominant in their fields are not eligible to receive a grant. Furthermore, all recipients must have been affected by COVID-19 and must use funds to pay employees or ongoing operational expenses.
To be eligible for a $500 grant, all recipients must register to confirm their small business status. Recipients must also launch a GoFundMe fundraiser and raise at least $500 in funds. All fundraisers must include the hashtag #SmallBusinessRelief to qualify. Grants will continue to be distributed until all funds are depleted. The GoFundMe Small Business Relief Fund campaign page and the program FAQs provide all of the information you need to secure your grant.
FedEx #SupportSmall Grants
Eligibility Criteria: For-profit businesses in the US that have been in operations for at least 12 months, have fewer than 50 employees, made less than $5 million in sales revenue in 2019, and have shipped or plan to ship
Open & Close Date: Submissions will be accepted from May 25, 2020, through June 12, 2020.
FedEx is showing its support of small businesses by providing a total of $1 million in grant funding to eligible applicants. The 200 recipients of this grant will each receive $5,000 plus a $500 FedEx Office credit that can be used for posters, banners, and other marketing and promotional materials.
To be eligible, all applicants must be at least 18 years old and operate a US-based business. Only for-profit businesses can apply. Qualifying businesses must have been in operations for at least 12 months, have less than $5 million in sales revenue from 2019, and have fewer than 50 employees. All applicants must also have shipped within the last 12 months or are planning to ship within the next 12 months. Franchises, resellers, independent consultants, nonprofits, and previous winners of FedEx Small Business Grants are not eligible.
The application period opens on May 25, 2020. Applications will no longer be accepted after June 12, 2020. Interested business owners can apply directly through FedEx.
Nav’s Small Business Grant
Eligibility Criteria: Any Nav customer with a social media account
Open & Close Date: The current round runs from February 24, 2020, through May 30, 2020. A new submission period opens quarterly.
Nav’s Small Business Grant isn’t specifically for businesses affected by the coronavirus — any Nav customer can qualify. Every quarter, three recipients are selected to receive grants. The winner of first prize receives a check for $10,000. The first runner-up receives a grant for $2,000, while the second runner-up receives $1,000.
To qualify for this grant, you must be a Nav customer. Then, you must create a post and share it on Facebook, Instagram, or LinkedIn. Your post should discuss a challenge that your business has faced and how you plan to use your grant. Nav encourages participants to get creative with their posts by including photos, creating videos, or recording audio. Nav must be tagged in the post for the submission to be considered.
This grant program is ongoing and accepts new submissions each quarter, so if you miss out on this round, don’t worry — you can take part in the next round. Check out past submissions, tips for creating your post, and learn more about this grant by visiting Nav.
COVID-19 Business for All Grants
Eligibility Criteria: Any US-based business affected by the coronavirus
Open & Close Date: This contest is open from March 26, 2020, through July 16, 2020.
Hello Alice has partnered with companies like eBay and Verizon to distribute funds through the COVID-19 Business For All Grant program. Through this program, qualifying small businesses can receive a $10,000 grant.
Qualifying for this grant is easy. The program is open to any US-based business that does not engage in illegal or illegitimate activities. All entrants must sign up for a Hello Alice account and complete the online application. Winners will be selected based on their need for funds and how grant funds will be used. You can learn more about this grant and submit your application through Hello Alice.
Supermaker’s Entrepreneurial Dream Project
Eligibility Criteria: New businesses or businesses that haven’t yet launched, less than $2.5 million in gross annual revenue, and an active business website and social media account
Open & Close Date: Applications are due by June 15, 2020
Supermaker’s Entrepreneurial Dream Project is aimed at new businesses or businesses that haven’t even gotten off the ground yet that have been impacted by the coronavirus. Two winners will be selected to split a grant of $100,000. Ten additional winners will be selected to receive mentoring through the Supermaker Mentor Network.
Businesses that made their products available in 2019 or later are eligible. Businesses that have not yet launched may also apply. Existing businesses must have less than $2.5 million in gross annualized revenue. Products must currently be sold or ready to sell within six months of applying to qualify. Eligible entrants must also have a US-based business, an active website, and social media accounts showing entrepreneurial activity.
Winners will be picked based on criteria including the business’ mission statement, sustainability, and proposed use of funds. Interested applicants can go directly to Supermaker to check out FAQs, read tips for submitting a good application, and apply for this grant.
The Conductor Foundation
Eligibility Criteria: Nonprofit organizations
Open & Close Date: Ongoing
The Conductor Foundation grant program is different than other grants on this list. First, it’s open to nonprofit organizations. This also isn’t a monetary grant but does offer more opportunities for growth and online visibility.
Winners of this grant will receive Conductor Searchlight SEO technology, Keyword Discovery Services, and ongoing support from the team at Conductor.
Applicants do not have to be affected by COVID-19 to qualify, and this contest is ongoing. Interested nonprofits can learn more and submit a one-page application directly through The Conductor Foundation.
Amazon’s Neighborhood Small Business Relief Fund
Eligibility Criteria: Small businesses with less than $7 million in annual revenue or fewer than 50 employees that are located in select neighborhoods in Seattle and Bellevue
Open & Close Date:Â Undetermined
Amazon has created the $5 million Neighborhood Small Business Relief Fund to provide financial assistance to small businesses located in select Washington State neighborhoods. The amount of each award varies and will be determined based on information received during the application process. Funds should be used to cover day-to-day operational expenses and to improve cashflow.
To qualify, businesses must be located within close proximity of Amazon’s offices in Regrade, South Lake Union, and Bellevue. All eligible entrants must have less than $7 million in annual revenue or fewer than 50 employees. The grant program is open to any business that is open to the public and relies heavily on foot traffic.
Amazon has a page that allows you to determine eligibility and register to apply. The company also has a list of FAQs and additional information to help interested business owners find out more about this funding opportunity.
PBA COVID-19 Relief Fund
Eligibility Criteria: Licensed beauty professionals unable to work as a result of COVID-19
Open & Close Date: Ongoing until funds are depleted
Licensed beauty professionals that have been unable to work due to the coronavirus can apply for a grant through the Professional Beauty Association COVID-19 Relief Fund. Eligible entrants will receive a $500 Visa gift card that can be used to purchase supplies or cover immediate expenses.
A lottery process is used to determine winners of this grant. To date, over $1 million has been distributed to help beauty professionals, and the contest will be ongoing until funds are depleted.
Interested applicants must submit an application. The PBA also offers FAQs giving more details on this funding opportunity.
CND x BCL Nail Professional Relief Grant
Eligibility Criteria: Licensed nail professionals employed for at least 12 months that are currently not receiving an income
Open & Close Date: Submissions will be accepted through May 30, 2020
Beauty Changes Lives, through a donation by CND Creative Nail Design, will be awarding grants to nail professionals that have lost their income as a result of COVID-19. Each winner will receive temporary financial relief through a one-time $1,000 grant.
This program is open to licensed beauty professionals that have been employed for at least 12 months as of March 16, 2020. Eligible applicants must also reside in the US and must not be currently be receiving an income.
In addition to submitting an application, entrants must also write an essay of more than 200 words and provide documentation proving identity, number of dependents, licensure, and other information. Submissions will be accepted through the end of May 2020, and winners will be selected through July. Check out Beauty Changes Lives to learn more about this program and to sign up for a chance to win.
The Red Backpack Fund
Eligibility Criteria: Woman-owned businesses and nonprofits affected by COVID-19
Open & Close Date: Application rounds will open on June 1, July 6, and August 3
The Spanx by Sara Blakely Foundation has donated $5 million and partnered with GlobalGiving to help female entrepreneurs through The Red Backpack Fund. This fund will provide a minimum of 1,000 grants of $5,000 each to female entrepreneurs impacted by the coronavirus. Recipients will also receive an All-Access Pass to MasterClass for mentorship opportunities.
This grant program is open to US-based businesses that are at least 51% women-owned. Eligible entrants must have an EIN, at least one employee but no more than 50, and annual revenues not exceeding $5 million.
There will be multiple rounds of funding for these grants. Application periods are June 1 – June 8, July 6 – July 13, and August 3 – August 10. If your business is interested, check out the FAQs or submit your application. If the fund currently isn’t accepting applications, you can sign up for email updates to be notified when the next round of submissions is open.
The Doonie Fund
Eligibility Criteria: Black female entrepreneurs affected by COVID-19
Open & Close Date: Undetermined
The Doonie Fund was launched by digitalundivided CEO Kathryn Finney to support and empower black female entrepreneurs. The fund was launched on April 5, 2020, and has helped over 500 women to date.
To qualify, all entrants must be an entrepreneur that identifies as both black and female. Eligible recipients must also have been impacted by COVID-19. Recipients will receive $100 to help their business. This is an ongoing fund with no announced submission deadlines.
To get started and to learn if you qualify for the program, submit your application. You can also check out The Doonie Fund page to learn more about the program.
Grants Worth Watching
While some grant programs aren’t currently accepting submissions, there are a few that may offer more funding opportunities in the future.
Visa Foundation COVID-19 Emergency Relief
The Visa Foundation has committed $10 million to provide immediate relief to organizations on the frontlines of the COVID-19 pandemic. So far, the foundation has distributed $8.8 million in grant funds to organizations including UNICEF, Feeding America, and Red Cross.
Visa Foundation Small & Micro Business Program
The Visa Foundation has also committed $200 million over the next five years to support small businesses, micro businesses, and the economic advancement of women. Of these funds, $60 million will be allocated to non-government organizations worldwide that support small businesses and micro businesses. The remaining funds will be allocated to investment partners that generate returns for these businesses.
Facebook Small Business Grants Program
Facebook is providing small business grants to up to 30,000 recipients through its Small Business Grants Program. The two-week window to submit an application for a portion of the $100 million fund is closed to US businesses, but businesses in other nations may still be eligible to apply. Additional resources may be made available in the future.
Horst Rechelbacher Relief Fund
The Horst Rechlebacher Relief Fund provides $1,000 grants to unemployed licensed beauty professionals or students enrolled in a licensing program. Although the submission deadline has already passed, interested professionals can keep an eye on the Beauty Changes Lives website for updates.
Other Resources For Coronavirus-Affected Businesses
If you need immediate funding or don’t qualify for any of these grants, you still have options to keep your business afloat during this pandemic. An abundance of resources are available through our COVID-19 hub, including industry-specific survival guides, emergency funding options, credit card payment assistance, and more. We’re continually updating and adding new content to make sure that business owners like you have the financial support and resources needed to weather this storm. Good luck!
The post Take Advantage Of These Small Business Grants For Coronavirus Relief appeared first on Merchant Maverick.