The Money Act: Public or Private Funding?

Best Lane for Funding Small Business in Leadville Today

When it comes to funding your small business amid a pandemic, there are options for Colorado entrepreneurs. While the news feeds have been plentiful with information concerning the next round of PPP funding from the public sector.

Both are important for economic viability in Leadville Today. From the eateries on historic Harrison Avenue that are trying to stay alive to others in construction that are taking the opportunity to thrive and grow to meet market demands, finding the best lane is important. But it can also be a bit overwhelming.

To that end, readers can find below some of the options available for Lake County businesses. The post starts off with a roundup report from the private sector as the CEO of a digital company outlines what the state landscape looks like concerning financing, including the importance of building credit for your business.  Remember, not every business is “holding-on” some industries are managing new growth. Beyond that is everything you need to link through to concerning the next Paycheck Protection Program (PPP) funding available from the public sector. Hopefully, you’ll find the following information helpful. As always, reach out to LT at info@leadvilletoday.com.

Small Businesses Financing In Colorado Improves

By Steve Marks, Digital Content Zone

Throughout 2020, Colorado’s small businesses have faced one setback after another. The damage done by the COVID-19 crisis has been drastic and looks set to continue for the foreseeable future. Entrepreneurs and small business owners are struggling, and with the virus continuing to spread, lockdown measures are likely to remain in place.

Regardless of what you believe is the best way to fight the virus, no one can argue that the response has harmed and, in many cases, permanently shut down local businesses. Lockdown measures may continue to be necessary to save lives. But it is not lockdowns that are destroying businesses. It is the lack of the necessary support to keep businesses alive through these times. Over the past year, we have seen fewer financing opportunities availed to Colorado businesses. Stimulus plans have primarily helped big corporations. Private lenders have not had the capacity or confidence to lend to struggling SMEs.

There is a light at the end of the tunnel. No one can pretend the vaccine will put an end to all COVID-related financial consequences, but it will allow businesses to slowly begin to recover. And, because a working economy requires available lines of credit, both private and public lenders are starting to offer more financing opportunities.

Snow or shine, historic Harrison Avenue has weathered the economic storms since 1878. That’s a pretty good track record!

The Importance of Credit

Every economic crisis inevitably leads to lenders becoming more and more discerning with what funds they have. Only the businesses with the most evident potential are offered lines of credit. This has largely happened throughout the COVID crisis. However, the reality is that economies run on credit. Lenders need borrowers as much as borrowers need lenders. Because the crisis has dragged on for so long, there are few borrowers who meet the standards that lenders expected a year ago. They have therefore had little choice but to change their standards and provide products that suit struggling businesses in the time of COVID.

For some businesses, no amount of credit can bring them back from the dead. But businesses which have been hanging on can find a route to recovery through new financing opportunities. The better these businesses do, the better the lenders do. Of course, both are crucial for the recovery of the economy. The good news is that, even though the crisis has not passed, lenders are increasingly offering loans to small businesses in Colorado. Here is what you need to know.

The Reemergence of Small Business Loans

In 2019, Colorado had a growing economy with incredible potential. Small business owners were jumping at the opportunities available, with banks and private lenders happy to provide financing. While 2020 disrupted that growth, the potential is still there.

Anticipating the next financial bubble is no child’s play in Leadville Today. Knowledge is power, so take advantage of all the options  – most of them are free or low-cost.

While the government is going back and forth with possible schemes for further funding of small businesses, private lenders are the ones actually providing loans. They are doing this by securing financing from banks and other sources. For example, BlueVine recently secured a $75 million revolving credit facility from Atalaya Capital Management. This deal is a perfect microcosm of the mutuality of the different parts of the economy.

Atalaya Capital Management provides private credit to big companies like BlueVine. BlueVine is the leading provider of small business banking. Companies like Atalaya rely on the success of companies like BlueVine, which rely on the success of small businesses. An open line of credit, carefully monitored and adjusted according to the state of the crisis, is necessary for the survival and growth of all.

But it is not just big lenders like BlueVine that have sourced funds to offer to small businesses. Private lenders across Colorado are looking to fund small businesses that are still hanging on. The fact that there is an end in sight, with the rollout of vaccines across the country, has led to more optimism and belief that small businesses will not have to default.

What is Next for Small Businesses in Colorado?

The increase in small business financing is promising, but what can we expect for the majority of Colorado SMEs? While it is tough to see past the next week, let alone the next month, we can analyze what data we do have.

First off, the longer lockdown measures are in place, the more difficult it will be for businesses in the hospitality industry to survive, no matter what financing opportunities arise. Restaurants and bars rely on in-person drinking and dining, and even with vaccine rollout, it is going to take a while before crowded establishments are totally safe.

What lane does your business need to be in when it comes to the private and public sector funding options?

However, investors in Colorado are primed for the economy to bounce back. Before COVID-19, Colorado’s economy was growing. There are still going to be factors impacting local businesses once the crisis is over here, including a drop in tourism as the world continues to recover and a lack of money for locals to spend. But Colorado is the same state it was a year ago, with the same opportunities.

Ultimately, even the biggest companies require a culture of consumerism in order to survive. We can expect to see them doing their part to stimulate the economy so as to fatten the pockets of the individuals and small businesses whose patronage they depend on.

The government will also need to engage in damage control, and they may do so more effectively once the extent of the damage is clear. Until now, they have been trying to fix a plane midair. As the crisis passes, they will be able to assess things on the ground again.

Small Business Loans

Throughout, small business loans are going to be crucial to keeping the economy afloat. Small businesses are valued by everyone, from customers to regulatory bodies, and we have seen this play out in the increased funding on offer. There will need to be compromised, both on the side of borrower and lender, but ultimately, that is how the best business gets done. 2020 was a tough year for everyone on an economic level. Hopefully, the increased funding opportunities for small businesses signal a change coming for 2021.

Leadville Today Contributor Steve Marks is the CEO of Digital Content Zone, an online digital marketing company.

Walking towards the future with hope and gentle guidance in Leadville Today. Photo: File photo from 2019 Leadville BBQ & Brew – will it return?

Federal PPP Applications Re-open Next Week

With the new $284 billion Congressional appropriations for small business relief, the federal Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote widespread community access to capital, initially, only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP program will open to all participating lenders shortly thereafter.

Eligible lenders of the first two draws of PPP loans are one of four types:

• Community Financial Development Institution (CDFI)
• Minority Depository Institution (MDI)
• Community Development Corporation (CDC)
• Microlender Intermediary

Review this list of participating Colorado Community Development Financial Institutions. It’s important to note that in the new rounds of PPP, businesses that use an agent to file their PPP applications will be responsible for covering the corresponding expense for their service. In the 2020 PPP allocations, the lender paid that fee; however, businesses are now responsible for the fee and cannot use PPP funds to reimburse themselves. For PPP applicants that have previously received PPP loans, the financial institution which processed last year’s loan is your best place for you to begin new inquiries. In preparation, this Prepare for the PPP document outlines the key elements needed to prepare for your PPP application.

Finally, to help guide you through the process, the following links provide detailed information for each corresponding element of the federal stimulus:

• 1st Draw PPP Loans: For qualified recipients that have not previously received a PPP loan
• 2nd Draw PPP Loans: For qualified recipients that have previously received a PPP loan
• Eligible PPP expenses for forgiveness have been expanded
• Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Businesses
• Changes to Employee Retention Tax Credit
• Shuttered Venue Grants: Businesses who qualify for this grant cannot receive this grant and new PPP funds. They will need to make a decision as to which funding source makes the most sense for their business

Best Practices for Employees

A free workshop will be offered on Tuesday, Jan. 19from 9:30 – 11 a.m. concerning the best practices in people management during a pandemic. Coronavirus has changed the employment landscape in a number of ways from new requirements for employee leave to added considerations for personal protective equipment and safe distancing. Join the Northwest Colorado Workforce Area and the Colorado Department of Public Health and Environment (CDPHE) for a free event where you’ll learn the best practices in people management during a pandemic. Register

Unemployment Portal Re-Opens on Sunday

For those workers who are receiving unemployment benefits, the Colorado Dept. of Labor & Unemployment (CDLE ) new portal system is supposed to be up and running by Sunday, Jan. 10. In the meantime, from Noon, Tuesday, Jan. 5 – Saturday, Jan. 9 the Colorado unemployment system will be down as CDLE activates their new My UI Plus Portal. Claimants and staff will be unable to access any info at this time.

• FAQs and background on the new CDLE system are available at this link.