CEO at Novae, a black-owned fintech company that aims to provide greater access to financial services for underserved communities, discusses various funding sources available to entrepreneurs and small businesses. Capital is crucial for the survival and growth of businesses, and accessing funding can be challenging, especially for newer and smaller businesses.
One significant funding source that has recently expanded is Small Business Administration (SBA) loans. The Biden-Harris administration has made changes to the program to increase access to SBA loans, including authorizing new lenders, relaxing credit requirements, and eliminating equity injection requirements for loans larger than $500,000. These changes have resulted in record gains in providing loans to veterans, people of color, and women entrepreneurs in 2023.
Government contracts are another potential source of funding for small businesses. The U.S. federal government is a significant purchaser of goods and services, spending almost $700 billion on contracting in 2023. Despite the misconception that smaller businesses cannot compete with larger companies for government contracts, almost 25% of contract money is aimed at small businesses. Businesses can research resources, such as the SBA’s Empower to Grow program, to assist them in applying for government contracts.
Alternative financing options, such as online loans, merchant cash advances, and crowdfunding, have also become more available in recent years. While these options can provide quick access to capital, business owners should exercise caution due to high interest rates, shorter payback terms, and daily holdback requirements for transactions. Entrepreneurs should carefully review the terms of loans and funding options to choose the best option for their specific situation.
In a rapidly changing world, staying informed about available funding sources and financing options can help entrepreneurs and small business owners make strategic decisions for growth. With a variety of funding options available, including SBA loans, government contracts, and alternative financing, businesses have more opportunities than ever to secure the capital needed to expand and thrive. It is important for business owners to seek advice from licensed professionals when considering their financing options.
As a member of the Forbes Business Council, the CEO at Novae emphasizes the importance of staying informed and making strategic financial decisions in a competitive business environment. By taking advantage of the various funding sources available, entrepreneurs and small business owners can position themselves for success and growth in the future. The CEO encourages business owners to carefully research and evaluate their funding options to make informed decisions that will benefit their business in the long run.
