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Find Startup Funding and Get Financial Control Even in a Pandemic

It was bushels of apples after an afternoon in an orchard that prompted Diana Blaylock to launch her business, Mama’s Best Bakery, in 2017. She started by selling apple pies on Facebook and business took off from there. The pandemic didn’t slow things down; instead she found herself busy baking bread and other comfort foods from her home kitchen in Twin Falls, Idaho. During COVID-19, “people have been eating their feelings,” she says.

In order to truly grow and scale her bakery, though, Blaylock needs funding.

She tried a crowdfunding campaign, but with no real guidance or experience, it failed. The Idaho Women’s Business Center connected her with Crowdfund Better (via their collaboration called Crowdfund Idaho) which is guiding her through the steps to create a new campaign, and she’s optimistic that this time will be successful.

While we’ve had a lot of doom and gloom about the world this year, not all small businesses are struggling. And many people are taking the plunge to start a business. The number of business applications in the U.S. reached nearly 1.6 million in 2020. We haven’t seen numbers like that in memorable history.

But while businesses are starting up in record numbers, that doesn’t necessarily mean those business owners will be able to find the financing they need to get off on the right foot. Like Blaylock, when it comes to raising money and getting financing, you “don’t know what you don’t know.” And that can mean wasting valuable time looking for the wrong type of funding.

The lending landscape looks significantly different this year compared to last, thanks to COVID-19. Before the pandemic (and the Paycheck Protection Program, which provided small businesses impacted by the pandemic with forgivable loans), there were more than 44 different types of financing small businesses could choose from. Since then, many lenders have tightened criteria — and some have stopped lending altogether — mostly due to the uncertainty we’re all experiencing.

If you’re one of the many new “covidpreneurs,” or even if you’ve run a business for a while, you may need guidance on where to look to find financing during these uncertain times.

Here, we’ll look at how you can find financing when it seems that banks are reluctant to lend, as well as what you can do to get and stay organized financially moving forward.

Startup Financing During COVID-19

So you’ve started a new business and you need financing, but your bank is refusing to lend you money because your business hasn’t been operating long enough to qualify for traditional financing. Startup financing through a bank or credit union has always been a long shot for most early-stage businesses.

Add in the fact that, because of the global pandemic, we’re seeing many lenders cut back on approvals, and it can be downright frustrating trying to find financing right now.

It’s not impossible, though, even for brand-new businesses. The key is knowing where to look.

Business Credit Cards

A business credit card may not be a small business loan, but it is one of the simplest ways to get financing for a new business. They don’t have extensive time in business or business revenue requirements, and as long as you have good personal credit scores (in the mid-600s or higher) there is probably a card for you.

But it is worth noting that even credit card issuers have become more cautious in recent months. According to Comscore’s The COVID-19 Impact on Small Business Credit Card Applications report, there was a 6% year-over-year decline in Q1 2020 of credit card applications, which dove into a 41% year-over-year decline in Q2 of this year.

Some card issuers are getting back to business and approving applications, so if you are seeking some form of financing for your business, it’s worth looking into. If you plan to carry a balance, the interest rate will be key. Otherwise you can choose a business credit card with rewards such as cash back. Business credit cards can also help build business credit.

Credit Score

Trade Credit

Another resource for financing is trade credit. I’m convinced this is one of the most undervalued forms of financing available to small businesses. Vendors and suppliers may give you time to pay for purchases interest-free. In addition to helping you improve cash flow, these accounts can also help you build business credit if they report your payment history to business credit bureaus such as Creditsafe, Dun & Bradstreet, Equifax or Experian. Not all vendors report, so it’s worth asking if they do — and maybe even requesting they do if they don’t.

Where should you open trade credit? Start with the vendors you already use or that sell what you need to buy. You’ll find a list of vendors that are startup-friendly and help build business credit at Nav.com/vendors.

You’ll also find your vendors to be some of the best creditors you’ll ever have. They are more likely to work with you when you’re in a cash flow pinch and will likely offer a discount if you pay your invoice early.

Even if your business is new, you may qualify for trade credit. After all, they want your business to buy from them and not a competitor.


Another noteworthy (if often overlooked) source of capital is crowdfunding. There are several types of crowdfunding campaigns:

  • Rewards: Provide tangible rewards in exchange for contributions, such as early access to your new product or other perks.
  • Debt: Borrow money you must pay back.
  • Equity: Solicit investors in your business, often by giving them shares in your business.
  • Donor: Solicit donations for your business.

Crowdfunding works best if you’re either trying to raise money to launch a new product or project that others may want to get behind, or building a business that will scale. It’s not going to be a good fit if you’re just trying to find the cash to buy a new computer or fund a marketing campaign. It requires a strong pitch and solid marketing campaign. Most that are successful raise a significant amount of money from their own network.

Tip: The free Crowdfunding Cheatsheet at Crowdfundbetter.com explains the different types of crowdfunding, the pros and cons of each, and will help you identify platforms for each type of campaign.


Sometimes you get turned down by a traditional bank because you just want a little capital. Banks make more money on bigger loans. Your $10,000 or $25,000 loan request may be considered small potatoes to them.

Fortunately, there’s another option: microloans. These smaller loans are often made by non-profit lenders. Kiva is one such lender. It connects borrowers with a network of over 1.6 million lenders who want to support small businesses. Right now, Kiva offers U.S. businesses negatively impacted by COVID-19 loans of up to $15,000 at 0% interest.

The Small Business Administration Microloan program also offers microloans up to $50,000 (averaging about $14,000) through approved microlenders. Funds can be used for working capital, inventory, equipment, or supplies. Finding local microlenders can be tricky. Start your search with SBA Resource Partners such as SCORE and Small Business Development Centers, both of which provide free mentoring to entrepreneurs. Locate your local office at SBA.gov/tools.

What to Consider When Seeking Financing

There are several factors that go into whether a lender will approve you for financing, and that formula varies from one lender to another. But generally, the critical factors are:

  • Revenues
  • Time in business
  • Credit
  • Industry

Some alternative lenders look primarily at your revenues, so even a relatively new business, if it’s thriving, may qualify for a loan. Although there are a handful of lenders that will accept your loan application if your business is only six months old, they are the exception rather than the rule. Expect to provide three months of business bank statements, or better yet, allow the lender to connect to your business bank account to review activity.

Time in business is a tricky one for new businesses: you’ll have decidedly fewer options if you’ve been in business just a few months, but as your business moves closer to the two-year mark, you’ll have more financing options to choose from.

Some lenders rely on the business owner’s personal credit, others check business credit. Some check both, and only a few don’t check credit at all. (Those lenders are usually lending based on invoices or revenues.) If your personal or business credit are not strong, make it a point to really work on that. You can establish business credit even with low personal credit scores, starting with vendor accounts.

5 Smart Ways to Organize Your Finances in 2021

When Jendayi Stafford left the Navy with a medical retirement, her health was deteriorating to the point that she was in a wheelchair. She researched and applied wellness principles to get healthy and soon others were asking for her help. She formed Mission Counseling & Consulting, LLC, obtained therapy licenses and coaching certifications, and has been growing her home-based business ever since. She’s developed trademarked coaching programs and published an extensive workbook. She is also training and certifying other health coaches in her methods.

All that growth takes money. Stafford has a business credit card and business lines of credit that are helping her build business credit. She has been dogged about seeking out funding opportunities. She applied for and won a pitch competition, and also won money in a business sweepstakes program associated with a small business grant.

Stafford is committed to organizing her business finances. She’s joined a small business mentoring program, BHVentures, and she recently hired an accountant and CPA.

“I was doing the old school (method) of filing papers,” she laughs, “Because there has been so much growth, I definitely need to get legit.” She also expects these steps will help her with government contracting and grants she hopes to obtain.

Businesses serious about success in 2021 and beyond will want to make sure they lay the foundation properly now. Then they’ll be in a great position to take advantage of the opportunities the coming year will offer as we move into COVID-19 recovery.


1. Stop looking backward

“Most businesses look at their finances in the rearview mirror,” observes Karen McCall, who pioneered money coaching and recently launched Moneygrit, an online money management tracking and planning system. “They review what they’ve spent after the fact, often when doing their bookkeeping or getting ready for tax time. Planning ahead for both needs and wants is critical,” she insists.

“Every successful small business owner I’ve worked with knows how much they need to pay themselves, how much they need to pay their business expenses, and how much they need to grow their business,” she explains. “They have a concrete number to work toward. Business owners who take time to plan and then track their spending often go on to exceed their financial goals.”

2. Dump the shoebox

Stop keeping receipts in file folders and set up your accounting system correctly from the beginning. “Most businesses do it wrong,” says Sylvia Inks, small business consultant and owner of SMI Financial Coaching. Even if you hire an accountant as Stafford did, Inks recommends you familiarize yourself with allowable business expenses listed on the IRS form Schedule C. Otherwise you may miss out on valuable tax deductions.

Then use the expenses categories on that form to save and organize your receipts online. “Don’t save receipts by month,” she says, “and don’t keep paper receipts.”

Instead, create an online folder with the name of each expense category as listed on the Schedule C form, such as:

17-legal and professional services

If you’re audited, you’ll be easily able to find all receipts in that category.

“The IRS won’t likely ask you for a specific receipt,” she says. “Instead it may ask you to produce all receipts in a certain category — such as travel and meals — for the last three years.”

3. Get paid the right way

You don’t make money until you get paid. Jason Vitug, founder of phroogal.com, says he learned that the hard way. “I was managing multiple affiliate networks and programs through Excel and another project management tool that just wasn’t cutting it,” he says. “I was missing revenue opportunities and delaying sending invoices.”

He now uses Airtable to create data sets and generate reports. “It allows me to easily identify revenue trends and missed opportunities. It also helped me keep track of affiliates that require an invoice,” he explains. Now he can invoice on time and get paid faster.

As a business, you want to minimize the risk of a slow (or no) paying client. Here are 3 steps that will help:

  1. Have your client sign a solid contract. “Working with a contract that you’ve pieced together from free samples found online or borrowed from others is like driving a car with four mismatched tires,” warns attorney Annette Stepanian. “Your ride is always a bumpy one and you’ve got this nagging worry that you’re going to blow out a tire and get stranded on the side of the road.” While working with an attorney to draft custom contracts is ideal, if that’s cost prohibitive Stepanian offers affordable contract templates for a variety of businesses on her website, YourLegalBFF.com.
  2. Invoice promptly. Set up a system, like Vitug did, to invoice promptly and follow up on slow-paying clients. Consider adding an incentive (such as a discount) for early payment or a penalty (such as a late payment) for paying late.
  3. Check business credit. You can check business credit on current and prospective clients; no permission is needed. If a client’s commercial credit report shows late payments or other problems you may want to ask for a larger deposit, or even pass on the job.

4. Pay yourself the right way

Smaller businesses often forgo paying formal payroll and simply take money out of their business whenever they feel they have enough to pay themselves. Paying yourself a regular salary, though, even if it’s small to start, recognizes your contribution to your business.

Additionally, owners of certain business structures, such as an S Corporation, may run into tax trouble if they only take “owner’s draw” out of the business but don’t pay themselves a salary subject to payroll taxes.

Some accounting software programs offer a payroll option, or you can work with a Professional Employer’s Organization (PEO) to outsource payroll, compliance and even to get benefits.

Whichever approach you choose, make sure you get a business bank account and don’t use it to pay personal expenses. Many lenders will insist on reviewing your business bank statements and a bank account that’s a hot mess will do you no favors when it comes to getting approved.

5. Foster a more consultative relationship with your accountant

Next to you, your accountant probably knows more about your business than anyone else. What’s more, he or she may be able to see opportunities to both save money and reap additional profits. Make an appointment after tax time to dig into the weeds of your business finances with your accountant. It may prove to be a profitable investment in your business.

5 Tools to Organize Your Business Finances in 2021

Here are 5 tools that will make managing money in your business a breeze:

  1. Expensify: A leading expense management tool that lets you scan and upload receipts to easily create expense reports. Integrates with Quickbooks and Xero.
  2. iScanner: This AI enabled mobile app from BP Scanner turns your smartphone into a scanner. Turn documents and receipts into images and more. Available for Android and iOS.
  3. Freshbooks: Accounting software for non-accountants that makes it easy to generate professional invoices.
  4. Gusto: Online people platform that helps small businesses onboard, pay, insure, and take care of themselves and their teams. Payroll, benefits, and more.
  5. Nav: Check and monitor your business and personal credit for free, and get matched to financing based on your business data.

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