If your business did not obtain or was not able to qualify for an EIDL or PPP Loan, alternatives exist. You can still obtain business financing for your business in these turbulent times.
With millions out of work and small businesses across the country struggling to remain in business, the future still remains uncertain. For some businesses, the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) loan initiatives provided a financial patch. However, not all businesses are able to take advantage of these programs for numerous reasons.
The PPP and EIDL programs have funded a lot of struggling businesses. However, many businesses have been unable to secure funding from these programs due to qualification parameters. Other businesses that received funding, still need more money. Whatever the reason, there are businesses out there in need of funding that have not been served by the PPP or EIDL programs. At the same time for some businesses $150,000 is not enough.
We have processed over 300 applications at Lendinero in the last month. Nearly 80% got funded via the EIDL program. Some of the businesses we work with generate in excess of $1 Million in annual revenues. These businesses have huge overhead expenses and $150,000 may not last exceptionally long. At the same time, we have had clients get denied for the EIDL loans. Many clients have been denied primarily due to less than perfect credit, collection accounts, unpaid taxes, and other credit derogatoriness. There will be a personal credit check through Experian for all EIDL applicants, and larger loans may also check business credit through Dun & Bradstreet (D&B). There is no minimum credit score required but acceptable credit is required to qualify.
Business financing outside government subsidies
If you need more money or you were denied for the EIDL, what do you do? There are other business financingoptions for your business.
If you have good credit, the following alternatives are good to obtain additional cash:
SBA 7(a) Loans and SBA 504 Loans
The 7(a) loan program with the Small Business Administration (SBA). These loans can be used for many business purposes, to include expansion, working capital, equipment, inventory, and real estate acquisitions. With these loans, up to 85% of the loan is backed by the SBA, thus mitigating the risk to the lender, and giving small businesses a chance to qualify for a loan that, under ordinary circumstances, they wouldn’t be eligible for. There are nine different types of SBA loans to choose from. Our guide to SBA 7(a) loans details these different loan types, the business purposes for which they are intended, and the types of businesses that qualify for each loan type. SBA 504 Loans are primarily for real estate. These loans finance 90% the value of the commercial property.
If you have less than perfect credit or need a fast solution, these loans will save your business in the short run.
While online lenders are typically more flexible in terms of their lending policies than commercial banks.
At the same time, a lot of online lenders are not lending right now. Working with a good platform is essential. If you search on your own, it may take you several days and also affect your credit. Some online lenders will pull credit. Your best bet is to work with a reputable platform that matches borrowers with lenders to obtain business financing.
Cash Flow Loans
Cash flow loans base their credit decision not on your personal credit score, but the cash flow of your business. Also, many lenders who provide these types of loan will understand the decrease in revenues.
Even though, you have lost revenues if you can demonstrate steady cash flow during the last four months you can still get business financing.
Personal Online Loans
While a personal loan is not business loan, you can still use it for your business. Currently, there are still online lenders who can provide a personal loan fast. Prior to covid19, you were able to obtain funding the same day. Today, the process may take 3 to 7 business days. Still is fast and simple process.
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We are in a tough spot right now. Our world is beset by crisis and uncertainty. However, our response to all this cannot be to forfeit and withdraw from your business. People still have needs that must be met and will need your services and products. Given that commerce still needs to happen, and businesses still need to provide goods and services, there will remain a need for entrepreneurs like you. There are alternative business financing options available for you. Do not give up.