funding post pandemic

Here Are 7 Ways to Get More Funding Than Ever Before in the Post-Pandemic Era

Starting a business in 2021? You’re in good company: The U.S. Census Bureau reports that there were some 440,000 applications for tax ID numbers in March of 2021 alone. Many of these entrepreneurs will face a shared dilemma: where do they get the funding they need to launch?

Traditionally, getting startup capital can be challenging. Most lenders prefer to see at least one to two years in business, strong revenues and good credit. That doesn’t mean you’re out of luck, though. After all, lenders make money by lending and many are eager to get back to business. And positive developments in alternative funding (such as crowdfunding) may help your business raise the capital it needs.

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Here’s how to leverage these trends to get more startup funding than ever before in the post-pandemic era:

Take advantage of your good credit

The average credit score in the U.S. climbed 1% (seven points) in 2020, reaching a record score of 710, according to Experian data from Q3 2020.

If you’ve survived the pandemic with your credit score intact, you may be able to leverage it to get financing. Again, while many small business lenders also want to see that a business has been around for at least a year or two and has solid revenues, there are some that will work with startups with solid personal and/or business credit scores.

One example: SBA loans. The most recent SBA loan statistics show that 17% of 7(a) loan program funds went to startups. SBA 7(a) loans offer loans of up to $5 million. You’ll apply for an SBA loan from a participating lender authorized to make these loans — keep in mind that not all work with startups, so be sure to ask.

Tip: In addition to good credit, you’ll want a solid business plan.

Snag a great credit card

Business credit cards are a popular financing source for startups. One reason is because they are available to brand new business owners with good personal credit and sufficient income from all sources (not just revenue from a business).

Again, card issuers are competing to get cards in the hands of qualified entrepreneurs, and you may be able to get significant signup bonuses in the form of reward points or cash.

Tip: Understand whether the card issuer reports to business credit agencies or not, as this can help you build business credit to get other funding in the future.

Related: What You Need to Know About Managing Cash Flow Post-COVID-19

Leverage new crowdfunding rules

New crowdfunding rules mean businesses may raise more money with less risk. The SEC has raised the annual limit for what’s known as “Regulation Crowdfunding” from $1.07 million to $5 million. This type of crowdfunding allows small businesses to raise money from multiple investors through SEC-approved online platforms.

In addition, startups can now “test the waters” to find out if there is interest from potential investors and group multiple investors into Special Purpose Vehicles (SPVs) which will make things easier if they seek additional investment capital down the road.

“Crowdfunding is no longer niche funding, but a growing source of capital tailor-made for startups who are looking both for funding and to acquire new customers,” Kathleen Minogue, founder and CEO of Crowdfund Better, said.

“The big story in 2021 is investment crowdfunding, particularly offerings using Reg CF. These offerings saw a 77.6% uptick in funds raised between 2019 and 2020, and 2021 shows no signs of slowing down with the SEC recently updating the rules to allow for larger raises up to $5 million.”

Tip: Download a free crowdfunding cheat sheet at; it will provide you with a list of reputable platforms across the crowdfunding landscape.

Start local, start small

The American Rescue Plan signed by President Biden includes $10 billion for the State Small Business Credit Initiative (SSBCI), a Federal program administered by the Department of the Treasury to strengthen state programs that support private financing to small businesses and small manufacturers.

While each recipient of these funds may administer programs in different ways, startup funding has been an acceptable use of funds under this program in the past, and there’s no reason to expect this time will be different. That means entrepreneurs may be able to get funding by tapping into local and state programs.

Tip: Connect with your local Small Business Development Center (SBDC) or SCORE chapter as these SBA resource partners can be a great source of information about local funding opportunities. Even if you don’t get funding right away, you can benefit from their free business mentoring services immediately.

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Tap social media networks

A loyal and engaged social media following on your chosen platform can be key to getting funding. A robust social network can certainly help you raise money via crowdfunding by making it easy to alert followers to your campaign.

Another strategy is to hold special events or flash sales to bring in revenues quickly. Deposit the proceeds into a business bank account to boost your chances of getting financing in the future. Small business lenders love to see healthy revenues. Note, you must use a business bank account, not your personal account to get “credit” with lenders for those sales.

Tip: You don’t need to be on every social media platform. Pick one or two social media networks where your customers congregate and be consistent in posting and responding.

Ask friends and family

Pandemic restrictions have led many Americans to stay home, and some have more money in savings as a result. If you have friends or family members who have been lucky enough to stay fully employed during the pandemic, they may be able to help. Over the years, loans from friends and family have been a common source of startup financing.

But instead of just asking for cash, approach your network with a solid business plan and a promissory note. Both assure them that you’re taking your venture seriously and that you’re not just asking for a handout. Another alternative is to ask friends and family to contribute to your crowdfunding campaign.

Tip: Learn how to create a fundable business plan.

Use supplier credit

Many companies that sell to small businesses offer payment terms, such as “net-30 terms,” in which the payment is due in 30 days. These vendors want your business and they will offer payment terms to keep you coming back.

Vendor credit can be a valuable way to improve cash flow, and even to build business credit if payment history is reported to business credit bureaus. It’s usually startup friendly, as well. Pay on time and your suppliers may be willing to extend credit for even longer terms; say net-60 or net-90 terms. Best of all, this financing is often interest free, though you may give up a discount for faster payment.

Tip: Find vendors that report to business here.

Key takeaways

While 2021 will still be a challenging year to start or grow a business, signs are pointing toward a positive outcome for the entrepreneurs that persevere. As the economy improves, funding will follow, so make sure you put your venture in the best position possible to get the funding you need.

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