PPP loans are no longer available as of 2021, but your business can still get the funding you need through state and local funding options, the ERC tax credit, SBA bridge loans, business term loans, business lines of credit and more.
Discontinued in May 2021, Paycheck Protection Program (PPP) loans were designed to help small business owners cover payroll costs during Covid-19. The program was implemented by the Small Business Administration (SBA) and provided funds to cover up to eight weeks of payroll expenses.
The good news is, there are PPP loan alternatives to tap into for Covid-19 related funds and debt relief – as well as small business financing options like SBA loans, term loans, lines of credit and short term loans that offer cash as soon as the next day. Here’s a closer look at each option.
If you missed out on the PPP or didn’t qualify, consider one of these alternative financing options instead.
Many states and local governments have relaunched loan and grant programs to help local businesses cover reopening costs. For example, New York State is offering loans up to $100,000 for recovery costs with rates fixed at 3% for businesses and 2% for nonprofits through the New York Forward Loan Fund (NYFLF).
You can find out which programs are available to you by reaching out to your local small business center. The SBA has a tool that allows you to search for business centers near you.
Enacted under the CARES Act, the ERC is a tax credit for businesses and tax-exempt organizations that continued to pay their employees while closed or partially open during Covid-19. The ERC tax credit is money that goes into your pocket – not a loan that needs to be repaid.
You may qualify for the ERC if you own a small business or tax-exempt organization and continued paying your employees during 2020 and/or 2021. If eligible, you could claim up to $5,000 per employee for 2020 and up to $7,000 per employee for each of the first three quarters of 2021.
See our Employee Retention Credit (ERC) Loans Guide to learn more about the ERC credit and how it works.
As part of the CARES Act, SBA debt relief is a program for existing SBA 7(a), 504, and microloan borrowers whose businesses were impacted by Covid-19. Through this program, the SBA covers six months of principal, interest and fee payments for all new loans issued before September 27th, 2020. For more details, see the SBA debt relief website.
This SBA pilot program offers fast funding of up to $25,000 to tide your business over due to disaster related events while it’s waiting for other financing to come through. You can find SBA Express Bridge Loans through a lender that offers SBA Express loans — not the SBA directly.
To qualify, you must have an existing relationship with the lender offering the loan, and your business must be in a community impacted by a Presidentially-declared disaster or a disaster declared under the authority of the SBA.
SBA loans are term loans partially backed by the SBA to lower the risk for lenders, which could mean lower rates for you. The SBA guarantees around 75% to 85% for these loans and limits how much lenders can charge in interest and fees. It offers up to $5 million through most of its programs for a variety of business expenses, with terms from six to 25 years.
To qualify for most programs, you’ll generally need a minimum credit score of 680, two years in business and positive cash flow. The main drawback is that SBA loans can take months to process. To get around this, try working with a preferred lender. Preferred lenders have the authority to underwrite applications and don’t need to wait for approval from the SBA.
With term loans, you’ll have your pick of short-term business loans or long-term business loans. Business term loans offer a lump sum amount – typically from $5,000 to $2 million – that you repay in fixed, monthly installments. They’re available through banks, credit unions and online lenders. Term loans offer flexible repayment terms from 18 months to 10 years, with rates starting at around 6% for the best credit borrowers.
To qualify, you typically need a credit score of 680+, at least a year in business and minimum of $50,000 in annual revenue. But eligibility requirements vary by the lender and the amount of money you want to borrow. Online lenders tend to have more relaxed requirements and faster funding than banks. Compare your options:
A business line of credit (LOC) is a revolving line of credit that can be used to pay for any type of business expense. They can be ideal for new and seasonal business owners that need to pay for ongoing expenses or to purchase inventory. Unlike term loans, you only pay interest on what you borrow and funds become available again as you pay down the line.
LOCs are available from banks, credit unions and online lenders with rates from 8% to 60%+. To qualify, you may only need a credit score of 560+, six months in business and $50,000 in annual revenue. But term lengths typically cap out at one to two years, at which time the LOC must be paid in full.
Invoice factoring is when you sell your unpaid customer invoices to a factoring company for a discount. You receive 85% to 95% of your invoices’ value upfront, and the factoring company takes over the job of collecting payment. You receive the rest of your invoices’ value, minus fees, after they’re paid.
Factoring fees range from 0.5% to 6% of invoice value, with terms ranging from 30 to 90 days. Invoice factoring may be easier to qualify for than other types of loans, as eligibility isn’t based on your credit score – rather, it’s based on your business financials, like your bank statements and outstanding invoices.
If you’re a newer business owner that can’t easily qualify for other types of loans, merchant cash advances can provide a quick cash flow solution. They’re a type of short term funding that lets you borrow against your future credit card sales – anywhere from $5,000 and $1 million – with funding as soon as the next day.
Repayments are either daily or weekly and automatically come out your credit card sales as a fixed percentage plus fees. While convenient, rates can run high – starting at around 18% APR. But they can be ideal for new or bad credit borrowers, since eligibility is based on your business financials, not your credit score.
SBA Microloans are business loans backed by the SBA with amounts ranging from $1,000 to $50,000. Microloans are geared towards small businesses and not-for-profit childcare centers that may not qualify for a loan elsewhere. Because they’re government backed loans, they may offer more competitive interest rates than other types of loans.
Repayment terms on Microloans reach up to six years, with rates between 8% to 13% APR. To qualify, you must meet both the SBA’s and lender’s eligibility requirements, which may include having a minimum credit score of around 620, two years in business and positive cash flow.
If you weren’t able to take advantage of the PPP, you have other alternatives for accessing emergency and non-emergency funds for your business.
In addition to government backed programs like the ERC tax credit, SBA bridge loans and grants – there are a wide range of business financing options available through banks, credit unions and online lenders for both short and long term funding.
These include term loans, SBA loans, lines of credit, merchant cash advances, invoice factoring and financing as well as personal loans and business credit cards. As always, compare your options to make sure you’re getting the best deal.
Invoice financing can help your business meet immediate cash flow needs based on your unpaid invoices.
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