1) PROBLEM – CASH – Without cash, companies cannot survive. According to a press release by Wefunder, “Small businesses critically need access to cash in order to survive, and simultaneously, customers and community members desperately want to help,” said Jonny Price, Director of Fundraising at Wefunder. “Small businesses should be exploring multiple options for raising capital immediately, and one of those options can be their friends, family, and customers who love them and want to support them.” The economic impact of coronavirus is expected to be devastating for many small businesses, which make up 99.7% of all U.S. firms with paid employees, and employ nearly 50% of America’s workforce. A 2016 report by JP Morgan Chase notes that the median small business holds 27 cash buffer days in reserve. And a recent survey conducted by Goldman Sachs revealed 51% of small business owners say they can only continue to operate for 0-3 months.
SOLUTION – Coronavirus Crisis Loan. Wefunder’s Coronavirus Crisis Loan is designed to help small businesses leverage the support they already have from their community and customers, into a loan with terms that are very friendly for small business owners. According to the press release companies can apply for loans from $20,000 to $1 million. Repayments will be deferred until 2021.
When repayments begin they will be based on revenue and lenders can opt to lend for as low as 3% simple (non-compounding) interest. According to Johnny Price, Director of Fundraising “Typically Wefunder’s Revenue Share Note is based on a multiple of investment.” For example, if you invest $1 you are entitled to 1.5 times your investment or $1.50. “However, this one is a simple interest note. The interest accumulates on the loan and not the interest,” says Price. In addition, “Quarterly repayments are based on a percent of revenue. Hence, if we are slower to get out of this economic crisis, and revenues are slower in the beginning, then the debt payments will be lower. This is exactly what small businesses want/need at this time.”
2) PROBLEM – INNOVATION – Unless you’ve been absent from the news there is a dire need for equipment, supplies, treatment and vaccines. “However, it really goes beyond this,” says Price. “We need to support companies that can provide innovation into senior care and remote education.” While State Governments are trying to source desperate equipment, companies are gearing up to supply demand. Many of them need both cash and guidance.
SOLUTION – FIGHT THE VIRUS CHALLENGE – Wefunder is launching a three-month accelerator to invest in startups tackling the crisis in sectors including biotechology, senior care and remote education. The online accelerator will invest $50,000 to $1 million in these startups. The program is 3 months long and besides
receiving cash, companies will receive “support from a network of world-class mentors” from Wefunder’s network that will allow these companies to innovate and “move faster.” Companies can apply online and the deadline for applications is April 3rd.
“This is our generation’s moment to rise to the occasion,” said Nick Tommarello, Wefunder’s CEO. “We’re 100% focused on doing our part. We can’t match the heroism of our doctors and nurses, but we can help save more small businesses, and fund more startups tackling this crisis head-on.”
Governments both State and Federal cannot move at the same speed as small enterprises. At times like this we need to identify those small enterprises that can help tackle some of the larger challenges we face. If we can pull them together and help fund them we will not only address significant challenges and bottlenecks but create a blueprint for dealing with these economic challenges going forward
