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We’ve all been through a tough time with the pandemic in the past year. Many small businesses have been hit hard with the lockdowns and restrictions put on services, establishments and retail. It’s possible that your company is one of the many struggling to stay in business and you might be wondering what you can possibly do to make ends meet, pay bills and keep your business open before it’s too late. The CARES Act has provisions that last through the end of 2020, which have helped many business owners and another stimulus package may be on its way. However, there are many other fundraising options that were and are available outside of those temporary government programs.

How to Raise Funds for a Business Startup

Although the pandemic has been hard on many businesses, it has also provided great opportunities for startup businesses. Services related to sanitization and delivery, among others, have found a ready market. For startups, there are several strategies for raising money to launch your new business through government or private funding sources. We’ve included those in our list of small business fundraising ideas.

Small Business Fundraising Ideas

Whether you need funding for business growth, to cover a temporary cash flow issue, or to launch a startup, you have multiple funding options to consider. The following list includes several current and ongoing opportunities.

1. EIDL Government Loans  Watch for news regarding potential additional availability of low interest EIDL small business loansfor COVID-affected small businesses. When and if they are funded again, past experience suggests that if you snooze, you lose. The applications for your bank along with the government forms can take some time to assemble. Small businesses that waited even a short time during the previous loan period missed out on available funds. We can help you with your application.

2. Paycheck Protection Act – This is another government loan program for COVID-19 relief for small businesses. This program focuses on trying to keep businesses operating by providing funds to continue to pay employees rather than lay them off and send them to the unemployment queue. Businesses that meet certain criteria for how they use their granted PPP funds can be forgiven for the debt. If this is funded again, be prepared so you can be one of the first to send in your application.

3. Pension distribution – Another benefit of the CARES Act, it’s now possible to take your pension distribution before the age of 59 ½ years old, up to $100,000. You won’t pay the 10% tax penalties for early withdrawal as long as you qualify with a coronavirus-related hardship. Additionally, while you still have to pay taxes on the money you withdraw as income, you can spread it out over the three years they give you to pay the money back to an IRA or other retirement plan. The IRS website has full rules and details for specific qualifications. We can help you understand and comply with those rules.

4. Main Stream Loan – If the government programs don’t return, or your company is not eligible for CARES or other COVID-19 relief, you can still take out a mainstream or conventional loan based on your income. It will be at a higher interest rate, and may be more difficult to get with the most favorable terms, but it is an option.

5. HELOC and Home Equity Loans – If your business is on the brink, getting a home equity loan might be a good way to get some cash to help save it. The traditional home equity loan puts your money safely into the bank and has set loan details built into the contract. The HELOC loan gives you a line of credit up to a designated limit that allows you to take a lot or a little at a time when you need it. There are other differences between the two loans, so seek professional counsel before choosing theseoptions.

6. Borrow from Family or a Friend – If at all possible, you may be able to avoid huge fees, taxes and interest if you can get a personal loan from a trusted friend or relative. They might allow you to repay the money over a specified period of time to help you get your business back on its feet.

7. Angel Investors & Venture Capital – Both of these funding options usually come with mentorship from the investors who have both capital funds and business experience to invest in businesses they believe may provide a good return on their investment. 8. Business Incubators and Accelerators— These funding programs are usually available in major cities. Incubators are for nurturing a business along and accelerators are for fast-tracking towards success.

Spear CPA CFP Business Tax and Accounting Services in New York City

Spear CPA CFP understand that many people have put their whole lives into their small business and don’t want to see them fail. We are all in this together, and we’d like to help you choose a way to raise funds to start your new business or fund your business’ current needs throughthe best possible avenue. Call us or go online today to schedule a free startup funding consultation or to discuss fundraising strategies for your small business.

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