Securing Business Start-up Financing: How post-pandemic enterprises can drink from the lending well.

• Author: Barbour, Tracy

While the COVID-19 pandemic forced thousands of companies to permanently close, many new businesses are still opening around the country. Fortunately, there are ample funding opportunities available to help entrepreneurs finance their endeavors--if they apply the right strategies.

A staggering 5.4 million new business applications were filed in 2021, topping the 4.4 million record set in 2020, according to the US Census Bureau. And in October 2022 alone, there were 432,834 business applications--an increase of 1.2 percent compared to September 2022. These applications--which represent filings for tax identification, not the total number of business startups--were mainly in the industries of mining; manufacturing; transportation and warehousing; health and social services; arts, entertainment, recreation, accommodation, and food services; and educational services.

Alaska is also experiencing an uptick in new businesses. In fiscal year 2018, the Alaska Small Business Development Center (SBDC) assisted 140 new businesses, according to Executive Director Jon Bittner. In fiscal year 2022, it helped close to 220 businesses. These numbers relate only to the entities that worked with the Alaska SBDC, which provides confidential advice, assistance, and other resources to entrepreneurs looking to start or grow their small business.

Even during the height of COVID-19, the Alaska SBDC still saw a considerable number of businesses opening. "Maybe it's because there were a lot of people transitioning out of their jobs," Bittner speculates. This is certainly plausible, given the massive workplace and labor market disruptions the pandemic caused. Job losses prompted many employees to pursue their dreams of self-employment through gig work or full-fledged business ownership.

Regardless of the reason, the Alaska SBDC is seeing new enterprises surface statewide, especially in certain industries and rural parts of the state, Bittner says. For instance, new businesses are emerging in healthcare and technology, with some of them focused on leveraging innovations in artificial intelligence. There has also been a significant increase in tourism businesses, particularly in the area of regenerative tourism. In addition, more construction-related startups and expansions are springing up to capitalize on the Bipartisan Infrastructure Law.

An Abundance of Loan Programs

Start-up financing opportunities have expanded due to a number of new government programs. One of the latest funding sources available is the Alaska State Small Business Credit Initiative (SSBCI). The statewide program--administered by the Alaska SBDC--uses $59.9 million from the US Department of Treasury to finance incentives to help drive private-sector funding to Alaska's small businesses. The initiative, which mobilizes local sources of capital, such as community banks and local equity investors, is designed to reward...