RALEIGH – The second round of the Paycheck Protection Program (PPP) is targeting small businesses struggling to stay afloat during the coronavirus crisis. But money is running out fast, according to the latest data.
However, there’s another lifeline for local entrepreneurs struggling to stay afloat: crowdfunding.
“Local small food and beverage businesses have been among [those] to be hit the hardest,” said William McGuire, CrowdfundNC’s chief crowdfunding officer. “We think this program could help some businesses.”
There’s good reason to believe that, even with this second round a funding, there won’t be enough money to meet demand.
After the first round, a survey from the National Federation of Independent Business found that three-quarters of small businesses had applied for the first-round PPP loans, but only 20 percent had gotten the money.
That’s where CrowdfundNC comes in.
Launched in 2019, the group’s mission is to grow North Carolina’s entrepreneurial ecosystem by democratizing access to capital for all businesses.
How it works is simple: Qualified businesses work with CrowdfundNC, and its partner Localstake, to use equity crowdfunding to seek investment from their fans.
For example, a business might choose to offer a 1.5 times return in addition to some perk. A fan that invests $100 could anticipate to receive $150 in return over a period of time, while also getting a product or service from the business.
Since the return is based on revenue, the more revenue generated, the more likely a fan is paid back or paid back sooner.
“This is a relatively newer concept to this area, but it’s being used successfully by other businesses in the rest of the country,” said McGuire.
“Investing obviously carries the risk of loosing the entire investment, but what is the risk of doing nothing when we can?,” he added. “For people who have some disposable funds, investing together locally is just one more opportunity to rally around what we love about our communities so we end up on the other side as strong and united as possible.”
CrowdfundNC isn’t the only platform where businesses and startups can go to raise funds.
Many local startups have been turning to such tried-and-true sites, such as Kickstarter. And to their surprise, it’s paid off.
Take, for example, Hush Buddy. It’s a new patented sleep training system to go from “screaming to dreaming” in minutes launched by Raleigh entrepreneurs Scott Hanson, Edward Danyo and Jim Passe. They kicked off a campaign on the platform months ago. Then COVID-19 struck.
“I thought, that’s it. No one will be backing our campaign with all this going on,” said Hanson.
But instead of stalling, funding for the startup actually surged to the finish line, raising more than $17,000.
“Turns out, people want their toddlers to have better sleep no matter what!” said Hanson.
Those who backed Hush Buddy’s Kickstarter campaign will be the first to receive the system. Meanwhile, the dollars pledged will pay to start up production. Delivery is expected in about six weeks.
Grants and loans also are available. A few examples:
- The NC IDEA Foundation is announcing its latest $50,000 grant winners today – and there are early-stage grants available, too.
- The Golden LEAF Foundation is providing loans.
- Various minicipal governments across the state are making cash available.
- The NC Biotech Center recently announced its latest round of grants and loans.
- And various federal grants are available through SBIR and SBA programs.