Worcester Business Journal

wbjournal.com | May 24, 2021 | Worcester Business Journal 19 By Christopher Watson Christopher Watson is senior vice president and senior lending officer of the business banking division at Webster Five. Small businesses are the economic lifeblood of our communities. They create the majority of new jobs and account for nearly half of all U.S. economic activity, but most operate on tight margins and are vulnerable during economic upheaval. The COVID-19 pandemic shutdowns had a drastic impact on many small businesses. Two rounds of Paycheck Protec- tion Program loans provided critical support, but in early May, the funding dried up for most. 4) Bridging the gap - While the first PPP funding released in March 2020 was a free-for-all across the business spectrum, the second round prioritized small businesses. To qualify, borrowers had to show a minimum 25% revenue decrease in any quarter year-over-year, weeding out many large- and medium-sized companies experiencing less financial impact. At Webster Five, more than 75% of second-round loans were for less than $100,000, showing the program hit the mark. Although PPP funds are nearly exhausted, there is good news for small businesses. The Small Busi- ness Administration is allowing preferred lenders, like Webster Five, to expedite SBA-guaranteed loans up to $1 million through Dec. 31. The SBA waived fees through September. The SBA is addressing potential strain on cash flow by allowing loans to be structured with longer terms. 3) Community banks play a vital role - Commu- nity banks were at the forefront of helping small businesses secure PPP loans, which is no surprise considering their longstanding local relationships. The same is true in the transition back to traditional lending. Local banks are an integral part of their communities, and the money they lend is based on deposits from customers who benefit from vital local economies. 2) What to expect when applying for a new loan - It is possible for a lender to get money to a busi- ness in just two or three days after loan approval. In order to complete the application smoothly, bor- rowers need to provide current information including tax transcripts, year-to-date income and expense statements, prior statements showing business operations pre-pandemic, and realistic predictions for recovery. It helps to be prepared and work with an experienced loan officer. 1) Supporting small businesses - Communities continue to rally behind local shops and restaurants, but many small businesses are still trying to hold on as the world slowly re-opens. They need and deserve support because just as small businesses were key to economic growth before COVID, they will be crucial to our economic recovery as we emerge from the pandemic. K N O W H O W SEC increases crowdfunding limits for entrepreneurs O ne-to-one coaching isn't the only kind of executive coach- ing out there. Peer coaching – where groups of colleagues work together to reflect on problems or practices, build new skills and teach and mentor one another – comes with unique workplace benefits. Plusses include improved team performance, worker empowerment, and clearer expectations, all with a less-costly price tag than individual coaching brings. It offers better accountability than one-to-one coaching and offers better feedback, too, according to Brenda Steinberg and Michael D. Watkins. Coaching groups, they say, oen contain more powerful dynamics than individual coaching overall. "Whether your goal is to be bolder, develop your strategic-thinking skills, or emotional- ly connect with your team, your group members will give you regular input on your progress," they write in Harvard Business Review, when you share your goals and action plans. It can create new, positive work- place norms. "Peers, whether in teams or not, can create a habit of making one another part of their own solution, rather than ruminating in venting conversations, or commiserating to- gether without owning any part of the needed change," says professional-de- velopment blog ManagementConcepts. com. Co-workers engage with one another differently as a result, in an organic, whole, innate way throughout the organization. is cultural shi is especially successful when supported by senior leadership, according to the blog. It can be hyper-charged by first strengthening certain employee qualities. On LinkedIn, Rebouncer CEO Steffen Maier suggests a peer- coaching workshop beforehand to make coaching more effective. Good listening is key, as is being open minded, willing to change and curious to learn. Good peer-coaching executives have self-awareness and are flexible to accept other best alternatives. "ey recognize their strengths and weaknesses, and they gladly accept feedback, even if it's negative," he said. 4 T H I NG S I know about... ...non-PPP small business lending options BY ANTHONY PRICE Special to the Worcester Business Journal B y all measurements, 2020 was a bad year. e world was in the throes of a deadly pandemic. People lost both their jobs and loved ones, businesses closed, and economies tanked. It was raining lemons, and making lemonade didn't seem possible. But despite all the gloom, the U.S. Securities and Exchange Commission delivered good news in November, when it voted to approve increasing the amount entrepreneurs can raise using investment crowdfunding platforms. e new rules went into effect in mid- March. e SEC raised the limits on the amount of capital raised on crowdfunding platforms, from $1.07 million to $5 million in a 12-month period. Historically, only accredited investors could raise capital in private companies, unless an applicable exemption was used. Accredited investors are deemed sophisticated investors by the SEC because they earn $200,000 a year, $300,000 for a couple, or have $1 million in assets, excluding their home. For far too long, the bar was too high for the average American to participate. In 2012, President Barack Obama signed the Jumpstart Our Business Startups Act into law. is law made it legal for private businesses to raise capital from the public, through crowdfunding platforms, which solicit small-dollar amounts from the public. e SEC did not implement the crowdfunding aspect of the law until 2016 because it feared there would be massive fraud, which never materialized. Capital formation has always been a challenge. Now, the playing field is almost level. While managing a successful crowdfunding campaign is not easy, it is a powerful tool. ere are a number of Financial Industry Regulatory Authority regulated investment crowdfunding platforms, from Wefunder, to Republic, to Start Engine (Kevin O'Leary, aka Mr. Wonderful of "Shark Tank" fame is featured on Start Engine). e platforms approve crowdfunding campaigns, where all the activities must take place. Crowdfund Capital Advisors reported that $239 million was committed in 2020. Investment crowdfunding is different from reward-based funding platforms such as Kickstarter and Indiegogo, where you may receive the product as a reward for contributing. GoFundMe is a donation-based platform used by individuals and small businesses to collect donations to overcome a hardship. Investing in a local business may be an opportunity to help your community, and your pockets. In particular, it could help ease the growing wealth gap in the U.S., especially for people of color. Be prepared to lose your money. If you can't afford to lose a few hundred dollars or more, don't do it. at's not to say these companies will all be bad investments, but it is better to be safe than lose your shirt. On the flip side of the coin, many investors lose money in buying public stocks or going to a casino. e future is bright for investment crowdfunding. Here's to a better capital-raising landscape for entrepreneurs. Cheers! Let's all make lemonade in 2021. Anthony Price is the founder and CEO of LootScout, which counsels small businesses on how to raise capital and is the publisher of "Mini Books". BY SUSAN SHALHOUB Special to the Worcester Business Journal 101: P E E R C O A C H I N G W W W

• Cover