As of May 31st, 2021, the Paycheck Protection Program ended, closing its doors to new applicants. So, what’s next?
A Brief Overview
By now, as a small business owner you are probably well informed about the Paycheck Protection Program or the relief program known as PPP. While PPP loan forgiveness is still open for new applicants (small business owners who took out a PPP loan with Biz2Credit have the ability to apply for forgiveness funds via Biz2Credit’s online portal), the program itself has ended and has ceased giving out new loans. The site mentions that this deadline does not apply to previous applicants on either SBA.gov or Biz2Credit and that they can continue to log in and fill out their PPP loan application.
A Quick Recap of the PPP Program
The Biz2Credit informational page on PPP funds hosts a summary of Congress’s program to keep small businesses financially afloat:
Last year, as part of Congress’s March 2020 CARES Act, the PPP loan forgiveness program granted $659 billion worth of loans to small business owners. If their application was approved, small business owners had the opportunity to finance both payroll and non-payroll costs (at a ratio of 60/40) during the pandemic. This was all without taking on vast amounts of debt as long as businesses followed the guidelines outlined by the Small Business Administration (SBA) in using the funds.
In December, Congress put set aside $284.5 billion to fund a second round of PPP.
If your small business satisfied all retention criteria as cited by the Small Business Administration (SBA), then it is safe to say that your loan will be fully forgivable.
Now That PPP Is Over, How Can Small Businesses Get Funding?
Although PPP loans are no longer being granted, there are still plenty of opportunities to apply for and receive financial help. We’ll cover a series of resources for small businesses to obtain funding below.
National Small Business Week
In an official brief on September 10, President Biden declared the week of September 12-September 18 National Small Business Week.
Within the brief, the White House cited small businesses as being a backbone to American communities, and the source of great innovation. As part of this, they discussed the administration’s efforts to make federal contracting accessible to small businesses, especially those in traditionally disadvantaged areas who may not have been eligible for a federal loan previously. If efforts are successful, these contracting efforts would be a part of the Build Back Better Initiative.
Already, the Build Back Better Initiative includes tax cuts for low-wage workers, the creation of jobs through higher quality technical and career-focused education, and Registered Apprenticeships.
These federal contracts may help drive revenues for small businesses. However, there is a lot of debate within both parties right now regarding many of the Biden Administration’s initiatives, so there’s certainly no guarantee that all of this will come to fruition. Even so, it is something to stay informed about, since if any bills are passed that open doors and opportunities for your small business you will want to make sure you are ready to take advantage of them.
National Small Business Week simply highlights the importance of small businesses to our country, while also urging the public to invest in small businesses.
The American Rescue Plan
The White House cites the American Rescue Plan as another resource for small businesses in need of economic relief.
Particularly, President Biden’s American Rescue Plan invests in, lends to, or gives grants to small businesses for the purpose of rehiring and maintaining a working staff and purchasing necessary sanitation equipment.
The American Rescue Plan also extends tax benefits such as Employee Retention Credit and Paid Leave Credit for small businesses
Another part of Biden’s plan is the Small Business Opportunity Fund, which seeks to give capital for the purpose of helping businesses grow. The Small Business Opportunity Fund focuses on businesses in lower-income areas and minority-owned businesses within underserved communities.
Concrete Funding Opportunities that Small Businesses Can Take Advantage of Today
Economic Injury Disaster Loans
Although the PPP has ended, it is not the only small business loan available from the federal government. Still accepting applications is the COVID Economic Injury Disaster Loan, or the COVID EIDL, a loan program that, like the PPP program, is managed by the Small Business Administration (SBA).
The EIDL loan is a loan for small businesses that have suffered the economic disaster of the COVID-19 pandemic, and it is available in all 50 states, Washington D.C., and United States territories. Unlike the PPP, this loan must be repaid. However, the SBA’s mission is to create a loan that grants both “accessible and borrower-friendly capital,” which means EIDL loans tend to have relatively favorable terms.
Here is what you should know:
COVID EIDL loans are available for small businesses in the agricultural and nonprofit sectors and are open to sole proprietors. COVID EIDL loans will run until December 31, or until funds run out. This means the sooner you apply, the better.
A COVID EIDL loan offers two types of advances that do not need to be repaid. These advances are specifically for small businesses located in areas identified as low-income communities by the SBA. Small businesses that have 300 employees or less and have lost 30% in revenue could receive up to $10,000 as part of the Targeted EIDL Advance. Small businesses that have 10 employees or less and have lost 50 percent in revenue can also receive up to $5,000 as part of the Supplemental Targeted Advance.
The SBA lists specific expenses that loaned money can and cannot be used for:
- Loaned money can be used for regular expenses for business operation, as well as paying or pre-paying any non-federal debts accumulated, like monthly installments or deferred interest, paying federal debts, rent or mortgage, and utilities for brick-and-mortar locations, and payroll.
- Loaned money cannot be used for expanding your business, starting a new business, or pre-paying any federal debts.
There is a 30-year fixed interest rate of 3.75% for businesses and a 30-year fixed interest rate of 2.75% for nonprofit businesses in the private sector.
Although not an entirely forgivable loan like the PPP, the low-interest rate allows for the opportunity for a certain level of pre-pandemic normalcy: accruing capital, while adequately providing payroll funds for employees.
There are additional documents you will need to fill out on your COVID EIDL application if you remained open in some capacity both before or during January 1, 2020, to January 31, 2020.
For more information, and to see if you qualify, visit the SBA’s FAQ sheet.
Other SBA Loan Programs
Within Biz2Credit’s Knowledge Center, there is information on other SBA loans to consider aside from the COVID EIDL. Biz2Credit offers its expertise and specializes in finding an SBA lender that is right for you. In doing so, we help make the loan process easy and accommodating for all small business owners.
Currently, there are a few different SBA loans that small businesses can take advantage of. These are distinguished as SBA Express Loans, SBA 7(A) Loans, and SBA 504 financing. Below are some of the key factors from Biz2Credit’s Knowledge Center regarding these loans. This is important information to leverage before deciding on which loan to apply for.
Here are some things you should know about SBA Express Loans:
- Good for long term, working capital investments
- Used to purchase equipment or other things bought with working capital
- The loan amount can extend to as much as $350,000
Here are some things you should know about SBA 7(A) Loans:
- Good for many types of small business investments
- Used to purchase resources for the short term and long term
- The loan amount can extend to as much as $5,000,000
The SBA 7(A) loan, or the most common of the SBA loans according to the Biz2Credit’s Knowledge Center, is like all other SBA loans: To qualify, you must be eligible and meet certain criteria. For example, SBA 7(A) loans only take applicants who operate a for-profit business and have used other financial assets beforehand (amongst other eligibilities). Additionally, these loans are for small business owners that do not have any withstanding federal debt.
You should know that despite these eligibilities and your business’s risk category, SBA loans can still be an option. This is why the EIDL loan is a great option for those facing pandemic-induced financial hurt. Keep in mind that the SBA Loan Guarantee Program assures lenders that the SBA will assume responsibility for some of the loan. This makes the credit and business history requirements lest stringent and improves the loan terms, since outside funders are more willing to grant loans. So, while you may not qualify for a traditional brick-and-mortar loan, you may qualify for an SBA loan.
Biz2Credit Small Business Loan Options
Term Loans with Biz2Credit
Biz2Credit also offers small business owners the ability to apply for a term loan. Biz2Credit understands that applying and accessing loans should be an easy process. All you have to do is create a profile with Biz2Credit and fill out a quick application.
These term loans range from $25,000 to $250,000, and Biz2Credit offers as little as 8.99 percent interest, with special rates and discounts as applicable. Importantly, you can receive your term loan within 72 hours.
It is important to remember why we take loans in the first place, sans the COVID-19 pandemic. Overall, loans give you the ability to further grow your business. And term loans give you spending flexibility: You have the ability to see the cash up front and plan accordingly. Plus, the terms are clear and straightforward, so you know what payments you have to meet and what the expectations of your business are.
Biz2Credit also offers individualized services, like the ability to create a schedule for loan payments that works for you. Your schedule can be accessed any time online. Also, Biz2Credit gives small business owners the ability to schedule an appointment with a funding specialist to discuss what loans are right for their business, as well as discuss any other loan-related topics.
Working Capital with Biz2Credit
In addition to term loans, Biz2Credit also offers small business owners the ability to apply for working capital. Similar to a loan, working capital provides small businesses with the benefits of upfront cash. With working capital, business owners can grow their business by hiring more employees, expanding their brick-and-mortar locations, buying more inventory or equipment, and paying day-to-day costs.
Business owners can apply for as little as $25,000 and as much as $2,000,000.
Commercial Real Estate (CRE) Loans with Biz2Credit
With a Biz2Credit commercial real estate loan, business owners have the ability to apply for as little as $250,000 and as much as $6,000,000. Considered by Biz2Credit to be a loan “designed for businesses making bold moves,” CRE loans are for those seeking to invest.
Similar to term loans and working capital, applying for CRE loans with Biz2Credit is as easy as creating a profile and filling out a quick application. Additionally, those interested in CRE loans have access to the funding specialist team and the ability to create a funding schedule that works for them.
Loan Approval Rates Remain Strong
In a recent study conducted by Biz2Credit, it was found that New Jersey had the highest loan approval rate, 23.4 percent, speculated because of the state’s proximity to two major metropolitan areas, New York City and Philadelphia.
Unsurprisingly, New York ranked second, with Illinois, California, and Pennsylvania coming in third, fourth, and fifth, respectively.
Florida, Georgia, Texas, Ohio, and North Carolina were also highly ranked. At number ten, North Carolina had 7.9 percent loan application approval.
If anything, these loan approval rates suggest that loans are accessible, perhaps more so than what we once had thought. These are fairly high rates given the pandemic we have been going through for over a year now and the instability that has brought to so many small businesses. So, even if you feel you are not eligible for a small business loan, there is not hurt in applying for one. Especially if it could mean saving your business. You might be surprised and find out you are eligible for a loan with much more favorable terms than you originally anticipated.
At Biz2Credit, our number one priority is to serve the millions of small businesses across the United States. With the ongoing pandemic and the natural disasters across the country, we realize that our mission has never been more important than it is now. So, please continue to check back here at our Biz2Credit Blog for the latest information and news surrounding all that is going on the world of small businesses.