By Fernando Berrocal

Acquiring funds for a new business can be a daunting task, but even more so in a post-pandemic world. According to the US Census Bureau, there were around 440,000 applications for tax ID numbers that were submitted in March 2021. With all of these emerging startups, many of these entrepreneurs will be asking the same question: where will they acquire the resources to finance their business?

Obtaining startup funding has traditionally been difficult. Most lenders like to see a business that has been in operation for at least 1 to 2 years, has strong revenues, and has good credit. That doesn't rule out the possibility of a solution. Lenders make money by lending, and many are ready to go back to business. Positive developments in alternative fundraising (like crowdfunding) may assist your business in raising the funds it needs. Here's how to take advantage of these trends to raise investments in this post-pandemic era.

Use your Good Credit to your Advantage: In 2020, the average credit score in the US increased by 1%, hitting a new high of 710. If you've made it through the pandemic with your credit score intact, you might be able to use it to secure loans. While many small business lenders like to see that a business has been in operation for at least a year and has a stable income stream, some, such as SBA loans, will deal with startups that have good personal and/or business credit scores. According to the most current SBA loan data, startups received 17% of cash from the 7(a) lending program. Loans of up to $5 million are available through SBA 7(a) loans. You'll apply for an SBA loan through a participating lender that allows you to issue these loans.

Get a Good Credit Card: For entrepreneurs, business credit cards are a common source of revenue. They are available to business owners with great personal credit and guaranteed income.  Card issuers are competing to get cards into the hands of eligible businesses, so you could be able to obtain substantial signup incentives in the form of reward points or cash.

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Make use of the new Crowdfunding regulations:  Businesses may now raise more money with fewer risks thanks to new guidelines. Small businesses can use SEC-approved online platforms to obtain money from multiple investors through this type of crowdfunding. Additionally, entrepreneurs may determine whether potential investors are interested and aggregate several investors into Special Purpose Vehicles (SPVs), which will make things easier if they need extra funding. "Crowdfunding is no longer a niche source of capital, but a rising one tailored for startups looking for both funding and new clients," Kathleen Minogue, founder of Crowdfund Better, stated.

Start Small and Local: The State Small Business Credit Initiative (SSBCI), a federal initiative to expand state programs that assist private financing for small businesses. While each receiver of these funds may run their programs differently, startup funding has always been a permissible use of funds under this program, and won’t be different. Entrepreneurs may be able to obtain funding through local and state programs.

Make use of Social Media sites: Having a large and active social media following might help you secure funding. By making it simple to inform followers of your crowdfunding campaign, a social network may surely assist you in raising funds through crowdsourcing. Another option is to have flash sales to generate income quickly. To improve your chances of securing finance, put the money into a business bank account. Healthy revenues are attractive to small business lenders.

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MassLight and Venture Raise Options: We here at MassLight supply capital and a dedicated tech team for your startup, and are dedicated to making sure startups get the resources they need in this post-pandemic world. We take equity in return. Our services are for early-stage startups and offer assistance launching and scaling your mobile and/or web applications. We have mentors available during office hours, and can facilitate introductions to investors within our network. There are three stages to choose from: Idea Stage (worth 3% equity), Discover Stage (worth 6% equity), and Build Stage (worth 20% equity). These terms are negotiable if a startup has raised significant institutional capital, or is trending towards an ARR of 1M. For more information, refer to our FAQs. 

Another valuable resource would be, Venture Raise, a platform that makes sure you spend less time fundraising so you can focus more of your time building your business. Venture Raise connects entrepreneurs with investors through super connectors from the world's top law and accounting firms, banks, and sales organizations in an easy-to-understand web app. This is accomplished by connecting you with organizations such as Cooley, PricewaterhouseCoopers, and Silicon Valley Bank that tap personal investor networks ready to help you.

In Conclusion

While 2021 will continue to be a challenging year to establish or build a business, signals point to a positive outcome for those who persevere. As the economy recovers, so will finance, so make sure your business is in the best possible position to get the funding it needs.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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