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Why marketers should avoid discounting (and what you can do instead) [OC}

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Source (with images): https://www.linkedin.com/pulse/you-cannot-buy-customers-why-marketers-should-avoid-grolleman/

~ I can count on one hand the times I’ve cooked the last year, living in Shanghai. Thanks to coupons on food delivery APP’s, not only is it often cheaper to have food delivered than to eat it at a restaurant, it’s difficult to make dishes yourself in your own kitchen and compete on price with the raw ingredients you have to buy (and cooking skills, but that is not the point here).

There was a time though, that this was even more extreme. A few years ago you could basically eat for free if you’d just change APP every day, each platform offering weekly coupons you could use. Now only Ele.ma and Meituan remain.

We saw a similar price war in 2018 and 2019 with sharing bicycles; Ofo versus Mobike. Ofo was the worst of them, the company mainly aiming to be the cheapest and growing through deposits from users. I never found an Ofo bike that was in decent shape. It always had at least one wheel bent, a handgrip missing, or worse, you’d scan the QR code and then discover that the bike had no chain.

In a rush, Ofo and Mobike also tried to expand overseas in Southeast Asia, Japan, the US, and Europe. Both brands burned through their cash. Ofo went up in smoke and Mobike had to retreat to just serve China, before being bought by Meituan.

But there is a winner here. HelloBike, a third competitor, focussed on lower-tier cities (getting 95% of its users from tier 2 & tier 3 cities), and now they’ve made their way to Shanghai, quickly replacing the Mobikes on the sidewalk. HelloBike doesn’t rely on a low price (although they’re still cheap). Rather, they’re embedded into Alipay, so you can quickly scan it and you don’t need to register a new APP. And they’re in good shape. And they’re everywhere.

Sadly for marketers, discounting is such a drug.

The IRI states that in the UK supermarkets, more than 50% of food & non-food products are now sold on discount, and that discount is now one of the most significant marketing expenses, usually costing more than TV advertising.

The main misconception about discounting is how much it eats into your profit. Let’s do a simple calculation. If your profit margin is 20% and you give a 10% discount, that means you cut your profits by 50%. In this scenario, you need to double your sales to break even, something a 10% discount is unlikely to do.

Besides this, there are more reasons to avoid discounts:

  • You turn your product into a commodity.
  • It signals low quality and low confidence, which erodes brand value. You’re saying to your customers “Yeah, we’re not really worth that much”.
  • Discounting mainly benefits the people who already buy your product. If your product is non-perishable, they might bulk-buy or learn to buy on discount.
  • There is no evidence that discounting increases loyalty. As soon as discounts stop, customers go back to their normal purchase patterns.
  • In fact, the opposite may be true; customers who paid the full price before will be annoyed and reluctant to pay the full price again in the future.
  • Rather than discounting, investing in a brand has much higher returns, especially in the long term.

Would you still buy Ferrero Rocher if it was much cheaper? Apple smartphones? Gilette razers? Nike sneakers? Nintendo is known for rarely lowering prices on their consoles for years after its release, and the same for any premium fashion brand.

These brands gain credibility from their pricing power. McKinsey states that 80 to 90% of incorrect pricing decisions are made by marketers who simply charge too little, not too much.

Discounting is an addictive habit that is hard to stop, because it contributes directly to short-term sales numbers, even if it comes at the expense of future profits, brand image and customer relationships. Customers, now with their closets full of your product, can sit out a few months to buy again, creating a vicious cycle: you need more discount to keep up sales levels.

It’s very hard for marketers to hold their ground when it comes to discounting, but here are some things that help:

  • Use the Westendorp pricing model, helping you hit the range between too cheap and too expensive.
  • Introduce different pricing models. Mercedes-Benz has the affordable A-class as well as the CLK. For GoEast Mandarin we offer private & group classes.
  • If you must have an incentive, you can also operate from a strength, e.g. “Only 5 places left for this course”. If you must give away something, give away something else than your core product. This can actually improve the brand, rather than erode it (see figure 14 from ’The Long & Short of it’).
  • If you must discount, offer it to groups that need it and can grow into full-paying customers, such as students (such as Apple is doing).

The reason why brands fail is rarely about lack of discounting. Mobike, Ofo, Toys R Us, Borders, Blockbuster, Thomas Cook, and Hummer didn’t fail because they weren’t cheap enough, but rather that they didn’t offer anymore what the customers wanted, and somebody else offered it better. Discounting wouldn’t have saved them, and to have relied on it instead of saving their business is just lazy.

Brands may succeed on low pricing, but it’s very rare. When brands fail, when customers don't want to buy your product, it’s rarely because of pricing alone. The advice on discounting is: Set your normal pricing right, and just don’t discount.

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Marketing Strategies

The semiotics of face masks

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It’s difficult to get adults to wear bicycle helmets. (I wrote about this on the blog 16 years ago).

The reason has nothing to do with comfort or safety. It has to do with signals.

Semiotics is the science of flags, signals and other communications. It studies the very human act of judging something (or someone) based on limited information as we seek the message behind the signal, all in a quest for belonging and social standing.

Even more than helmets, face masks make a statement.

Ten years ago, if you wore a face mask at work, you were either a surgeon, a carpenter or a bank robber.

As they began to spread, mainly in parts of Asia, the mask was interpreted by some non-mask wearers as either a generous act (the wearer doesn’t want to infect others) or something slightly paranoid.

Then, when the pandemic first arrived in the US, masks became the focus of hoarding. Like toilet paper, it was a way to sacrifice time and money to get something scarce and reassuring. People weren’t reading scientific journals, they were grasping. The hoarding had the unfortunate side effect of keeping masks from front-line medical workers who needed them. It also created a sense of false security because many of the people who were using them had no clue how to use them properly, causing them to be worse off than if they hadn’t had them at all.

If you wore a mask on Main Street as you shopped in early March 2020, it was probably not increasing your social standing.

And then, as some newspapers shifted their stance and homemade masks began to appear, the story changes again–worth noting that even fast fashion has never changed this fast.

And so the storytelling continues. “Why is that person wearing a mask,” the non-mask wearer asks themselves. Is it to shame me? To let me know that they’re ill and I should steer far away? Perhaps it’s a way of identifying them as anti-social, because, after all, I’m not wearing one… Or maybe they’re smarter than me and I’m behind?

The narratives may also be shifting from, “how do I protect myself?” which is a self-directed desire, to, “how do I keep others protected?” This is generally a hard sell in the world of the Marlboro Man, bespoke disposable water bottles and the Hummer.

Notice that none of these internal monologues have much to do with epidemiology or public health. Face masks might help, it’s not certain, but the semiotics of social standing and cultural posture happen long before we actively consider the science.

Whether or not you choose to wear a mask, drive a Prius or even a pickup truck, it’s worth remembering that because we’re human, we start with two things: What’s the story I’m telling myself, and what’s the story I’m telling everyone else.



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Marketing in Times of Uncertainty – Whiteboard Friday

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Posted by randfish

Our work as marketers has transformed drastically in the space of a month. Today, we’re grateful to welcome our good friend Rand to talk about a topic that’s been on the forefront of our minds lately: how to do our jobs empathetically and effectively through one of the most difficult trials in modern memory.

We hope you’ve got a cozy seat in your home office, a hot mug of coffee from your own kitchen Keurig, and your cat in your lap as you join us for this week’s episode of Whiteboard Friday.

Video Transcription

Howdy, folks. I’m Rand Fishkin, founder of Moz and co-founder of Sparktoro. And I’m here today with a very special edition of Whiteboard Friday. 

I think that now is the right time to talk about marketing in uncertain epochs like the one we’re living through. We obviously have a global crisis. It’s very serious. But most of you watch Whiteboard Friday. Know that here at Moz, right, they’re trying to help. They want to help people through this crisis. And that means doing marketing. And I don’t think that now is the right time for us to stop our marketing activities. In fact, I think it’s time to probably crunch down and do some hard work. 

So let’s talk about what’s going on. And then I’ll give some tactics that I hope will be helpful to you and your teams, your clients, your bosses, everyone at your organizations as we’re going through this together. 

The business world is experiencing widespread repercussions

First off, we are in this cycle of trying to prevent massive amounts of death, which is absolutely the right thing to do. But because of that, I think a lot of us in the business world, in the marketing world, are experiencing pain, particularly in certain industries. In some industries obviously demand is spiking, it’s skyrocketing for, you know, coronavirus-related reasons. And in other cases, demand is down. That’s because we sort of have this inability to go out.

We can’t go to bars and restaurants and movies and bowling alleys and go do all the things we would normally do. So we don’t need fancy clothes to go do it and we don’t need haircuts — this is probably the last Whiteboard Friday I would want to record before needing a cut. And all of that spending, right, that consumer spending affects business-to-business spending as well

Lower spending → cost-cutting → lower investment/layoffs → environment of fear…

It leads to cost cutting by businesses because they know there’s not as much demand. It leads to lower investment and oftentimes layoffs as we saw in the United States, where nearly 10 million workers are are out of work, according to the latest stats from the federal government. And that builds this environment of fear, right. None of us have faced anything like this. This is much bigger and worse, at least this spike of it is, than the Great Recession of 2008. And, of course, all of these things contribute to lower spending across the board. 

However, what’s interesting about this moment in time is that it is a compressed moment. Right. It’s not a long-term fear of of what will happen. I think there’s fears about whether the recession will take a long time to recover from. But we know that eventually, sometime between 3 and 18 months from now, spending will resume and there will be this new normal. I think of now as a time when marketing needs to change its tone and attitude.

Businesses need to change their tone and attitude and in three ways. And that’s what I want to talk through. 

Three crucial points

1. Cut with a scalpel, not with a chainsaw

First off, as you are looking to save money and if you’re an agency, if you’re a consultant, your clients are almost certainly saying, “Hey, where can we pull back and still get returns on investment?” And I think one of the important points is not to cut with a chainsaw. Right. Not to take a big whack to, “Oh, let’s just look at all of our Google and Facebook ad spending and cut it out entirely.” Or “Let’s look at all of our content marketing investments and drop them completely.” That’s not probably not the right way to go. 

Instead, we should be looking to cut with a scalpel, and that means examining each channel and the individual contributors inside channels as individuals and looking at whether they are ROI-positive. I would urge against looking at a say, one-week, two-week, three-week trend. The last three weeks spending is very frozen and I believe that it will open up more again. I think most economists agree. You can see that’s why the the public stock markets have not crashed nearly as hard. We’ve had some bouncing around.

And I think that’s because people know that we will get to this point where people are ordering online. They are using businesses online. They are getting deliveries. They are doing activities through the Internet over the course of however long we’re quarantined or there is fear about going out and then it will return to a new normal. 

And so because of that, you should probably be looking something like six to twelve weeks in the past and trying to sort out, OK, where are the trends, where are their lifelines and opportunities and points of light? And let’s look at those ROI-positive channels and not cut them too soon. 

Likewise, you can look inside a channel. If you haven’t seen it already, I highly recommend Seer Interactive’s guide to cutting with a scalpel, not a sledgehammer, and they look at how you can analyze your Google Ads accounts to find keywords that are probably still sending you valuable traffic that you should not pull back on. I would also caution — I’ve talked to a bunch of folks recently who’s seen Facebook and Instagram and Twitter and YouTube and Google ad inventory at historically low prices. So if you have ROI-positive channels right now or your clients do, now is an awesome time to be to potentially be putting some dollars into that. 

2. Invest now for the second & third waves in the future

Second thing, I would invest now for the second and third waves. I think that’s a really smart way to go. You can look at Harvard Business Review and Bloomberg and a bunch of folks have written about investing during times of recession, times of fear, and seeing how. Basically when we when we go through wave one, which I think will be still another two to six weeks, of sort of nothing but virus-related news, nothing but COVID-19, and get to a point where we’re transitioning to this life online. It’s becoming our new every day. And then getting to a post-crisis new normal, you know, after we have robust testing and quarantining has hopefully worked out well. The hospital systems aren’t overwhelmed and maybe a vaccine as is near development or done.

When those things start to come, we will want to have now messaging and content and keyword demands serving. Right. And ads and webinars. Anything that is in our marketing inventory that can be helpful to people, not just during this time, but over the course of these, because if we make these investments now, we will be better set up than our competitors who are pulling back to execute on this. And that is what that research shows, right, that essentially folks who invest in marketing, in sales during a recession tend to outperform and more quickly outperform their competition as markets resume. You don’t even have to wait for them to get good — just as they start to pick up. 

3. Read the room

The third and possibly most important thing right now is, I think, to read the room. People are paying attention online like never before. And if you’re doing web marketing, they’re paying attention to your work. To our work. That means we need to be more empathetic than we have been historically, right? They are. Our audiences are not thinking about the same things they were weeks ago. They’re in a very new mindset. It doesn’t matter if they’re business-to-business or business-to-consumer. You are dealing with everyone on the planet basically obsessed with the conditions that we’re all in right now. That means assuming that everyone is thinking about this.



I really think the best type of content you create, the best type of marketing you can create right now across any channel, any platform is stuff that helps first. Helps other people. It could be in big ways. It could be in small ways. 

The Getty Museum, I don’t know if you saw Avinash Kaushik’s great post about the Getty Museum. They did this fun thing where they took pictures from their museum, famous paintings and they put them online and said, “Hey, go around your home and try and recreate these and we’ll post them.” Is it helping health care workers get masks? No. But is it helping people at home with their kids, with their families, with their loved ones have a little fun, take their mind off the crisis, engage with art in a way that maybe they can’t because they can’t go to museums right now? Yeah, that’s awesome. That’s fine. It’s okay to help in little ways, too, but help first. 

I also think it’s okay to talk about content or subjects that are not necessarily related to the virus. Look, web marketing right now is not directly related to the coronavirus. It’s not even directly related to some of the follow-on effects of that. But I’m hoping that it’s helpful. And I’m hoping that we can talk about it in empathetic and thoughtful ways. We’d just have to have to read the room. 

It is okay to recognize that this crisis is affecting your customers and to talk about things that aren’t directly related but are still useful to them. 

And if you can, I would try not to ignore this, right? Not not to create things that are completely unrelated, that feel like, “Gosh, this could have been launched at any time in the last six months, sort of feels tone deaf.” I think everything that we do is viewed through the lens of what’s happening right now. And certainly I have that experience as I go through online content. 

Do not dismiss the scenario. I think that that history will reflect very poorly. History is moving so fast right now that it is already reflecting poorly on people who are doing this. 

Don’t exploit the crisis in a shameless way. I’ve seen a few marketing companies and agencies. I won’t point them out because I don’t think shaming is the right thing to do right now, but show how you’re helping. Don’t exploit by saying “It’s coronavirus times. We have a sale.” All right? Say, “Oh, we are offering a discount on our products because we know that money is tight right now and we are helping this crisis by donating 10 percent of whatever.” Or, “We are helping by offering you something that you can do at home with your family or something that will help you with remote work or something that will help you through whatever you’re going through,” whatever your customers are going through. 

Don’t keep your tone and tactics the same right now. Oh, yes, I think that’s kind of madness as well. I would urge you, as you’re creating all this potentially good stuff, new stuff, stuff that plans for the future and that speaks to right now, go ahead and audit your marketing. Look at the e-mail newsletters you’re sending out. Look at the sequential emails that are in your site onboarding cycles. Look at the overlay messaging, look at your home page, look at your About page

Make sure that you’re either not ignoring the crisis or speaking effectively to it. Right. I don’t think every page on a website needs to change right now. I don’t think every marketing message has to change. But I think that in many cases it’s the right thing to do to conduct an audit and to make sure that you are not being insensitive or perceived as insincere. 

All right, everyone, I hope that you are staying safe, that you’re staying at home, that you’re washing your hands. And I promise you, together, we’re going to get through this.

Thanks. Take care.

Video transcription by Speechpad.com

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Where to Find Public and Private Small Business Funding in 2020

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With the recent passing of a $2 trillion U.S. stimulus package, small business owners impacted by COVID-19 have been given options for low-interest loans, financial assistance, and other aid that can help them in this uncertain economic time.

Aside from this stimulus package, a number of private, state and local institutions have also stepped up to provide aid, assistance, and loans to small business owners suddenly facing unforeseen challenges.

With a number of different options emerging, small business owners might be asking themselves, “Which options am I eligible for?” and “Which funding option is right for my particular business?”

To help business owners and entrepreneurs looking for financing options, we’ve compiled a list of public and private opportunities for small businesses.

National Funding Resources for Small Businesses

Small Business Administration

The Small Business Administration is a federally funded organization that provides loans, debt relief, and other financial aid to small businesses with 500 employees or less.

Currently, the Small Business Administration oversees small business loans from SBA-approved lenders, such as banks. While SBA doesn’t lend money directly to small business owners, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions. This process reduces the risk for lenders, which — in turn — enables more small businesses to receive loans.

Source

Here are a few examples of loans that the Small Business Administration coordinates:

Paycheck Protection Program

This program provides low-interest loans of up to $10 million funded by the recently passed CARES Act. These loans aim to prevent the financial downturn of small businesses impacted by COVID-19. The program assists business owners in paying employee payroll, mortgage payments, or other vital business expenses.

According to the SBA’s site, up to 100% of the loan is forgivable and partial forgiveness will be granted if all employees stay on the payroll for eight weeks or more after a business receives the loan.

Economic Injury Loan Assistance

As part of another emergency preparedness act, small businesses impacted by COVID-19 can apply on the SBA site for a low-interest disaster loan of up to $2 million. Applicants will receive a decision about their loan within three days of applying.

These low-interest loans will have a payback period of up to 30 years, determined by lenders on a case-by-case basis. Each loan’s interest rate will be 2.75% for non-profits and 3.75% for other small businesses.

Standard 7(a) Small Business Loans

The 7(a) loan program is the SBA’s primary program for small businesses. The terms and conditions, like the guarantee percentage and loan amount, vary by the type of loan. These small business loans are often used for smaller startup business costs and are not related to emergencies or disasters.

The 7(a) loan size is usually between $350,000 and $5 million. Lenders are not required to take collateral for loans up to $25,000. For loans over $350,000, the SBA requires a lender to accept as much collateral as possible. This collateral could include a business’ fixed assets, trading assets, or real estate.

Express Small Business Loans

Express loans are similar to 7(a) Small Business Loans in that they max at $350,000 and will require lender collateral. The key difference is that applicants will get a decision and disbursement within 36 hours of applying for the loan. Like other SBA loans, the lender determines the eligibility and the loan’s terms.

For more urgent loans, exporters can apply for an Export Express loan. Applications for these loans, which cap at $500,000, will get a response from lenders within 24 hours.

Aside from the loans mentioned above, SBA also offers assistance for veterans, businesses that require short-term seasonal loans, and small businesses that need loans for international trading purposes.

You can find more about SBA’s standard loan programs here. On the SBA website, you can also find information about SBA lenders.

While SBA primarily provides loans, the administration also works with organizations to provide grants to businesses in certain fields, such as scientific research and development and exporting. Information about these specific grant opportunities can be found on the SBA’s grant page.

Grants.gov

Grants.gov is a comprehensive site that educates grant applicants about funding opportunities and allows them to search a huge catalog of federal, state, and local grants from a variety of different organizations.

While anyone can use the website to find grants for many different purposes, small business owners can filter searches to grants that directly pertain to their company or industry.

Grants.gov grant search database

Although there are thousands of searchable grants on this database, it’s important to note that many of them focus on non-profits, health, education, or public service. Additionally, many of the grants offered are from federal or state-funded organizations. This means that some for-profit small businesses might have difficulty finding grants related to their field.

Private Assistance and Lenders

In the coming months, many private banks will be offering assistance or special funding opportunities for individuals or small businesses. Here’s a quick rundown of companies with temporary assistance or ongoing small business loan programs:

JPMorgan Chase’s Small Business Pledge

In light of COVID-19, JPMorgan Chase has pledged $2 million to its nonprofit partners around the world and $8 million to “assist small businesses vulnerable to significant economic hardships in the U.S., China, and Europe.”

The banking company says they will be working with community development financial institutions around the world that will provide low or zero-interest loans and interest rate buydowns to owners. JPMorgan Chase will also aim to financially help those who’ve benefited from its Ascend and Entrepreneurs of Color funds.

Along with the aid noted above, Chase and JPMorgan are SBA-approved lenders, meaning they offer many of SBA’s low-interest loan options. They also offer real-estate, equipment, and business trade financing to small businesses.

Small business owners can also apply for short-term loans of up to $5,000. These loans have fixed or adjustable rates and can be paid back between one and seven years.

TD Bank Loans and Lines of Credit

TD Bank offers credit lines, loans, mortgages, and equipment leasing to small businesses.

According to TD, credit lines are best for borrowing $25,000 to $500,000. However, larger lines are available for commercial-sized businesses. Interest rates vary based on the credit line. When paying the money back, credit line recipients have the option to pay towards the overall credit line, or just pay interest-only.

When it comes to loans, mortgages, and equipment leasing, TD Bank says it can lend up to $1 million to small business owners. Similarly to credit lines, larger loans are available for commercial companies.

Like many other financial institutions on this list, TD Bank is an SBA lender and also claims to offer competitive interest rates.

Capital One

Capital One is also an approved SBA lender. Aside from SBA lending, Capital One also offers business installment loans. These loans are fixed-term loans of $10,000 or more.

According to Capital One’s website, the loans require monthly payments with a max payback period of five years. The company also aids small businesses in consolidating debt, so they only have to pay one lender each month.

Wells Fargo’s Small Business Initiative

According to a recent press release from Wells Fargo, the banking chain will soon be offering resources to meet the urgent needs of small businesses impacted by COVID-19.

As part of Wells Fargo’s initiative, the institution will dedicate $2 million “to the deployment of flexible capital in collaboration with Opportunity Fund and will also provide immediate cash boosts and financial coaching support of entrepreneurs and their low-wage workers in coordination with SaverLife.”

Aside from the initiative noted above, Wells Fargo offers three types of loans: unsecured business loans, Equipment Express Loans, and an Advancing Term loan. The first two loans are aimed at one time projects or purchases.

The loans can be for an amount between $10,000 and $100,000 and have payback periods of one to five years or two to six years respectively. The Advancing term loan is a $100,000 to $500,000 working capital loan which requires business assets as collateral.

The banking institution also offers credit lines between $5,000 to $100,000. Interest rates vary depending on the line. No collateral is required for these lines and all businesses that use them are automatically enrolled in Wells Fargo’s rewards program. For larger businesses, which make $2-to-$5-million annually, Wells Fargo also offers a Prime Line valued between $100,000 and $500,000

BlueVine

BlueVine is an organization that provides small businesses with loans between $5,000 and $5 million. Interest rates for loans and credit lines start at 4.8% and vary based on the type and size of loan selected. The company offers three specific types of lending: Credit lines of up to $250,000 with no repayment penalties. term loans of up to $250,000, and Invoice factoring — a credit line specifically for invoices — of up to $5 million.

To apply for a BlueVine credit line or loan, you must have $10,000 in revenue and have been in business for more than six months. The business owner must also have higher than a 600 FICO score. Eligibility information is not noted online for BlueVine’s invoice factoring service.

Once an application is submitted to BlueVine, the lender could respond within five minutes or 24 hours.

Funding Circle

Funding Circle offers small business loans between $25,000 and $500,000. Loans are fixed term and can have a payback period between six months and five years. Interest and origination fees might vary based on the type and size of the loan.

The company says that loan applicants will receive a decision within 24 hours of applying. According to its website, Funding Circle also provides loans for female entrepreneurs, minorities, and small business acquisitions.

Funding Circle is also an SBA-approved lender. According to its website, it will soon be offering loans funded by the Paycheck Protection Program, noted in the CARES Act.

Small businesses that are interested in working with this company to receive Paycheck Protection Program loans can sign up to receive email notifications when applications are launched specifically for it.

It’s important to note that certain Funding Circle loans require a one-time fee before they’re dispersed. When an applicant is approved for a loan, they’ll receive the fee and interest information before being required to commit to the loan.

To receive a loan from Funding Circle, business owners must have an Experian credit score of 660. Additionally, businesses in some industries are ineligible for term loans. These industries include speculative real estate, nonprofit organizations, weapons manufacturers, gambling businesses, and marijuana dispensaries. They also cannot provide loans to businesses in Nevada due to the state’s lending regulations.

PayPal Business Loans

PayPal offers small business loans between $5,000 and $500,000 to companies that have been in business for nine months or more and have a free PayPal Business profile.

According to PayPal’s site, no interest is due on the loan if it is paid back within the first six months. The amount of interest and payback period varies based on the type of loan businesses apply for.

To receive a PayPal loan, businesses must be more than nine months old, earn $42,000 annual revenue, and not have any active bankruptcies. Any business owner in the United States can apply for a PayPal loan, but they must have a FICO score of at least 550. Like Funding Circle, PayPal notes that some industries are ineligible for business loans.

Citi Fee Waivers

For retail customers and small business customers, Citi has waived fees on certificate of deposit withdrawals until May 2020. For small businesses, Citi will also provide waivers for monthly service fees and remote deposit capture.

Additionally, those with a Citi credit card might qualify for a forbearance program which would delay them from needing to pay back their full balance.

State and Local Funding Resources for Small Businesses

State-Funded Programs

Each state offers different benefits, tax exemptions, loans, or grant opportunities for businesses. To learn more about state-based assistance and funding, visit your state department’s website.

For example, small business owners in Massachusetts can visit mass.gov to find information about state-mandated COVID-19 relief. On this page, you’ll find information about Massachusetts’ own relief funding, as well as federal loan options.

Additionally, you can also check out the grants.gov database or this interactive map that allows you to see assistance opportunities by state.

Local Banks and Credit Unions

While many big banks are currently offering loans related to the financial climate, your local bank or smaller chains might also be allowing small business owners to take out loan amounts with interest rates and payback periods that work for them.

Tips for Picking the Right Funding

While the CARES Act and private business initiatives have opened the door to a number of financial opportunities for businesses, there are still a few things small business owners should keep in mind.

First, it’s important to note that some of the loans above might come with fees. For example, you might have to pay a small fee to disburse the loan in the first place.

Secondly, some of these loans do not disperse all at once. For instance, loans of up to $10 million designated by the CARES Act will offer small businesses a cash advance of up to $10,000 before the rest of the funds are dispersed.

Before committing to a loan, small businesses might need to look at their timeline for paying bills and other expenses and make sure that a loan’s disbursement works for them.

Lastly, and most importantly, when accepting a loan, a small business owner agrees to pay it back.

While some loan programs are currently offering deferment or partial forgiveness programs, most will expect all the funds plus interest to be paid back. As business owners research these loans, they should fully understand the payback and interest rate terms before committing. They should also have a financial plan and backup plan for how they will pay off the loans and interest in the future, regardless of whether their business is or is not running.

Disclaimer: This blog post is meant as a basic resource and not a comprehensive guide. We will regularly update it to add more information as funding opportunities become available or change.





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