Denied a PPP Loan? Here’s What You Can Do

A look at various business funding options.

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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. 

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How to Know if Your PPP Application Was Denied

If your loan was denied, you’ll likely have received notice directly from the lender, rather than the SBA. It’s possible they won’t give a reason for your denial. There are some common reasons for denial, such as: a mistake in the application, your business doesn’t qualify for the loan or you have previously defaulted on a SBA loan. If you received a rejection without reason, you should try to contact the lender directly to find out why. 

Alternatives to the PPP Loan

There are a few other kinds of loans that you can apply for in lieu of receiving a PPP loan. 

The SBA has many other types of loans available for small businesses facing financial hardship and economic uncertainty. Here are a few options: 

  • 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. 
  • 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. 
  • 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. 
  • 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.  
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Additional Business Funding Options

Whether you’ve been denied a PPP loan or are looking for unsecured financing options for your small business, you have a lot of routes to consider. 

Let’s take a look at some popular business funding options that can provide you access to capital quickly: 

  • Business line of credit: A business line of credit offers you with flexibility to spend when you need to on credit. Much like a personal credit card works, a business line of credit means that you won’t have to apply for a lump sum of capital. Instead, you can borrow on credit up to the limit. Businesses tend to use a line of credit to expand payroll or cover operational expenses, among other reasons. 

  • Online term loans: An online term loan can loan you $5,000-$500,000. The interest rates tend to stand at 7-99% APR. On the upside, the turnaround time is very fast, taking just about a day. However, they have short repayment terms and may require daily or weekly repayment. 
  • Invoice factoring: As another form of unsecured finance (meaning you don’t need to put up collateral), you can leverage invoice factoring. Your future accounts receivable stand in as collateral. In this instance, your credit score is unlikely to impact your ability to use this method. Instead, your past sales and accounts receivable are a better indicator for approval. 
  • 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. 
  • 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. 
  • 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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