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Is PPP The Right Approach to Keeping Businesses Alive? One Startup’s Research Says No

PPP and other Cares Act funding was released to businesses under the disguise of ‘trying to keep them alive’. This is because governments know that businesses are the touchstones of local economies. They are the source of jobs, commerce, and vital services.

 

However, we keep seeing the negative news headlines daily, as small businesses continue to fail despite over $6 trillion in relief. 20% to 40% of small businesses are closing their doors in America, and this is amidst PPP relief efforts.

 

MainVest, on the other hand, is seeing 100% of their businesses in good standing. According to their most recent report, 95% ofMainVest businesses are moving forward and have either reopened, or are currently preparing for reopening as local regulations dictate.

 

The lessons from these businesses show a resounding alternative, or supplemental, model to PPP: rely on business owners and their communities through direct support efforts. Their research on their businesses shows the key success factors to remaining viable through Covid-19 are:

1) Entrepreneurs that raise capital from their community own the sense of responsibility that comes with that obligation. They’re extremely committed to doing whatever it takes to stay afloat, our studies show.

2) They are innovative – small business adoption of tech solutions driving operational efficiency, new lines of business, and revenue growth has accelerated due to the pandemic.

3) A community invested in local businesses is more connected and incentivized to support them through unprecedented times.

 

MainVest allows local business supporters to invest through revenue sharing notes. By tying investor returns to revenue and overall performance of the business, investors are incentivised to evangelize and support their local economic growth.. The investor is repaid at a multiple from the proceeds of revenues generated, which means flexible cash for small business owners and performance-driven returns for investors.

 

One thing we know about the PPP rollout and executionis that businesses continue to close. What we can see from the private world of startup capital is that this doesn’t have to be the case. Businesses who wish to engage directly with their communities for investment capital are able to use the MainVest platform, as are individuals who care about their communities. www.mainvest.com for more information.

 

Would you like more information on their inside research or the group of brilliant folks behind this community-based small business initiative? Please reach out to Jessica for more information and to connect with the team at jessica@cultured-group.com or 858-209-4188.

 

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