Small business owners trying to keep their companies afloat amidst the Coronavirus pandemic and accompanying economic downturn are looking for funds wherever they can find them. According to a recent article by CPA Practice Advisor, this includes over a third of entrepreneurs who have used personal funds for their business expenses this year. 

The article cites a report that polled business owners on their funding streams and fiscal plans for their companies in the upcoming months. Predictably, the survey found that 70% of entrepreneurs utilized business credit cards. Respondents favored cards with rewards programs. Cash back was the most popular benefit, followed by travel. Other well-liked features included convenience and a low interest rate.

However, not all businesses are relying on traditional funding in these non-traditional times. According to the survey results, of the 35% who reported accessing personal funds for their business expenses, 24% used a personal credit card, 20% drew money from a personal savings account, and 10% did both. While this dedication to their companies is admirable, financial professionals are concerned with the chances they are taking with their own finances. Ted Rossman,’s resident industry analysist, put it this way: “It’s commendable how far these dedicated business owners are willing to go in search of their dreams. I worry, however, about the debt they’re taking on, and how they’re potentially putting their personal finances at risk.”

A safer option, which 30% of respondents said they had chosen, was the Small Business Administration’s Paycheck Protection Program (PPP) loans. These loans, which were designed to help companies with under 500 employees keep their staff on payroll and decrease layoffs due to the economic downturn, are forgivable under certain conditions. If employees were kept on staff for at least eight weeks, PPP loans can be used to cover payroll expenses and do not have to be paid back. The issue for many entrepreneurs was that the SBA was overwhelmed with applications when the program opened are were thus unable to process all of the requests they received in a timely manner. Additionally, rules on how to document qualifying expenses in order to have the loans forgiven were unclear, making many business owners (and PPP lenders) frustrated.

53% of those polled said they will require increased sales or a loan/grant in the next year in order to stay in business. 19% plan to rely on government assistance. 32% are banking on improved sales figures, and 13% plan to take out a traditional loan. 64% of respondents reported that they would need at least one of these in order to meet their growth targets in 2021.

If you are one of the business owners trying to make decisions about funding for 2021, our article “Financial Apps to Help You Fund Your Business” may help. If you are a woman entrepreneur, be sure to read “The Best Funding Options for Women-Owned Small Businesses” as well.

With the passage of the new stimulus package including a second draw of PPP funds allowed for businesses that have experienced at least a 25% reduction of revenue, hopefully business owners won’t need to tap into as much of their own savings to continue to fund their business operations.

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