Article | September 5, 2021
Doesn't free money for small businesses sound wonderful? Thus, free money to small-medium enterprises (SMEs) is the core purpose of small business grants. As a small business owner, you are constantly looking for funding opportunities for small businesses to expand your enterprise. This requirement became even more desirable during the coronavirus pandemic.
The following are the top challenges facing small businesses:
Cash flow is limited or inconsistent
Lack of capital raising
No provision for unforeseen expenses
Inadequate tax compliance
Absence of a budget
Combining commercial and personal finances
“It’s almost always harder to raise capital than you thought it would be, and it always takes longer. So plan for that.”
– Richard Harroch, Venture Capitalist and Author
How About We Figure Out What a Business Grant is?
A grant is a sum of money provided to a business for a particular purpose. There are several financing possibilities for small enterprises when applying for start-up business grants. You only need to know where to find it. Government (federal and state), charities, and private institutions all offer small business grants.
Unlike small business loans, small business grants do not need a repayment. In addition, unlike loans, you are not required to provide security, are not charged late fees or interest, and are not required to give away any ownership of your business. As a result, grants for small businesses are an appealing source of finance for businesses.
Small business grants are frequently awarded based on specific areas, industrial sectors, community groups, or types of enterprises. Grants come in various forms, including those granted by the government, those supplied by private firms, and those directed for specific groups such as women, veterans, or women. In addition, considering the current pandemic crisis, a new grant has been established to assist individuals negatively impacted by the coronavirus pandemic.
The federal government does not provide start-up business grants; instead, its grant programs are often directed toward non-profit organizations or other government agencies that face financing challenges.
COVID-19 Small Business Grants
Several types of COVID-19 small business grants are available to mitigate the loss caused by the coronavirus to small businesses. First, government grants for small businesses provide economic relief from the loss of revenue.
The United States Small Business Administration (SBA) administers federal small business funds for coronavirus recovery under the Economic Aid to Hard-Hit Small Businesses, Non-profit Organizations, and Venues Act.
Paycheck Protection Program (PPP):
Small Business Administration (SBA) provides financial help by introducing financial assistance programs like Paycheck Protection Program (PPP). However, Paycheck Protection Program (PPP) concluded on May 31, 2021. Even after the termination of the program, you can still qualify for loan forgiveness. This program was a significant part of COVID-19 small business grants. As of May 10, 2021, the SBA has authorized $782 billion in PPP loans.
To qualify for loan grants, you must establish the following:
Maintaining employee and pay levels
The revenues of the loan are used to cover payroll costs and other allowable expenses
At least 60% of the earnings are used to cover payroll expenditures
COVID-19 Targeted Economic Injury Disaster Loan (EIDL)
The Federal government recognized the coronavirus's impact and introduced many COVID-19 small business grants, and Targeted EIDL was one of the leading financial assistance programs offered.
The SBA makes targeted economic injury disaster funding available to small companies in low-income regions that have suffered revenue loss due to the coronavirus pandemic. This is more of a donation than a loan, as it is not returnable.
The targeted EIDL offers up to $10,000 in advance if your firm is:
Located in a low-income neighborhood
Has sustained a higher than 30% economic loss
Employ no more than 300 people
Due to COVID-19, small business owners and qualified agricultural companies in all 50 states and territories of the United States are presently eligible to apply for a low-interest loan.
Shuttered Venues Grant
As of August 2021, the Shutter Venues Grant program is ended. However, later that month, the Small Business Administration (SBA) planned to establish a supplemental Shuttered Venue Operators Grant (SVOG) application for 50% of the initial amount, up to a maximum of $10 million.
The Economic Aid to Hard-Hit Small Businesses, Non-profits, and Venues Act established the Shuttered Venue Operators Grant (SVOG) program, modified by the American Rescue Plan Act. The initiative, managed by the SBA's Office of Disaster Assistance, would provide over $16 billion in subsidies to closed venues.
Eligible candidates may receive up to 45% of their gross earned revenue in the form of a grant. The maximum grant is ten million dollars.
Restaurant Revitalization Fund (RRF)
The American Rescue Plan Act established the Restaurant Revitalization Fund (RRF) to provide emergency assistance for eligible restaurants, bars, and other eligible businesses impacted by the pandemic.
This program compensates restaurants for income losses caused by the pandemic, up to a maximum of $10 million per firm and no more than $5 million per physical location.
As of now, RRF is closed for new applications.
Government Grants for Small Business
Numerous government grants for small businesses have been made available for free by the federal, state, and municipal governments. However, accepting free government money entails a considerable bit of paperwork and is time-consuming and technical at the same time.
Federal Government Grants for Small Business
The federal government offers many other additional grants for small businesses along with COVID-19 assistance. Federal government grants for small businesses are generally available to firms engaged in research, technology, or health.
The government agencies that support small company grants are the SBA, the National Institutes of Health (NIH), and the Department of Agriculture.
Let us find out which are the most competitive government grants for small businesses.
Small Business Innovation Research Program (SBIR)
Small Business Technology Transfer Program (STTR)
U.S. Small Business Administration State Trade Expansion Program (STEP)
U.S. Department of Energy (DOE) and Environmental Protection Agency (EPA)
U.S. Department of Agriculture (USDA)
State Government Grants for Small Business
State offers government incentives to a small business that address the state's social or economic issues. However, due to the minor application set for state funds, competition may be less severe and easily accessible.
Federal agencies occasionally award grants to state governments, which then distribute the monies.
Below is few resources body that offers funding opportunities for small businesses:
U.S. Economic Development Administration
State Business Incentives Database
Small Business Development Centers (SBDCs)
Private Small Business Grants
While government grants are beneficial to small companies, the financing levels are insufficient. Occasionally, private corporations and charities step forward and provide small business grants. On the other hand, private business grants need separate applications and may have eligibility limits confined to specific industries.
Numerous corporate-sponsored small business grants require applicants to compete in pitch competitions or something comparable. Unfortunately, few major private corporations provide substantial financial incentives to small businesses for joining (and winning) contests or pitch competitions. However, even if you do not win, you may receive a runner-up reward or exposure for your business.
Below are few private small business grants available
FedEx Small Business Grant Contest
National Association of the Self-Employed (NASE)
Visa Everywhere Initiative
Wells Fargo Community Investment
Nav's Quarterly $10,000 Business Grant
Patagonia Corporate Grant Program
Start-Up Business Grants
A start-up business grant is money provided by the government or another entity to assist small businesses and organizations in establishing and developing their businesses. Initially, small business grants are often not accessible to launch a firm; nevertheless, they are available for specific businesses and owners.
The following is a list of different sorts of businesses eligible for start-up small business grants:
Women, veteran, or minority-owned businesses
Here is an example of small business start-up grants
4.0 Schools fellowships
Jack Daniel's pitch distilled
As the information above indicates, there are several small business grants available. However, applying for grants is time intensive and may result in your firm not receiving the money needed. Finally, explore the small business grant, whichyour business is eligible for.
If small business grants are not a possibility for you, several alternative funding choices are available that fit your budget.
What can a small business grant be used for?
Small business grants are used for a variety of purposes: to establish a business, to stimulate minority entrepreneurship, to support research and development in a particular industry, to bring innovation, and to assist businesses in the domains of science, technology, and health, the list goes on.
How can I get a grant to start a small business?
There are several websites and organizations where you may obtain small company grants, including the following:
USDA Rural Business Development Grants
Small Business Development Centres
National Association for the Self-Employed (NASE)
FedEx Small Business Grant Contest
What distinguishes grants from small business loans?
The primary distinction between small business grants and small business loans is that grants are not returned (with certain circumstances), but loans need to be paid back. In addition, grants are generally reserved for small firms, requiring more time to process and receive the funds.
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Article | August 18, 2021
Treasury management or more generally Supply Chain Finance management is still a neglected topic at many SMEs.
While large international corporations make the investment into expensive treasury management solutions (often part of their ERP solution) and even setup their own In-House Banks, this is considerably more difficult for the mid-corp segment and even more so for the smaller segment of the SMEs. Often SMEs lack the funding, time and expertise to deploy those platforms and often those platforms lack the flexibility required by an SME.
Nonetheless in this globalized competitive market with fast moving cash, even SMEs are in need of an effective treasury management. Every SME has its own specific challenges, due to its specific payment cycles and cash reserves. Nonetheless most SMEs (estimated to about three-quarters) still do their treasury management via (complex) Excel sheets, requiring a lot of manual effort. This gap forms a big opportunity (in Europe SMEs account for more than half of all gross value added) for incumbent banks and Fintechs to offer easy and user-friendly tooling for this. In recent years, more and more Fintech players try indeed to provide an answer to this gap, often via SaaS platforms, which connect easily to the customer’s banks (via Open Banking APIs) and for which the setup cost is limited.
The gains for an SME in optimizing their treasury processes can be very substantial. A good treasury management can reduce costs in multiple ways:
Reduce working capital by reducing the time to collect money from customers, by reducing inventory and/or by paying suppliers only at the payment due dates.
Reduce unpaid invoices by a better follow-up and good debt collection techniques
Reduce penalties (such as administration costs or late-payment interests) due to late payments and indirectly also improve the relationship with suppliers.
Reduce effort (resource workload) for financial management, like the follow-up of payments of incoming and outgoing invoices, automated generation of payment instructions for incoming invoices…
Optimized cash management allowing to keep on your current account only the required cash amount to run your business, thus allowing to invest excess cash, but also to avoid requiring short-term debt when too much cash is invested (and blocked in medium- to long-term assets)
Reduce foreign currency costs and exposure risks by keeping the right reserves of foreign currencies, applying hedging (like swaps or options) techniques, correctly taking forex rate fluctuations into account in future cash flow predictions…
Reduce transaction commissions for bank transactions, by selecting the right banking products, but also by using the right banking partner(s) (especially for international foreign currency payments big price differences exist between different banking parties)
Reduce cost of fraud by improving control, transparency and accountability via a pro-active, automated monitoring of all cash flows, allowing to detect anomalies as soon as possible
This can be achieved in multiple ways:
Setup and optimize the processes and tooling with the help of specialized services companies (like e.g. the offering of BelPay)
Setup or acquire software solutions (often in the form of SaaS offerings, i.e. Treasury in a Box) for cash & liquidity management, like invoice generation and follow-up (including invoice and payment matching), debt collection, incoming invoice processing (including payment), cash pooling, cash forecasting/capital planning… These software tools allow a more pro-active treasury management and reduce manual effort by automating certain steps in these processes. Examples of such platforms are HighRadius, Gtreasury, CashForce, Kyriba, Nomentia, Monite, Pair Finance, AiVidens… But there are also more specialized tools, offering only a specific service, like debt collection (e.g. Virteo, recovr, Pair Finance, TrueAccord, CollectAI, CollectionHub, inDebted, Attunely…), digitalization (through OCR) of paper invoices (e.g. Tangentia, Contract.fit, Metamaze, Klippa, SimpleOCR…), expense management (e.g. Payhawk, Rydoo, Expensify, Spendesk, Pleo, Circula…), account aggregation and payment initiation (e.g. Isabel 6/Ponto)…
Capture revenue by allowing customers to pay for products or services in a way that is most efficient for them and for the SME, allowing to increase sales, but also to ensure the best possible payment ratio. This includes solutions like digital onboarding and management of Direct Debits (e.g. via Twikey or DigiTeal), including a Pay button (e.g. via Twikey or POM) in invoices which allows to pay the invoice with a pre-filled credit transfer, card payment or other payment option, integration with PSPs (like Adyen, Mollie, MultiSafePay, Ingenico, Stripe…) for online payments, digital invoicing allowing to combine invoicing and payment (e.g. PEPPOL platform or offering invoices with immediate payment option via UnifiedPost, ZoomIt or Doccle), "Buy Now, Pay Later" solutions (like Klarna or AfterPay) or new solutions like PSD2 Payment Initiation or the upcoming new scheme of SEPA Request to Pay (SRTP).
Improve integration between accountancy software (and/or accountant) and the cash management solutions and associated bank accounts. Solutions like Silverfin, TOCO, Yuki, OkiOki, Billit, Furoo, Clearfacts, Billtobox, sevDesk, Candis… can provide (a part of) a solution to this.
Usage of solutions for cash management (e.g. international cashpooling, sweep accounts…) and more general treasury management services offered by banks to their customers. These can be incumbent banks or new Fintechs, which specialize in the niche of serving SME customers. Examples are Tide, Qonto, Azlo, Arival, Fyrst…
Reducing costs of international payments and forex transactions via new Fintech offers, like XE.com, TransferWise, CurrencyTransfer.com, WorldFirst, iBanFirst, Ebury…, but also via specialized software tools, like Kantox, FiREapps, Money Mover, Acumatica…
Get cheaper financing via specialized credit institutions and banks (e.g. OakNorth, CapitalBox…), by issuing commercial paper (short-term paper) or long-term debt, via crowdfunding and peer-to-peer lending (e.g. Funding Circle, Auxmoney, LendingCrowd, Iwoca, Look&Fin, Crowdcube…), via Credit Lombard loans or inventory-based loans (e.g. Finventory) or via invoice factoring (e.g. Edebex, Previse, Optimum Finance, GapCap, BlueVine, BillFront, Crowdz…). There are also more and more marketplaces and comparators assisting SMEs to find the best financing option, e.g. Funding Options, BusinessComparison, Crowdz…
Improve risk management (like currency risk, interest-rate risk, market risk, credit risk, counterparty risk…) via trade finance, like bank guarantees (cfr. Ebury), via better authorization and fraud detection mechanisms (detecting patterns and anomalies) or by better assessing counterparty risk (e.g. DueDil, InsideView, PitchBook…)
Apply tax optimizations, by optimizing for different tax regimes worldwide and also optimizing for tax deductions (like e.g. generate revenue on entities which have collected losses in the past)
Clearly the Fintech market for SMEs is in full evolution, but still quite immature. As a result dozens of offers exist, making it very difficult for SMEs (which was one of the reasons in the first place they work with Excel) to select the best and right offering(s) for their company. As such there is a big market for consultancy and other services firms, specialized in helping SMEs to improve their treasury management processes.