Starting a small business is challenging. In fact, many fail to survive their first year because of a lack of startup finance knowledge. If finances are not managed properly, there is potential to run out of cash and consequently shut down. The coronavirus impact on startups has added new challenges for businesses in the way obtaining financing. Ventura County, however, has a host of networks willing to help your small business grow and stabilize during this COVID-19 pandemic.
The Current Surge in Debt Financing
The pandemic has caused many venture capitalists to slow down funding of new projects. The lack of available subsidies from the investment community has impacted entrepreneurs nationwide. This has prompted many entrepreneurs to turn to debt financing in order to meet their funding needs during COVID-19. As the pandemic continues, the growth of new businesses is leaning towards a dependence on debt financing. This is especially feasible for business owners with good credit scores.
One of the main advantages of debt financing is that it gives your business access to cash quickly, helping you to get off the ground or remain in operations. It is critical however, to understand the financing terms and work with financial consultants to build an effective strategy for funding use and payback.
How to Select Your Lending Partner
An important component of handling startup finance is to research various lending partners and find one that meets your short-term and long-term needs. Developing this relationship over time can give your business stability and focus.
A major factor in choosing a lending partner should be their track record in risk assessment. Find out if they focus more on incremental or rapid growth in terms of the businesses they fund. Also, evaluate the financial stability of your potential lender and whether they are strong enough to survive the pandemic crisis. Your prospective lender should be able to play the role of a mentor and guide your company during an economic slowdown. Utilizing local associations like the Small Business Administration (SBA) or Economic Development Collaborative (EDC) can help you identify economic resources that fit your specific needs.
The coronavirus impact on startups will likely be felt by entrepreneurs for years to come. What arises from the changes implemented during the pandemic, may set new standards for how businesses are funded in the future. Meanwhile, understanding startup finance can help an emerging business rise to the next level.
Would you like expert help in setting up your business in Ventura County? At Business Forward Ventura County, we are a countywide initiative and business resource hub committed to delivering economic development support to businesses throughout Ventura County.For more information on getting started, contact us today.