Access to capital continues to be a major struggle for small businesses across the country. Consumed with keeping their businesses running, making payroll, and funding operational shifts due to the pandemic, small business owners require expanded access to funding as they continue to adjust for decreased revenue and strive for full economic recovery.
A recent QuickBooks survey found that as of March 2021, on average, small businesses submitted nearly three times as many applications for loans, grants, and other funding compared to the first nine months of the pandemic. Yet despite increased efforts, securing capital continues to be a major challenge across the small business community.
Thursday’s town hall was designed to provide small business owners with much-needed insight into accessibility of capital, grants, and affordable loans. Moderated by Emmy award-winning journalist Lisa Ling and joined by members of QuickBooks Small Business Advisory Council, the complete lineup of expert panelists included:
- Cedric Richmond, Senior Advisor to the President and Director of the White House Office of Public Engagement
- Luke Voiles, Vice President and Business Leader of QuickBooks Capital
- Dana Donofree, entrepreneur and founder of AnaOno
- Allison DeVane, owner of Teaspressa
The event offered a dynamic forum for business owners to share their stories of struggle and perseverance over the last year as well as ask panelists questions about alternative funding sources and updates on government policies. The panel received multiple questions and while they were not able to answer all, the complete list will be shared with the Mr. Richmond’s office and will also guide future QuickBooks articles.
Ling directed a highly informative and in-depth discussion on the very real and ongoing economic challenges for U.S. small businesses. The following provides a recap of principal topics, discussion points, and questions covered during this one-hour event.
What is the Office of Public Engagement and how does it interact with the Small Business Administration (SBA) and SMBs?
Kicking things off with Cedric Richmond, Senior Advisor to the President and Director of the White House Office of Public Engagement, Ling tackled the first big question on the minds of attendees: What is the Office of Public Engagement exactly?
“We consider ourselves to be the relationship manager and information distributor in terms of constituent groups, small and large business outreach, civil rights organizations and other groups. Our job is to maintain all of these relationships,” explained Richmond. “What’s most important to understand is that we focus a great deal on fostering input from these groups as we develop policies.”
According to Richmond, President Obama described the Office of Public Engagement as “The welcome mat to the White House.” A more detailed description includes the Office’s purpose and mission:
“To be inclusive and accessible to its citizens, the Office of Public Engagement is responsible for creating and coordinating direct dialogue between the Biden-Harris administration and the diverse American public.”
Further, The Office of Public Engagement works directly at local, state, and national levels to ensure that community leaders, small businesses, and diverse and new voices all have the opportunity to inform the work of the President. The core goal is to create and maintain a two-way flow of communication between the administration and communities across the nation so that everyone has a chance to be heard and the administration can take action.
“We make sure that people who contact us with issues and problems are heard, whether it’s about PPP loans or capital required to survive the pandemic. We really work to listen to everyone and then move on resolutions. We try to make ourselves very accessible to our constituents.” said Richmond. “In fact, we are so concentrated on helping small businesses that we moved the SBA to the Cabinet level.”
What is QuickBooks’ place in the world of small business finance? And what do small businesses need right now?
QuickBooks Capital Vice President and General Manager, Luke Voiles, addressed these questions. He was clear that the company is firmly rooted in helping small businesses succeed.
“It always goes back to our core mission. We are here to power prosperity among our customers. This comes in the form of offering a platform that automates a traditionally painful loan process so we can get capital in the hands of business owners sooner.”
QuickBooks Capital recognizes that small businesses need capital—now more than ever. This is what led the company to create its QuickBooks Capital division, which offers small business an alternative to traditional lending institutions for loans at a competitive rate.
Voiles explained that the company has, “…the unique ability to leverage core accounting and payroll services data (with the customer’s permission) to identify businesses in need of capital—expanding eligibility for underwriting small businesses that normally would not have access to the funding required to sustain operations and invest in growth.”
As a fintech company, QuickBooks is in a unique position to make lending decisions. Again, with the permission of its customers, the company can use a rich set of data to quickly evaluate creditworthiness and appropriately measure risk to unlock access to capital for businesses.
Small businesses are the backbone of the U.S. economy and QuickBooks understands how vital the SMB community is.
“It’s why we strive to be a true advocate to small business owners,” said Voiles.
How will the American Jobs Plan impact small businesses?
Richmond addressed a key question on the minds of our attendees. “The American Jobs Plan will create a new grant program through the Minority Business Development Agency that will help small, Brown- and Black-owned manufacturers access private capital,” Richmond shared during the hour-long conversation.The American Jobs Plan, according to Richmond, “Doubles down on the investment in small businesses…We are investing billions of dollars to expand high-speed internet, improve the electric grid, expand access to contracts, and of course open the door to more capital.”
Overall, the America Jobs Plan will provide more than $110 billion to help finance small businesses across industries and build back better women- and minority-owned businesses—many of which were hit especially hard over the last year and a half.
Richmond was direct that the White House is being very intentional about building a strong infrastructure to help small businesses compete.
How is unequal access to funding being addressed?
Voiles addressed the question of funding access inequality and QuickBooks’ role in making capital more accessible to small businesses across industries and within underserved populations.
“There’s an inherent bias built into the lending system. Lenders rely on high FICO scores to grant loans. But within underserved communities, many don’t have the FICO score required to get the loan that will allow them to start building a positive credit history.”
In fact, according to the QuickBooks Small Business Access to Capital Survey, underserved markets were more likely to have a loan or credit application rejected from March through December of 2020.
This is where QuickBooks Capital is focusing their work—creating a new model for the loan application process. The company is using rich data sets to calculate and build loans for underserved markets, including those that have been in business for less than two years and women- and minority-owned businesses. QuickBooks reports that nearly 60 percent of QuickBooks Capital customers would not have qualified for loans through other common lending channels.
“QuickBooks Capital was launched because we saw that our customers have historically been underserved by traditional lenders and banks—often because they’ve been operating for less than two years and therefore lack cash flow and credit history.”
Since the launch of QuickBooks Capital, the company has focused on continually refining its machine learning models to help customers overcome their biggest financial challenges and provide them the capital they need.
Small business owners speak…
In the second half of the event, Ling addressed comments and questions from Town Hall attendees. Among the hundreds of responses, a clear pattern emerged. Top questions and concerns included:
- “I cannot find help.”
- “No one will help me.”
- “Why is it so difficult to access these funds?”
Clearly, many small business owners are still struggling to recover and get their hands on funding. To ensure that the small business owner perspective was properly represented, two members of Intuit’s Small Business Council, Dana Donofree and Allison DeVane, joined the conversation. Intuit’s Small Business Council is dedicated to helping raise the voice of QuickBooks customers and ensure they have a seat at the policy table.
First up was Dana Donofree, entrepreneur and founder of AnaOno intimate apparel. Donofree was inspired to create her unique product line to meet the needs of those who have undergone breast surgery that is commonly related to a cancer diagnosis.
Question for Dana: “When you launched your business seven years ago you were self-funded—what has it been like since then trying to get capital for a growing business?”
“I decided to self-fund my business because investors and lenders were just not available to me,” Donofree explained. “I was shocked to find out that capital was very difficult to secure. I used credit cards and personal bank loans.”
After a while, however, Donofree got creative. “I started to look into corporate grants and found many opportunities. In fact, I applied for and received a $10,000 grant from Intuit. I also took advantage of the EIDL and PPP loan programs.”
Second to the conversation was Allison DeVane, owner of Phoenix-based business, Teaspressa—supplier of an all-natural, specially-blended tea that brews like coffee.
Question for Allison: “As someone in the food and beverage industry, you experienced a great deal of upheaval this past year. Where are you right now and what do you need to succeed going forward?”
“My story is similar to Allison’s. It was mind-blowing to find out how hard it is to get start-up money. I actually went on Shark Tank to pitch my business idea in addition to charging up credit cards. When the pandemic hit, I relied on PPP funds to get us through and help us during an extreme-pivoting time.”
Opening the discussion up to all attendees, the following additional questions were posed and answered by panelists.
Ling highlighted more data from QuickBooks Small Business Access to Capital Survey, specifically the fact that Black- and Hispanic-owned businesses were the most likely to seek funding during the pandemic.
In reaction, attendee Jacob from Texas asked: “What is the Biden Administration doing to help minority-owned businesses?”
“We changed a lot of rules under the PPP program to make sure that minority-owned and small businesses got more of the money in the second round of funding over larger businesses, which is what happened in the first PPP round,” Richmond explained.
Richmond added: “We also put thirty billion dollars into the SBA to support black- and brown- owned businesses because we know how instrumental they are in the community. When you invest in minority-owned businesses, you invest in the community at large.”
Next, Ina in California asked, “What’s the best way to be prepared on paper for a loan application?”
Taking paper out of the process altogether was Luke Voiles advice. “The process has to be automated. If you are using QuickBooks, you have all the data you need on hand and in real time to support any type of loan.”
This means not searching for paper files like W-2s or 1099s. All the information you need is right there in your system to fulfil loan requirements. It’s far more efficient…and that’s what the busy small business owner needs.
Gabrielle from California (along with many others) wanted to know, “Is there help on the way for sole proprietor businesses?”
“We’ve already offered some relief” said Richmond. “We instituted reforms to the PPP program to make loans equitable for sole proprietors. And we will continue to monitor and make changes to help open up access to capital.”
Aimee from Tennessee asked, “What are some ways to attract capital from investors?”
Dana Donofree addressed this question by, first, spotlighting an inherent challenge with women-owned businesses. “We just have a harder time in the board room. That’s just a fact, so we have to be very persistent. When you hear a no, just keep pushing for a yes. This is what we have to do until we get more women at the investor table.”
She also shared a big learning experience. “I always started my pitch with how the product will improve the lives of our buyers. What investors really want to hear is that you understand the market and business model. This is the key to getting investors to listen and engage. Explain to them how your product will make money first and how it will help people second.”
Barbara in Pennsylvania made her concerns clear: “It would be tremendously helpful if we could find a lender who could help us consolidate our loans into a program that would allow us to move forward. Does the SBA provide that support?”
“I’m not aware of the ability to consolidate loans,” Richmond said. “But I do know that the SBA offers a program called Lender Match, which can help businesses with added capital. I recommend visiting the SBA website for more information.”
Vera in Colorado asked, “How do you find funding if you don’t fit into traditional lending guidelines? And what makes you an attractive lending prospect?”
The traditional lending model is simple: money is lent with the expectation of getting paid back with interest. So, what makes a business an attractive prospect under the traditional model is size and length of time in business. This is why it’s so hard for small and newer businesses to get approved for loans.
“It goes back to changing the model. QuickBooks Capital, for example, wants to see monthly cash flow after expenses that is sufficient to make a monthly loan payment. It’s nothing to do with size or longevity in the market. This is the model of the future,” explained Luke Voiles.
Ling then directed attention back to other top questions among the small business community. This included questions around potential changes to the PPP loan program and clarity around grants versus loans.
What is the difference between a grant and a loan?
While this may seem like a simple question with a simple answer, the PPP program complicated the distinction between grants and loans.
Voiles explained: “A grant is money that doesn’t have to be paid back. A loan provides capital that has to be paid back with interest. But PPP loans blurred the line. The PPP program offered loans to small businesses. However it also came with a set of guidelines that, if met, converted the loan to a grant and offered forgiveness.”
Grants are clearly more attractive to small businesses. Voiles recommends leveraging resources offered through the SBA to help navigate available loans and how to apply.
Will there be another round of PPP coming? And how do you find out about additional government funding?
“Without an additional appropriation from Congress, you won’t see additional money put into the PPP program,” explained Richmond. “But today there is still approximately seven billion dollars available in the PPP fund.”
Richmond also advised small businesses to take advantage of the employer retention credit. This credit covers up to $28,000 a year per employee to cover payroll costs.
Other funding options exist as well, including the 504 program, which is a loan that converts to a grant once completed. In fact, there are so many options that it can be overwhelming to navigate. As such, Richmond reminded listeners that the best course of action is to work through the SBA to identify and work to secure funding.
“I will say that we are getting more and more creative on ways to work with small businesses. The government is committed to stepping up to help build back better our small business communities,” said Richmond.
Additionally, Dana Donofree encouraged businesses to also look to corporate America for capital. “There is so much money out there. You just have to be willing to put in the work to win the grants. Do the research on the companies offering the grants, get to know their core values, and put that to work for you in your grant writing. I never had to apply for a federal grant. I secured most capital from corporations.”
What’s coming to help the restaurant industry?
There is no argument that the restaurant industry was one of the hardest hit by the pandemic. According to Richmond, his office is working hard to continue to support food and beverage-based businesses.
“We know how hard restaurants were hit. That’s exactly why we created the Restaurant Relief Fund. The RRF put $30 billion dollars back into the industry,” Richmond stated. “And rest assured that we are going to continue to look at additional ways to help.”
What’s on the horizon?
Offering up a positive end to a highly informative discussion around small business funding challenges, panelists left attendees with what they feel are bright spots on the horizon.
Dana Donofree: “COVID put small businesses under the microscope and really forced us to look at weaknesses in the funding process. We can now work to improve the disparities…and that’s a good thing.”
Allison DeVane: ”We learned how far technology can take us. Just look at QuickBooks Capital and what they are doing to help small businesses get loans. I’m excited to see what happens next.”
Luke Voiles: “We can see in the data that things are getting better. Most businesses are 90 percent back to where they were last year.”
Cedric Richmond: “When we come together, there is nothing we can’t achieve. And we have a government that is helping in a focused and dedicated way. I marvel at the resilience and determination I see in the small business community. That’s something we can all be proud of.”
Missed the event? Access it now.
If you missed today’s town hall, watch it on-demand here. Additionally, for more timely and helpful information visit the QuickBooks Resource Center to access articles and posts containing useful tips for small businesses.
For more resources and information on securing small business loans and grants, visit: