Increase Your Business Growth By Getting Funds That Are Easy To Understand And Affordable
The Paycheck Protection Program – PPP – reached an end in May 2021. It was a refreshing opportunity for business owners to keep wages and expenses going throughout the coronavirus pandemic. However, the program is over now that the pandemic is under control.
The coronavirus is still around, and many businesses still struggle to survive. Fortunately, there are still many good options.
Out there – not all of them are suitable for all businesses. Here are some of the best Paycheck Protection Program alternatives and what they mean.
How about a grant?
Business grants are definitely worth some attention when it comes to financial support.
The government offers many grants, but foundations and trusts may also provide such opportunities, not to mention corporations.
There is a major difference between loans and grants – grants are given and must not be repaid. On the same note, there are no risks of losing any equity. But then, given these benefits, grants are hard to get, and the eligibility criteria can be extremely strict.
Often, such grants are created for particular industries and only for some well-established reasons. All in all, a grant is considered one of the best sources of money for businesses. If you are lucky to get one, you will receive more than you need.
It is worth noting that grants will not cover debt or operational expenses. A grant will not be your best option if you need capital money to start a business.
Loans and microloans are classic.
Applying for working capital loan can be a good option. This is the classic way to get money for your business, and despite the costs of interest rates, still worth your time. This is the classic way to get money for your business, and despite the costs of interest rates, still worth your time. The process is time-consuming, indeed. There is always a chance of getting rejected, but eligibility criteria will not be too strict.
Startups and small businesses are more likely to be rejected because they bring in some risks – after all, the business model is not proven to work. About three out of four large businesses get their loans accepted, though – only one out of three small businesses can secure a loan.
Microloans represent a good option, too, especially for small businesses. You will not be able to get as much money as with a traditional loan. Plus, interest rates are a bit higher too. On the plus side, they are easy to get and can be used for all expenses.
While not always a general rule, loans and microloans are sometimes given against assets only.
Credit cards for emergencies
Credit cards are normally considered risky, but they can get the job done if you are on top of your finances. Home equity loans go in the same category and can bring in even more risks – not a good choice.
A home equity loan for your business means your house becomes the collateral. If your business fails or your plan is not good enough, you risk losing your house – not worth the risk. With these thoughts in mind, a credit card seems to be the better choice.
Credit cards can be used for all kinds of expenses. Once you get the funds back or money from your customers, you can repay your debt. The system seems safe, but credit cards come with high-interest rates – ideally, you should repay the loan before the interest rate kicks in.
The bottom line, credit cards, and other alternatives can be a good choice, but only when used correctly. Avoid taking risks with such options because consequences can be very dramatic.
Peer-to-peer lending – Is it worth it?
Peer-to-peer lending implies relying on small amounts of money from multiple sources. Once you get a big lump sum, you can put it into your business and sort it out. This form of lending is also known as social lending because it works.
Many such platforms are established over the Internet. Their goal is to bring investors and business owners together. However, for investors, this is not an actual investment – instead, it is a loan. Once your business is back on track or up and running, you need to repay them.
Many such platforms cap the amount of money you can get, but the total is still quite high.
This opportunity is great for a small business because interest rates are quite low – especially when compared to traditional bank loans. There are no unexpected fees and taxes; based on your chosen platform; you can get up to half a million dollars.
Crowdfunding – The modern way
Crowdfunding has a self-explanatory name – a crowd gathers together to support your business. You need to market for such a project, and you need to capture plenty of attention. The more investors you get, the better.
Crowdfunding campaigns are more successful with innovative products or services. There are more campaigns, but donations are the most common ones. Other options include equity funding, debt-based funding, and reward-based funding.
While such campaigns can be started for anything, most people tend to have a passion for startups, so new businesses with great ideas are more likely to succeed in this venture – it is always worth a try, regardless of your circumstances.
In short, there are quite a few handy alternatives to the short-term PPP system, which only lasted for about a year. While traditional banks seem to be the classic option, many modern ideas can bring in the funding you require.
There is no harm if you try out different options to determine which is better for your business. After all, what works for some people will not work for everyone else.