A look at various business funding options.
PPP loans were issued to help keep small businesses afloat during the coronavirus pandemic. As a form of unsecured finance, PPP loans were granted to qualifying businesses to help them continue to pay their employees, amongst other costs.There were strict eligibility requirements, as well as conditions as to what the loan had to be used to cover.
The Paycheck Protection Program is now on its second round of funding for eligible businesses. However, some business owners may have already been declined a PPP loan. If you applied, but received a denial, you may be wondering why. You may also be looking for alternative forms of business funding. On the upside, there are many other options you have available to your business (keep reading for more on these)!
We’re here to tell you everything you need to know after being denied a PPP loan. We will share some common funding methods so you can easily assess your alternative business funding options.
How to Know if Your PPP Application Was Denied
If your PPP loan application was denied, you will typically receive a notice directly from your lender rather than from the SBA itself. In some cases, the lender may not provide a specific reason for the rejection. However, there are several common causes of denial, including errors in your application, your business not meeting the eligibility requirements, or a history of default on a previous SBA loan. If you received a denial without explanation, it’s important to reach out to your lender directly for clarification. Understanding the reason can help you correct mistakes or explore other funding options.
Alternatives to the PPP Loan
If your PPP application was denied, don’t be discouraged—there are other funding paths available to support your business. The SBA offers several loan programs designed to help small businesses manage financial hardship and economic uncertainty. Depending on your needs, you may qualify for:
1.- SBA Express Bridge Loan
If you are a small business that has already established a relationship with an SBA Express Lender, you may be able to access up to $25,000 fast. An SBA Express Bridge Loan is meant to overcome a temporary loss of revenue to then apply for a SBA Economic Injury Disaster Loan.
2.- SBA Debt Relief
Debt relief is granted to business owners who currently hold a SBA 7(a), 504 or Microloan, or those who took out loans from these programs before September 27,2020. The SBA will pay 6 months of principle, interest and fees associated with these loans.
3.- Employee retention tax credit
It’s possible that you can qualify for a refundable payroll tax credit for up to 50% of wages paid to every employee until December 31, 2020. Sole proprietors are eligible too.
4.- Pandemic emergency unemployment assistance
If you are a sole proprietor, independent contractor or self-employed, then you can apply for unemployment for up to 39 weeks.
Additional Business Funding Options
Whether you’ve been denied a PPP loan or are searching for unsecured business financing, there are several reliable funding alternatives available. These options can help small business owners access working capital quickly, without the long delays of traditional bank loans. Here are some popular choices:
1.– Business Line of Credit
A business line of credit gives you flexible access to funds whenever you need them—similar to how a credit card works. Instead of applying for a lump sum, you can borrow up to a set limit and only pay interest on the amount you use. Many small businesses rely on a line of credit to manage payroll, cover operating expenses, or handle seasonal fluctuations in cash flow.
2.– Online Term Loans
Online term loans provide fast access to capital, with loan amounts typically ranging from $5,000 to $500,000. These loans can be approved and funded in as little as 24 hours, making them a strong option for businesses that need immediate funding. While interest rates can range widely—from around 7% to as high as 99% APR—the quick turnaround and accessibility make them appealing for many business owners. Keep in mind, though, repayment terms may be shorter and could require daily or weekly payments.
3.– Invoice Factoring
Invoice factoring is another form of unsecured financing that allows businesses to leverage their unpaid invoices to access cash. Instead of relying on your credit score, lenders evaluate your past sales and accounts receivable to determine eligibility. This makes invoice factoring a practical solution for businesses with steady sales but delayed customer payments. It frees up working capital without requiring traditional collateral.
4.-Merchant cash advance
Perhaps you applied for a PPP loan or any other kind of traditional loan, but you keep being denied. This could be because your credit score isn’t high enough, or your business doesn’t have enough history. As a solution, you can apply for a merchant cash advance, and receive a quick lump sum of cash fast for your financing needs.
5.-Crowdfunding
If you’re looking for ways to avoid borrowing money and having to pay it back, then consider crowdfunding. Crowdfunding pulls together money from various individuals, but it takes selling power to get buy-in for your idea or product. In exchange, you may provide the donors with product, services or equity for their investment.
6.- Equipment Financing
Unlike the main purpose of the PPP loan (which was to protect employees and cover payroll), you may need money to buy new equipment for your business. IN this case, the unsecured finance method of applying for an equipment loan could be your best bet. Equipment financing offers you a loan to cover the costs of buying new equipment. The new equipment serves as collateral should you default on paying back the loan and interest.
Business Funding Made Easy
Having the ability to access business funding quickly can greatly impact your success. Although many business owners were denied PPP loans, there are other SBA options to aid business owners facing the negative effects of COVID-19.
Additionally, alternative sources of unsecured finance like merchant cash advances or online term loans exist to meet the needs of small business owners.
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