Latest Riot-Related Small Business Loans and Grants

Small businesses that have already struggled with the pandemic are now experiencing the fallout of rioting and looting that has taken place across the nation. The good news is, there’s help.  Here are some of the latest riot-related small business loans and grants.

And some small business encouragement to pull you through. 

$2M Loans Available for Illinois Small Businesses 

Illinois suffered greatly following George Floyd’s May 25th death while in Minneapolis police custody — $32 million in losses due to rioting have been recorded across the state. Everything from high-end shops to smaller, family-run businesses have been affected. 

To provide relief, the SBA has stepped in with low-interest, Economic Injury Disaster Loans. Qualifying Illinois businesses and private non-profits who suffered riot-related losses between May 26th and July 30th are eligible for up to $2 million in emergency loans for operational costs, payroll, PPE and more. The loan amount will be based on the actual economic injury of the business and its financial needs, regardless of whether the business endured any property damage. The deadline to return economic injury applications is July 13, 2021.

Kenosha Small Business Grants and COVID-19 Relief

Downtown Kenosha Inc. is offering $250,000 in grants to help Kenosha businesses recover from damages caused by rioting during protests in late August. Grant funds are geared toward bridging insurance coverage gaps and providing short-term rental assistance as well as covering clean-up costs associated with damages.   

“This is one step in helping people who have lost their very livelihood,” Kenosha Downtown Inc. executive director Alexandria Binanti said in a statement. “More than repairing buildings, we’re helping families who have committed to building their lives in Kenosha’s small business community. We owe all our Kenosha business families a chance to rebuild stronger.”

And for those Kenosha small businesses that are struggling with reduced revenue due to the COVID-19 pandemic, The Wisconsin Economic Development Corporation has launched a second round of “We’re All In” grants to help. The latest round of the grant program will provide $5,000 grants to 10,000 additional Wisconsin-based, for-profit businesses. Applications will open at 8 a.m. Oct. 19th and close at 11:59 p.m. Nov. 2nd

The St. Paul Midway Fund

The St. Paul Midway Fund will benefit the community around the Allianz Field soccer stadium in St. Paul, Minneapolis for riot-related small business relief, rebuilding and relocation. Two forms of “Small Business Economic Justice grants” are available at MidwayUnited.org.

A total of more than $340,000 will be available to 21 small businesses in need of damage relief. Eligible businesses can apply for up to $15,000 to assist with paying for smoke and water cleanup, glass replacement, replacement of stolen goods, lost inventory and any other damages caused by riots, looting and unrest.

An additional $500,000 will aid at least 10 businesses through a “Rebuild and Relocation” program. Qualifying businesses can apply for up to $50,000 to assist in rebuilding efforts, ranging from total fire loss to help with relocation costs due to loss of lease or eviction. Applications will be accepted through Dec. 20th, or until funds run out.

And There’s Hope…

Despite everything that’s been happening, small business owners are finding resilience. Daniel Johnson, a small business owner in Minneapolis, is a good example of this. Johnson’s flagship clothing store, House of Hoodies, burned to the ground during the riots following George Floyd’s death. However, instead of feeling sad for the business loss, he decided to rebuild by opening a new store in Rochester.

“It just lit a fire in me to just keep pushing and we have the younger generation that just watches us. We just wanted to be an inspiration to everyone and let them know and show resilience and if you fall down you have to get back up.” Johnson said.

This is just one of the many small businesses finding strength during this time, and it starts with having a positive outlook to move forward. 

 If you’re not in one of the mentioned areas, be sure to check within your community for any local riot-related small business loans and grants that can help you start to recover. 


Forget the Feds! Take advantage of Regional Support for Your Business

If your business is looking for financing, especially during these times, there are various places you can turn. While many small business owners applied for Federal grants and loans, in the form of the Paycheck Protection Program (PPP) and the EIDL, some of these financing opportunities have come and gone.  But have you considered regional support for your business?

Today, many localities across the country have all sorts of support mechanisms and are ready to help small business owners looking for COVID-19 relief. All you need to do is know where to look to take advantage of them.

Here’s where you can start looking.

Small Business Administration Regional Offices

The SBA doesn’t just operate out of Washington, D.C., all across the country, you’ll find SBA District and Regional Offices set up to help local small businesses in that area.

Within these local offices, the SBA offers programs such as SCORE for free and low cost mentoring and counseling, Women’s and Veteran’s Business Centers to help small business owners create business plans, networking, and marketing help.

This summer, the SBA also introduced the Community Advantage Recovery Loan (CARL) Program, which provides funding for small business owners in underserved markets.

U.S. Chamber of Commerce

Virtually every community around the country has a branch of the Chamber of Commerce (CoC). It can be an excellent source for small business owners to network and get in touch with local funding programs.

Many local Chambers of Commerce are also offering free help and guidance during this time. Search your state or local CoC website. There, you might find a list of local member brands providing grants, training and other free services to small business owners in the region.

State, County and City Government

Many states and county governments are also offering small business loans and grants for COVID-19 relief. To find these, search for your local city, county and state’s economic development offices and small business programs, which tend to administer these programs.

Statewide programs vary in size and scale. However, many offer smaller grants and funding to businesses serving in front line work or operating culturally essential institution.  These new options are in addition to more traditional options. Many of these loans focus on keeping struggling small businesses afloat, offering funding to keep employees on the payroll to prevent staff reductions and cover the costs of sick workers.

Rents are also a continuing concern for small business owners. So, check your state, local, and city governments to see if they have enacted rent moratoriums or offer rent assistance.

Several state and county governments are also facilitating personal protective equipment (PPE) to small business owners for employees at no additional cost.

Business Improvement District Programs

Business Improvement Districts (BID) are geographical areas that are overseen by a non-profit organization that helps maintain, improve and promote the area.

An essential part of the growth and improvement of any BID is through its small local businesses. Many BIDs have economic development programs that offer loan and grant programs to qualifying small business owners, especially those who might be underserved in the community, such as women and people of color.

Private Local Groups and Entrepreneurs

Don’t forget to look to local groups and entrepreneurs as well. Many of these groups and individuals offer grants, loans and even microloans to qualifying local business owners in the area.

There are already thousands of groups and non-profit organizations that work regionally providing small business and SBA loans during so-called “normal” times. They are working to continue their efforts during COVID-19 by expanding current loan options and offering new loans and grants.

You Have Options

Even though your business might be struggling under the weight of everything happening in the world right now, know that there are funding options out there for you.

Once you’ve gone through your opportunities at the Federal level, look look a little closer to home and consider taking advantage of regional support for your business. More often than not, you’ll find people and other businesses who want to help you get through this tough time.

 


Life-Saving Measures for Small Businesses on the Brink of Closure

No matter what part of the country you’re in, you have small business-owning neighbors struggling to keep the lights on. With erratic reopening plans, caseloads that still won’t decline, and the need for social distancing until there’s a widely-available vaccine, countless businesses have been hit hard.  But what can be done?  Are there any life-saving measures for small businesses on the brink of closure?

If you’re a business owner in this situation, you could find enough relief to keep your doors open and critical staff employed using one (or all) of the options below.

Review Your Expenses

While you might have already done this back in March, it might be time to review your expenses again.

Instead of eyeing luxury expenses this time around, put an eye toward ways to discontinue some low-margin services and supplies until traffic gets back to pre-pandemic levels again. This could mean paring-down your menu, hiring a delivery person instead of subcontracting to meal delivery services, liquidating inventory at a deep discount to reduce warehouse space, or even limiting workdays to the most profitable days and hours.

When evaluating expenses to cut, don’t think of these expenses as permanently on the chopping block. Instead, you can bring them back and build back up when life and revenue pick up speed once again.

Get Creative With Payment Arrangements

If you’re strapped for cash, your vendors may be as well. Reach out to your accounts payable and start a conversation about mutually-beneficial payment arrangements.

For example, if you can promise $X toward your invoice every two weeks, that’s better for your vendor than zero dollars. Your vendor gets a predictable cash flow, and you get a reasonable payment arrangement.

If you and a vendor do mutual business (they invoice you and you invoice them), set up a call for an invoice review. Explore creative options like applying their invoice for $1000 to your invoice for $800. You’ll still owe them $200, but it’s a lot better than $1000. This is a simple solution that often slips through the cracks because your AP and AR systems might not communicate with one another.

Explore SBA Loan Options

While the Paycheck Protection Program is no longer offered, there are three other SBA loan options you can explore for a much-needed cash infusion:

  • Economic Injury Disaster Loan (EIDL): If you’re experiencing a loss of revenue due to COVID-19, you could be eligible. Terms are 3.75% interest (fixed) for up to 30 years with no pre-payment penalty. You can even defer payments for up to one year (but interest will still accrue).
  • SBA Express Bridge Loan: If you have an existing relationship with an SBA lender, you may qualify for a loan up to $25,000. These loans can be regular term loans or bridge the gap between today and approval for your EIDL Loan. You just need to reach out to your existing SBA lender to inquire.
  • SBA Debt Relief: If you have an existing SBA loan and have trouble making payments due to COVID-related financial hardship, this program can bring you relief. Eligible loans include “7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020” per the SBA. If you qualify, the SBA will pay any principal, interest, and fees on your loan for six months.

Have a Candid Conversation with Your Bank

Finally, it could pay to sit down and have a candid conversation with your bank. Your bank doesn’t want to lose your business or see you default on lines of credit or other loans. You could find they’re willing to work with you if they know your full financial picture.

There aren’t any guarantees that your bank could come through with funds or reprieves from payments due.  But, if you don’t start the conversation, you’ll never know what’s possible.

Have any other tips or advice on life-saving measures for small businesses?  Let us know.


Rethinking Revenue Models During Re-Opening and Beyond

As businesses look toward the third quarter of the year, many are still looking for ways to overcome the unexpected pains that COVID-19 has inflicted on their revenue models. With states and localities having widely varying re-opening plans, it’s only natural for businesses in every sector to be on the lookout for new ways to generate revenue.

 To help your business find inspiration for its own COVID-coping and re-opening plans, the businesses below share how they’ve reimagined their revenue models over the past two quarters.

 Adding Humanity to Membership Models

Before COVID-19, Scott Beaver, Ph.D. (affectionately known as Dr. Scott) and his company Easy Hard Science operated on a fee-per-course revenue model for its pre-recorded and live-by-chat video classes. With kids out of school for an indefinite time and parents’ needs to keep their kids learning, Beaver switched his business over to a membership model.

Now offering unlimited courses for a simple monthly fee, Beaver can overcome the trend he sees with how other companies are leveraging the internet during the COVID crises.

“Families are still stuck at home, and they are being offered all sorts of digital and mail order products,” says Beaver. “These products are safe, yet perhaps less human.”  Easy Hard Science provides what Beaver refers to as “good old ‘service with a smile’” and believes that his commitment to personal service is why families want to join and then stay in his membership program. He experienced a 300% increase in revenue in just six weeks after launching his membership model.

“We spend hours and hours talking with parents and having learners in live online classes and suggest you do the same,” he says. “Don’t expect robots to keep your customers happy. The world wants and needs more humanity at this moment, even if it’s delivered in a digital format.”

Investing in Micro-Influencers

 

Escape the chaos and embrace the calm one drop at a time. ☀️ Via: @jamesaspey #nuleafnaturals #nuleaf #cbdoil #cbd #organic #fullspectrum #wellness #peace

A post shared by NuLeaf Naturals Est. 2014 (@nuleafnaturals) on

NuLeaf Naturals had a healthy revenue stream built up through retailers, which came to a halt once states and cities imposed shutdowns. That forced NuLeaf to rethink its revenue model and focus on one that would help it become more self-reliant in all economies. 

No matter the circumstance, NuLeaf’s Vice President of Operations Ian Kelly knew that people still need to buy things, and eCommerce is the best bet in terms of safety. He helped navigate NuLeaf to a new revenue solution with micro-influencers through Instagram – online personalities with 10,000 followers or less.

“Micro-influencers are great for growth hacking social media without shelling out too much money,” says Kelly. “Investing in five micro-influencers with 10,000 followers is better than targeting one influencer with 100,000 followers. If you can find micro-influencers who are already fans of your products, it’s a great catch.”

Through NuLeaf’s micro-influencer campaigns, they’ve experienced a significant increase in engagement – especially direct messages from potential customers asking questions about their products. NuLeaf can now engage with new customers on a one-on-one level and start meaningful conversations that address a potential customer’s specific concerns. As a result, they’ve seen a rise in sales and plan to carry the micro-influencer marketing strategy alongside retailer re-openings and beyond.

Envisioning New Verticals

Rethinking Revenue Models During Covid
Credit: UCplaces.com

 

When you wanted to create or take a virtual tour – through a city, a haunted house, a historical monument – UCPlaces was the place you went to. Their app took you inside for a look at destinations far and wide, yet when COVID came along, tourism ground to a halt. Tourism was one of the main reasons people tuned into UCPlaces tours, for the self-guided experiences in new cities and countries.

“Since tourism took such a huge downturn, we were forced to adopt a new business model out of necessity,” says Mary Rutt, the company’s Director of Business Development.

As the company started rethinking revenue models, one COVID-related trend stood out.

“With folks moving out of crowded cities and rural real estate markets becoming flooded, we felt that the UCPlaces tour creation platform could be a great tool to help real estate agents stand out,” says Rutt. The only challenge was figuring out a way to create tours that real estate agents and their clients found beneficial. UCPlaces did their version of market research.

“We started by presenting the platform to a few local agents for their feedback. Our goal was to determine if providing tours to potential buyers would be something they’d find exciting,” she says. “The reaction was overwhelmingly enthusiastic, and we knew this was a revenue stream we had to explore.”

Two months after having the idea, UCPlaces now targets real estate agents to create “where to live” tours for their potential buyers to learn about a new location and not have to be in the car with their agent. 

“UCPlaces users can pop in their earbuds or connect to their car’s Bluetooth speakers and take one of our pre-recorded, GPS-led walking, hiking, cycling, or driving tours on their own schedule without needing to gather in groups,” says Rutt. “It’s perfect for social distancing.”

As you move into re-opening, the rethinking revenue models, such as the revamped models mentioned above, can help you identify new opportunities to keep the cash flowing in any market conditions. With a bit of creative thinking, you could discover that your next enduring revenue stream is easy to implement and can provide value for years to come.


Creative Social Distancing Ideas to Keep Your Small Business Afloat

Don’t let social distancing requirements stop your small business. 

Although the U.S. Centers for Disease Control and Prevention recommends maintaining a distance of 6 feet between people to prevent the spread of COVID-19, that doesn’t mean it’s impossible for small businesses to continue operating while meeting this recommendation.

Take a look at these small businesses that are using creative approaches to address social distancing challenges brought on by the pandemic.

Easton Events

Creative Social Distancing Ideas for Your Business
Credit: brides.com

On top of critical safety measures, such as on-site rapid COVID-19 testing and seating guests by family or pod for wedding venues, Lynn Easton of Easton Events — a full-service wedding and event design and planning company with locations in Charleston, SC and Charlottesville, VA — encourages the use of a “comfort” band system. Easton says these bands are essentially color-coded wristbands that will let guests “read the room” and express their comfort level with social interactions. Below, are examples of suggested band colors and their meanings. 

  • Red or Pink: “Kindly keep your social distance, but I am smiling behind my mask!”
  • Blue or Yellow: “I am comfortable in a group, but no hugging, please!”
  • Green or White: “I have antibodies—time to celebrate!”

Creative concepts like these allow guests to signal their social preferences in a way that is both polite and effective.           

Fish Tails Bar and Grill

Creative Social Distancing Ideas for Your Buisness
Credit: traptown.com

Forget about plastic partitions between tables to separate restaurant guests during the pandemic. Restaurants are now getting creative with guest seating. Ocean City, MD’s Fish Tails Bar and Grill, for instance, seats diners outside at a “bumper table”— an adapted tractor inner tube. The tables are equipped with wheels, and diners can bump into each other from 6 feet apart to maintain social distancing guidelines.

“It’s like a big baby walker,” Fish Tales co-owner Shawn Harman told NPR’s Morning Edition. “There’s a large tractor inner tube that surrounds a doughnut-shaped countertop. You’re standing essentially in the middle of the doughnut hole.”

Inman Family Wines

Creative Social Distancing Ideas for Your Business
Credit: inmanfamilywines.com

Kathleen Inman, owner and winemaker of Inman Family Wines in the Russian River Valley of Sonoma County, had to pivot her business when the pandemic hit. Inman moved in person wine tastings to virtual wine tastings for her club members over online platforms, such as Zoom. Members would pick up their wines at the club beforehand, and then log into the scheduled event at home. This allowed some 30 fellow wine enthusiasts to interact from afar and hear Inman introduce her wines from her California tasting room. Now that’s social distancing at its finest. 

Lenox Yoga


The pandemic is altering the way yoga studios serve their clients. So much so that Sue Parsley of Lenox Yoga, in Lenox, MA, had to revamp her entire business plan. Parsley now offers classes outdoors. To adhere to social distancing requirements, she ensures yoga mats are positioned at least 6 feet from one another. Parsley believes the pandemic is an opportunity to learn and let go of our preconceived notions. “It’s about letting the river take us where we need to go,” she said.

Darling Boutique


When outbreaks occur, businesses may need to temporarily shut down to help slow the spread of COVID-19. This is especially true for establishments that would find it difficult to social distance due to limited square footage. Boutiques are a good example. But shutdowns didn’t stop Darling Boutique, an award-winning curated boutique offering women’s consignment and handmade local artisan goods in Charlottesville, VA. Instead of having customers browse the company’s selection in person, they set up a video call to enable virtual shopping. They also let customers shop and buy items from social posts through DMs, emails and phone calls. To promote social distancing even further, the company offers daily curbside pickup and free mail delivery with minimum purchase.

Durango Dance

Creative Social Distancing Ideas for your Business
Credit: Jerry McBride/Durango Herald

Although dance studios face many challenges during the pandemic, Durango Dance keeps on dancing. Miriam Morgan, director of Durango Dance based in Durango, CO., uses colorful tape to create 6-foot zones on the dance floor. This allows dancers to practice routines while maintaining a safe social distance. Students can also dance from home by joining the class virtually.

Cyclista Espresso Bar and Roastery

Creative Social Distancing Ideas for Your Business
Credit:  Facebook

With social distancing requirements in place, many restaurants and cafés aren’t able to operate as they normally would, but it isn’t stopping Steve Stannard of New Zealand’s Cyclista Espresso Bar and Roastery. Stannard uses a toy train, equipped with polystyrene cup holders inside the carriage, to provide contactless service amid COVID-19 restrictions. Once the coffee is securely placed in the carriage, the train reverses backwards over a long table towards the café’s front door to waiting customers.    

These businesses are clearly addressing social distance requirements with creativity, and you can too, with some effort and a good plan. 


How to Support Minority Owned Businesses

In response to recent and ongoing events in the country, you may be taking stock of how and with whom you do business and, ultimately, how to support minority owned businesses.. With minority-owned businesses totaling over one million businesses in the U.S., it’s not a difficult task to find businesses in your local community that can allow you to put your money where your mouth is when it comes to diversity and inclusion.

Here’s the challenge: Your effort has to be intentional. If you keep doing business the way you’ve always done business and with the businesses you’ve always done business with, change will be slow if not nonexistent. You might be donating money to well-deserving causes, but your wallet isn’t backing up your thoughts.

To help you both work and shop with intention and purpose, several minority business owners shared their thoughts on how the public – and other businesses – can support minority-owned businesses.

Go Easy with the Assumptions

As a publicist at The PR Shoppe, Carolyn Fraser’s job is to help other brands and businesses shine. As a certified minority- and woman-owned business, she’s been on the receiving end of assumptions in the business community, and often from her colleagues.

“I’ve had colleagues make decisions on my behalf because they ‘just knew’ my situation,” says Fraser. “One associate actually told a vendor that  I ‘probably didn’t have much of a budget’ for a project, when in fact, money wasn’t a factor.”

If you find yourself assuming something about a colleague or vendor of color, step back and ask, “What am I basing this assumption on?” Is it first-hand information? Is it apparel or hairstyle? Is it the feeling that you’re in a new situation and unfamiliar with how this business does business?

Whatever your answer, the critical part is that you’re asking that question on the regular. Minority-owned businesses don’t benefit from your assumptions.

“Allow my work to speak for itself and give me a chance to wow you,” says Fraser. In the process, you just might wow yourself.

Commit to Collaboration

Kendra Hill’s day-in, day-out, is helping businesses worldwide achieve new heights and grow their businesses. Collaboration is a leading tool that creates the results her clients crave. She recommends that any business serious about a commitment to diversity and inclusion establish ways to collaborate with minority-owned businesses.

“A lot of people have huge platforms and engaging audiences,” she says. “Collaborating with BIPOCs on a project, such as a freebie, product bundle, or Instagram Live event, will expose [a business] to a whole new audience that they could potentially monetize.”

For example, one of Hill’s white counterparts invited her to take over her Instagram account of nearly 60,000 followers. Not only was Hill able to gain several new followers, but she also gained a couple of clients who then shared Hill with their networks. 

“From this one collaboration, my white counterpart was able to align herself as an ally to the BIPOC community, and I was able to make over $100,000 in retainer fees from my new client base.”

Spread the Word

Cheri Williams-Franklin founded her business, LifeSnapshot so that other families wouldn’t have to endure what she did following the death of a loved one. As a platform that helps families organize and securely store personal assets and final wishes information so their loved ones can easily find it while dealing with overwhelming grief, it isn’t just for other minorities. 

“Death is the universal commonality that we all have that transcends income, education, race, gender, and sexual orientation,” says Williams-Franklin.

When you find a business that benefits you in your search to diversify your wallet and make it more inclusive, Williams-Franklin wants you not to be shy about your good experiences.

“The greatest form of support for minority business owners comes from visibility and public awareness that our companies exist,” she says. “The public can make purchases of goods and services, provide positive word-of-mouth, and testimonials. Taking these steps will increase exposure, which often enables organizations to thrive as many of the products and services being offered benefit most Americans – not just a specific minority class.”

Checking assumptions, collaboration, and sharing positive experiences are three ways to put your wallet and voice to work in your local business community. If you’re a business owner and ally to the minority-owned business community, consider joining your local Urban League chapter or Black Chamber of Commerce. You’ll form powerful alliances, increase your network, and ensure that your business practices benefit from the experiences and capabilities of minority-owned businesses in your local area.


Find Free Money: Coronavirus Relief Funds and Grants for Small Businesses

Having difficulty finding COVID-19 relief aid to keep your business afloat during and after the pandemic? To jumpstart your search, here’s a list of some available coronavirus relief funds and grants for small businesses.

Hello Alice: Business for All Grant 

Small business owners affected by the COVID-19 pandemic can now submit applications for Hello Alice’s Business for All program. This program, with the support of Verizon, Silicon Valley Bank, Ebay Foundation, UBS, Visible and Stacy’s Rise Project, offers exclusive mentorship opportunities and grants of up to $50,000 to support long-term business growth. Applications are open through September 25th.

MDCalc Ad Grant

For organizations that support clinicians or treat COVID-19 patients, the MDCalc Ad Grant may be of interest. MDCalc is currently donating $1 million in advertising grants to businesses that are contributing to COVID-19 response efforts. Applications are reviewed and accepted on a rolling basis.  

National Association for the Self-Employed (NASE) Growth Grant

NASE members have the opportunity to secure NASE Growth Grants, worth up to $4,000 each, to help finance their small business needs. Small business owners can use their growth grants to help cover COVID-19 related activities, such as buying equipment, hiring part-time help, purchasing marketing materials and more. Annual members are allowed to apply immediately, and monthly members can apply ninety days after joining the NASE.

Urban Excellence Community Grant

The Caleb Brown Venture Capital and Consulting Project provides start-up, for-profit businesses and early staged businesses with grants of up to $1,000 to help rebuild local blocks, neighborhoods and communities. This can be especially beneficial for small business communities hit the hardest by COVID-19. The grant comes with 500 hours of complimentary business consulting for one year. For consideration, applications must be submitted by the 15th of every month.

Amber Grant

The Amber Grant program gives away $4,000 every month in grant money to female small business owners. The organization also expanded its grant-giving to include a year-end grant of $25,000. This is a great opportunity for female small business owners that are in need of extra funding during the pandemic. Applications are accepted at any time and award recipients are announced the first week of every month.

Local Initiatives Support Corporation (LISC) Grant

In response to the pandemic, LISC provides grants to support for-profit, small businesses. Priority will be given to business owners of color, women- and veteran-owned businesses and other businesses in historically under-served communities without access to affordable capital. The next round opening is August 31st. Prospective applicants are encouraged to register.

The Small Business Relief Fund

The Small Business Relief Fund will issue $500 matching grants to qualifying small businesses that raise at least $500 on GoFundMe. The purpose of this fund is to alleviate small business financial strain during these challenging times. Businesses will need to verify that they have been negatively impacted by a government mandate due to the COVID-19 pandemic to qualify.

Keep in mind that small business grants are also available through certain state and local programs and some nonprofit organizations. For federal assistance in response to COVID-19 pandemic, visit the Small Business Administration.  

 


Why Have So Few “Small” Businesses Gotten Relief from the SBA?

The first round of SBA PPP small business financing has come and gone and the thousands of small businesses that make up the Kapitus client base have largely been left out in the cold.  While we eagerly await Congress’s approval of additional funds, we used this time to survey our customers to understand who was able to obtain funds from the first $349 billion in forgivable loans, who was not, and which financial institutions were most helpful in supporting small businesses.

What we found was a troubling dependency by small businesses on the largest financial institutions in the country (national and regional banks).  These large banks, as well as the SBA itself, seem to be leveraging a definition of small business that allows large companies to fit their subsidiaries into qualifying entities while independent business owners are overlooked.  The national banks appear to have systematically prioritized these large clients over their smaller constituents and in doing so, exhausted the first round of SBA funding faster than many anticipated.

Our survey was conducted between April 17th and 20th and targeted 26,536 small businesses that we have provided capital to over our 14-year history.  As of Monday morning, we had received 2,076 responses, 80% of which told us they had applied for SBA PPP funding before the money ran out.

Of those respondents, 1,206 answered the question “have you received funding from your PPP application” and 1,116 or 92.5% told us that unfortunately, they have not.  The 90 customers that have received funding provided tantalizing clues as to how small businesses are getting money from the SBA.  The most successful channel to date appears to be through community banks, where 18.8% of applicants have been successful and where customers are more likely to have a personal relationship with a decision-maker inside the bank.

Kapitus PPP Survey

Credit unions have also been moderately successful with 11.8% of applicants receiving funding but have a much lower penetration rate than other banking channels.  Regional banks follow at a 7.2%, followed by the SBA itself (2.7%) and non-bank lenders (1.4%).  Sadly, national banks (such as Wells Fargo, JP Morgan, Bank of America and Citigroup) which have the greatest penetration into the US small business community, have to date done the least to help small businesses in their time of need.  National banks only produced three successful loans in our survey out of 320 applications, a dismal 0.9% success rate.

Why is it that national banks have done so poorly serving the small business community?  Banks are economic animals with scarce resources just like any other company.  When a large number of clients request a scarce resource at the same time, they prioritize their largest, most profitable and riskiest clients first.  In our survey, community banks supplied small businesses with more lending products than any other bank segment.  This indicates that community banks have deeper ties and greater exposure to the plight of small businesses and as a result, during a crisis they work more diligently to ensure that their needs are met.  As seen in the table below, our clients utilize community banks and non-bank lenders more heavily than other types of credit institutions.

Kapitus PPP Survey

Another part of the answer lies in what the SBA, and in turn the nation’s largest banks, consider “small” when it comes to business.  On April 16th the SBA announced that they had distributed nearly 1.7 million loans representing $342 billion, indicating an average loan size of $206,022.  Assuming the average American worker was making $49,764 annually (or $4,147 per month) just before the crisis (Bureau of Labor Statistics) and considering that PPP loans are sized based on 2.5 times monthly payroll, this implies that the average company getting a PPP loan as of April 13th had 20 employees.  There are nearly 6 million companies with between 1 and 500 employees and the average company in this group has 10 employees (US Census Bureau).  This means that fewer than 28% of eligible small businesses were served in the first round of SBA funding, and those that were served were the largest companies in the range. This argument is supported anecdotally by the fact that companies like Ruth’s Chris, Potbelly and Fiesta Restaurant Group each received between $10 million and $20 million in PPP loans through JP Morgan.  Kapitus PPP Survey

This sequence of facts has been very frustrating to non-bank lenders such as Kapitus who are the only consistent source of financing available to most businesses with 10 or fewer employees.  We have been petitioning the SBA for a temporary license to allow us to lend the PPP product to our core client base (our average customer has 8 employees) since the program was announced.  Nearly two weeks into the program the SBA released an application for non-bank lenders, and we submitted our application within 12 hours of its being published.  Eleven days later we have heard nothing, although some of our larger competitors did receive temporary licenses just as the money in the first tranche was exhausted.

Undeterred, we are working with our clients to secure PPP loans in any way we can.  We have partnered with several community banks and non-bank lenders with SBA licenses to fund our clients and we are lining up additional capital to fund these loans ourselves when and if we are awarded a license.  In the meantime, we counsel or clients on their financing options and continue to provide innovative lending products as small businesses struggle to navigate the most challenging business environment any of us have ever seen.  America’s small businesses owners are some of the most creative and resilient leaders our country has.  We look forward to partnering with the SBA to offer small business owners the solutions they need to survive, rehire, rebuild and reopen as soon as it is safe to do so.

To receive the most recent updates on Paycheck Protection Program and other federal, state and local relief initiatives aimed at helping small businesses visit our COVID-19 Resource Center.

 


About the Author

About Kapitus - Ben Johnston

Ben joined Kapitus in 2014 as Chief Strategy Officer and became Chief Operating Officer in January 2017.  Prior to joining Kapitus, he was a Principal of Pine Brook Partners, a New York-based private equity firm where he invested in banks, insurance companies, asset managers and specialty finance companies.


Best Books for Small Business Owners Series: The Innovator’s Dilemma

As a small business owner, do you consider how exploring new ideas can lead to future success? If making time for continuous learning isn’t at the top of your priorities, you’re not alone. And we want to help. Reading or listening to business books can offer new perspectives and help you understand classic business lessons. So, follow our Monthly Must-Reads series! In this series, we share the best books for small business owners. We’ll save you time by helping you determine whether each book is worth your attention. For each featured book we:

  • Identify exactly which types of business owners will benefit from reading it
  • Summarize the main points
  • Share key take-aways and reader reviews

This month, we cover The Innovator’s Dilemma by Clayton M. Christensen. Check out the end of this article for our past must-reads.

Business Book:

The Innovator’s Dilemma, by Clayton M. Christensen

Focus:

To uncover two innovation types and to understand the purpose of and necessity for each of them.

Main Idea:

When companies disregard opportunities for disruptive innovation, they risk going into the shadows of more inventive start-ups.

Great for Small Business Owners Who:

Develop innovative solutions for niche markets, or have long-standing businesses and want to protect themselves from dissipating.

Synopsis:

The Innovator’s Dilemma identifies and explains two types of innovation: sustaining innovation and disruptive innovation. Sustaining innovation is the ongoing effort of listening to and improving from customer feedback. In this way, it satisfies customer’s current needs. Disruptive innovation helps companies evolve, to meet customers’ needs–often in an underserved market. Examples include the transition from digital to smartphone cameras, GPSs to navigation apps.

Christensen goes on to explain which types of companies typically focus on disruptive innovation and which ones lag behind—and why. He offers strategies for how both long-standing companies and new start-ups can successfully explore and benefit from disruptive innovation.

Key Take-Aways:

Large, well-resourced companies are more likely to ignore disruptive innovation and suffer because of it. They may not even notice niche markets. They might think that these markets aren’t offering enough rewards to compensate for the lack of credibility. These companies should continue their sustainable innovation efforts. They should also start paying attention to how niche markets want to use their products.

For start-ups and small businesses, disruptive innovation offers huge opportunities. They’re often first to market. Targeting small niche markets offers a more forgiving, cooperative and engaged customer base. Disruptive innovators don’t directly compete with larger, better-funded market leaders for customers. This means they have a higher chance of growing surprisingly quickly and unchecked.

Pursuing disruptive innovation can help companies take–or keep–their place as market leaders of the future.

Reviewers Say:

“Clayton Christensen’s The Innovator’s Dilemma…remains one of the most important business leadership books on the market… The pace of technological innovation has increased drastically… [but] the foundational principles remain the same—when companies are doing everything right, they can still lose their position of leadership in the market. Companies are incentivized to act in accordance with what their customers want, and if they are not careful, that mentality can preclude them from taking advantage of disruptive opportunities that their current customers are not yet interested in. Christensen’s warnings should be heeded by leaders and managers at all levels of the organization…. I look forward to reading about how the Innovator’s Dilemma can be addressed in this age of near-constant innovation and rapid technological advancement.”

“I’ve been involved in innovation most of my career, and now wish I’d read this book much earlier. The simple but powerful thesis of the book is backed up by data and case studies from disparate industries. Like many business books it is a bit repetitive at the end… But the ideas and usefulness are five stars.”

Monthly Best Books for Small Business Owners:

August, 2019 – Blitzscaling

September, 2019 – The E-Myth Revisited

October, 2019 – Influence: The Psychology of Persuasion

November, 2019 – Built to Last

December, 2019 – Multipliers

January, 2020 – Start with Why

February, 2020 – The Five Dysfunctions of a Team

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The Simple Credit Score Fix You’re Not Taking Advantage of

An error or inaccuracy on your personal and/or business credit reports can drag your credit scores down. That’s the last thing you need if you’re planning to apply for business financing. A lower credit score could potentially result in a steeper rate when you borrow, or lead to being denied for credit altogether.

Fortunately, you don’t have to be stuck with credit score damage because of an error. Here’s how to identify and fix credit report mistakes.

What Counts as an Error?

Credit reporting errors are items that are mistakenly attributed to your credit file. These may include:

  • A paid account that still shows a balance due
  • Accounts that don’t belong to you
  • Accounts with a positive payment history that are inaccurately reported as delinquent

Payment history makes up the largest share of your personal FICO credit score. A late payment reported in error may shave serious points off your score.

Business credit scores, such as the Dun & Bradstreet PAYDEX Score, also consider payment activity. If a vendor isn’t reporting a line of credit properly, that also could result in a lower business credit score.

It’s important to understand the difference between a credit reporting error and a derogatory mark. Derogatory marks include late or missed payments and collection accounts; as long as they’re factually correct, they can’t be disputed.

Reviewing your personal and business credit reports regularly — once per quarter, for example — can ensure that errors don’t go unnoticed.

How to Dispute a Credit Reporting Error

The Fair Credit Reporting Act outlines a specific process for disputing credit report errors on personal reports. The first step is identifying which credit reporting bureau (Equifax, Experian or TransUnion) is reporting the error. The second is filing a dispute.

All three credit bureaus allow you to initiate disputes online, but you can also mail in a dispute letter. If you’re mailing a letter, be sure to include the following:

  • Your name and address
  • The nature of the error you’re disputing
  • A copy of your credit report with the disputed information highlighted or circled
  • Any supporting documentation you have to show that the item you’re disputing is incorrect

The dispute process for business credit reporting errors is similar, with the key difference being that disputes must be initiated with business credit reporting agencies.

Once you submit a dispute request, the credit reporting agency has 30 days to investigate and verify your claim. It must notify you of the results of their investigation in writing once it’s completed. If it’s determined that an error does exist, the error must be corrected or removed from your credit file.

What to Do If an Error Isn’t Removed

In the event that a credit bureau incorrectly determines the information you’re disputing is valid, there’s one more thing you can try: reaching out to the creditor or vendor that’s reporting the information and dispute it directly.

You’ll need to provide the same background details about the error and what you’re disputing. If the creditor realizes that an error has occurred, they have to update your credit file with accurate information. Taking this extra step could help you get the error corrected or removed, giving your credit score a boost in the process.


Best Books for Small Business Owners Series: The Five Dysfunctions of a Team

Continuous learning is essential to business and career success. As a small business owner, do you make time to continue developing yourself, considering new ideas and how you might apply them to your business? This is likely a challenge. But, one way to fit learning into your schedule is by reading or listening to great business books; and we’d like to help. With our Monthly Must-Reads series, we share the best books for small business owners.

Not only do we find books helpful for small business owners, but we also aim to save you time. For each book, we share who will benefit from reading it, the book’s key take-aways, and even reader reviews, so you can quickly determine whether it’s worth your valuable time.

This month, we’ll cover The Five Dysfunctions of a Team by Patrick Lencioni. For a list of past Monthly Must-Reads, like January’s Start with Why, check out the bottom of this article.

Business Book:

The Five Dysfunctions of a Team, by Patrick Lencioni

Focus:

How leaders can uncover and address issues that prevent their teams from collaborating and performing successfully.

Main Idea:

Fostering and leading a strong team takes more than a charismatic leader. It takes a leader who’s willing to do the hard work of uncovering and working through conflict, and a team that’s able to honestly identify and work through any issues that stand in the way of success.

Great for Small Business Owners Who:

Struggle with leadership, specifically creating cohesive, trusting teams

Synopsis:

InThe Five Dysfunctions of a Team, Lencioni takes readers through a novel-style fable illustrating five common issues keeping teams from functioning at their highest potential. In his story, Kathryn is a fictional CEO hired to lead a team of rockstar executive leaders, who excel in their individual roles, but have trouble working together. The reader follows along as she guides the characters to overcome their political and interpersonal drama, all while discussing and addressing each type of dysfunction they exhibit.

After concluding the story, Lencioni outlines the concepts of each dysfunction with an pyramid illustration. He dives into each type of dysfunction, explaining how to recognize and address them. At the end, Lencioni offers a quiz that you and members of your team can take to understand your strengths and weaknesses within the pyramid.

Key Take-Aways:

Managing and working as a team not only takes discipline and communication, but also courage to overcome obstacles that can seem personal. The five dysfunctions teams often experience are:

  1. Absence of trust
  2. Fear of conflict
  3. Lack of commitment
  4. Avoidance of accountability
  5. Inattention to results

Reviewers Say:

“Lencioni shares simple truths about teams that should be more intuitively obvious to everyone. Yet, these things are very easy to grasp while being very difficult to actually practice … without practice. This book focuses on what prevents a good team from forming and describes what’s needed. His companion book [Overcoming the Five Dysfunctions of a Team: A Field Guide for Leaders, Managers, and Facilitators] focuses on the implementation of these ideas but does not stand alone. If you only get one, get this one. The biggest problem I see is that both books are framed about C-level and top-level executive teams. Very few mid-managers would have the leverage and ability to implement all of these principles at lower levels of the organization. It’s definitely possible in some cases, but it would significantly more challenging. His principles are universally true, but his coaching is directed at executives.”

“A must-have in any manager’s toolkit. I have loved this book for awhile and regularly give it on loan. A perfect way to understand the people aspect of team and support managers through what is a common situation. Very cleverly written and full of tools to help get dysfunctional teams moving in a shared direction. Also good for some self-analysis as everyone will identify their own character.”

Monthly Must-Read Business Books:

August, 2019 – Blitzscaling

September, 2019 – The E-Myth Revisited

October, 2019 – Influence: The Psychology of Persuasion

November, 2019 – Built to Last

December, 2019 – Multipliers

January, 2020 – Start with Why

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Joseph Hoelscher: Using Creative Marketing To Help Customers Avoid Your Services

If your marketing helps people avoid needing your products/services, it seems like you might be going in the wrong direction. After all, isn’t the whole point to land more customers? In the right situation, though, this counterintuitive approach can lead to terrific results. Joseph Hoelscher, a DWI lawyer and partner at Hoelscher Gebbia Cepeda, built his marketing campaign on one key concept. They want to stop people from driving drunk so they don’t need services in the first place.

Finding a Legal Specialty

Hoelscher has been practicing law for about 14 years and specialized in DWI for several reasons. “I was good at it, it pays well and unfortunately it happens a lot. Anyone can accidentally have too much to drink.”

After working in this field, Hoelscher has seen plenty of the horrible results from DWI. “I’ve had vehicle manslaughter cases where the outcomes have been just horrific. Clients with serious injuries, losing their kids to CPS, and of course seeing the harm done to victims.”

Even though Hoelscher makes his living from DWI law, he longs to see the day when this is no longer an issue. If it meant him practicing another form of law, he’d do it.

Taking a Different Marketing Approach

Hoelscher felt uncomfortable with how the typical DWI firm handles marketing. “I’d see a lot of ads where the behavior seemed almost encouraged: hire us and you won’t get in-trouble.”

He wanted to try something different while potentially helping with this troubling issue. Hoelscher and his representatives attend events where people are partying and drinking, like San Antonio’s version of Mardi Gras, the Fiesta Festival.

At the event, they’d hand people cards with a code for a free Uber ride. “We’d put our info on the back along with a slogan, “we’d much rather you pay for an Uber than our retainer.” Hoelscher would also give these cards to parents at college events so they could pass along to their children.

Building Loyalty

Hoelscher said the response was overwhelmingly positive. “People would get a laugh and make sure to hold onto our cards.” He noted that humor was a good way to bring up the topic. “At these events, people are out to have a good time. We weren’t trying to judge them.”

Even though Hoelscher tried to cut down on DWI with the free rides, he’d still end up getting clients. “People would call, “ah I should have used your free ride.” Or they’d refer a friend, a family member who got in-trouble.”

Ultimately, Joseph Hoelscher finds clients by showing he cares and it shows how you can drive business by leveraging community engagement.

Seeing Cost-Effective Results

“We’ve also run radio, print, TV, and social media ads. The ROI was better on this targeted, personal outreach.” Hoelscher said they pick events where people are going to be drinking, their target audience, and that definitely helps their ROI versus print, radio and TV where they’re hitting a broader audience.

He also commented that his contrarian approach remains affordable. “We’ve had good success with social media, but the cost per lead had quadrupled over the past few years whereas the cost per lead is still the same for our rideshare campaign.” That’s another benefit of trying something unique, you aren’t fighting for resources with the competition.

Finally, he points out that the rideshare campaign helps get more out of his other marketing. “People take pictures of themselves getting into rideshares and link to our social media. When people see our other ads, they remember ‘oh that’s the guy who helped me avoid drinking and driving.'”

joseph hoelscher

Advice for Other Business Owners

If you’d like to try a similar campaign, Joseph Hoelscher says put yourself in the customer’s shoes. “Where are your customers coming from and what’s getting them in trouble?” In his case, he finds that people often drink and drive not on purpose, but because they didn’t plan on how to get home. His firm gives them that ride home they need.

When customers create problems for themselves, he recommends pointing out the issue, but doing so with humor. “If you engage in nonjudgmental outreach, people appreciate it. You aren’t trying to sell on fear.”

Above all, this style of marketing works. It shows customers you care about them. “I’ve had so many clients say they hired me because I was looking out before they had a problem, not like everyone else who only came knocking after they needed a lawyer.”

 

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