PPP Loan Alternatives

by | Aug 12, 2022 | Business Finance | 0 comments

Unfortunately, PPP loans are no longer available for small businesses. But that doesn’t mean you’re completely out of luck. While the PPP loan program was undoubtedly a boon to small companies during a very difficult time, it’s not the only option that you have available to you in terms of getting the cash you need to keep your business afloat. There are plenty of PPP loan alternatives out there for smaller businesses, even for those that may be struggling right now. It’s a matter of doing your research, asking the right questions, and finding a lender who is a fit for your enterprise.

PPP Loan Alternatives: What You Need to Know

The Paycheck Protection Program, otherwise known as the PPP loan, represented a federal program that gave small businesses the money required during the Covid pandemic so that they could pay their rent, their utilities, and their payroll. It was set up by the Small Business Administration and was passed by Congress in March 2020.

While the PPP is no longer available, there are PPP loan alternatives for which you could be approved, thereby giving you the cash you need to keep things moving forward.

SBA loans

Among the most popular loans for small businesses are SBA loans. There are a couple of different types of SBA loans available: SBA 7(a) loans and microloans. With the SBA 7(a) loan, it can provide up to $5 million in funding to a small company. You must meet specific criteria and fall within the SBA‘s definition of a small business in the United States. An SBA microloan, as the name suggests, is a smaller loan, usually less than $50,000. These can be quicker to get than some other loan types.

Term loans

Also prevalent are business term loans. A term loan is a lump sum of cash paid out to a company by a fixed set of loan terms and interest rates. Generally speaking, with a term loan, you will pay back a specific amount either weekly, biweekly, or monthly. With short-term business loans, the payback period is usually less than a year, though it can range for as long as three years, depending on your specific loan.

Business line of credit

A business line of credit can be fairly easy to get versus some other loan types. You might think of a line of credit in terms of a credit card. There is a set amount from which you can borrow. You only draw what you need. And you pay interest on the amount you draw, not on the total amount of the line. Once you repay that money, it is again available for you to use. This makes it quite convenient for many small businesses.

Merchant cash advance

A merchant cash advance is when a lender gives you a lump sum payment based upon your forecasted sales. They will look at your credit card sales to date and extrapolate what they believe your sales are expected to be short. They will then loan you money based on this number. At that point, repayment works as follows: the lender will receive a percentage of every credit card sale that you have. If you’re going through a prolonged time, you’re not repaying as much as you would during a more robust sales period. For seasonal businesses, this can be a great lending solution.

What Can You Use a Business Loan For?

While the PPP program had some restrictions in terms of how you could disperse the funds that you received, PPP loan alternatives don’t necessarily have the same restrictions. In other words, you are free to use the money for pretty much anything associated with your business. It will also depend upon the lender that you choose to work with. Alternative and online lenders are a bit more flexible when it comes to how loan proceeds can be used. So you definitely want to keep this in mind.

First Union Lending is Here to Help

We offer a variety of loan programs for businesses of just about every size. Though, we specialize in working with smaller businesses across the United States. We offer short-term loans, equipment financing, SBA loans, among other financing types. Even if your credit score is less than ideal, we might still have a funding solution for you. And most of our clients will receive the cash in their accounts within two business days. We don’t leave you hanging for weeks or even months like many conventional banks do. Call today to get started.