New Kabbage, LocalGiftCards.com hubs help small businesses through gift cards
A growing number of service providers are helping small businesses during the pandemic by offering free gift card support.
The COVID-19 pandemic is taking a toll on the economic health of the nation. Across the country, retail and service businesses — including bars, restaurants, theaters, gyms and coffee shops — are being asked to temporarily close or to practice social distancing, such as shutting down dining rooms and limiting service to the drive-thru or other crowd-limitation methodologies. As many of these businesses are small businesses owned by individuals, there is a risk that some may not be able to survive a long furlough.
Two separate companies have announced they will offer a gift card platform to support small businesses. LocalGiftCards.com has opened its “LGC Free for 3” program for free to any business that is at least 51% locally owned. Until July 1, 2020, a business can sign up for the program and receive a custom link to sell gift cards for the business. Customers can buy physical, emailed or mobile gift cards. These gift cards can be used immediately or held until the pandemic lifts.
“We are pleased to do our part in helping the local business community by making our service free to SMBs for three months. Our goal is to help businesses get through the COVID-19 closures by selling their gift cards online,” said Ray Clopton, CEO of LocalGiftCards.com, in the announcement. “We hope to make it easy for consumers to support their favorite locally owned restaurants and other businesses that have been forced to close.”
Similarly, the small business payment platform Kabbage has announced that small businesses can sign up for free at http://www.helpsmallbusiness.com/. Enrolled businesses would, like LocalGiftCards.com, get a custom link to sell gift cards between $15 and $500. Kabbage also provides the software and technology to scan and verify the gift cards, with proceeds from gift card sales immediately being deposited into the business’s Kabbage account.
Unlike LocalGiftCards.com, which indicated it would waive all small business fees involved with its program, Kabbage asserts a 2.5% payment processing charge per gift certificate. While Kabbage insists that it will not profit from the program, the processing fee is passed on to small business owners from Kabbage’s vendors. Additionally, Kabbage will hold up to 10% of the gift card’s value in reserve until it is redeemed or until 18 months have passed. Reserved funds will be released, per Kabbage, within 30 days of redemption or the gift card’s 18-month purchase anniversary.
“The impact of COVID-19 on small businesses requires the support of a nation,” said Kabbage co-founder and CEO Rob Frohwein in an announcement. “If there is a local small business that you love, they need your patronage now more than ever. Many businesses are closing and others are seeing reduced demand. The site is a means for the millions of small businesses that employ more than half of all employees in America to continue making sales and to feel your commitment to their long-term success.”
LocalGiftCards.com and Kabbage are but two companies offering gift card support for small businesses during the pandemic. inKind, Raise, helpmainstreet.com and WTOP — among others — provide a way to offer your favorite restaurants an interest-free loan of sorts to help support them in this most trying of times.
“Mom-and-pop shops will not be able to pay rent or make payroll because no one is buying inventory from them,” Nihal Mehta, founder of helpmainstreet.com, told Forbes. “It’s just our civic duty to be able to use whatever skills you have to be helpful to people in need.”
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