The federal government’s Paycheck Protection Program (PPP) has expired, but there are still government programs to help small businesses that are impacted negatively by the coronavirus pandemic.
In case you never took advantage of it, the PPP provided loans to small businesses to maintain their payroll, hire back workers who may have been laid off, and pay applicable overhead expenses. It provided $669 billion in forgivable loans.
However, other government loan and grant programs are available as well as other sources of funding.
Standard loans from the federal Small Business Administration (SBA), such as the 7(a) loan, are an option, although – like bank loans – they can be tough to get. They offer long terms and affordable interest rates.
The SBA increased the guarantee on 7(a) loans and waived standard loan fees in December in order to help support small businesses and encourage lenders to issue capital; those increased guarantees expired on Sept. 30.
The SBA Economic Injury Disaster Loan program offers loans up to $10,000 to small businesses hit hard by the pandemic and who are located in low-income neighborhoods. The smallest businesses also may be eligible for an additional $5,000 grant through the SBA’s supplemental advance.
The SBA authorized $30 billion for the targeted advance, but it has only funded just over $2 billion, so there is plenty left. The SBA opened up the targeted disaster loan advance to all eligible businesses June 14, but small business owners need to apply for an economic injury disaster loan to get it – although they do not have to accept the loan once approved.
Bank small-business loans are still difficult to qualify for; business owners must have excellent credit and strong finances. Big and small banks have been slowly increasing loan approval rates throughout 2021, but they are nowhere near pre-pandemic levels.
Online business loans can still come with a faster application and funding experience, although banks generally offer low interest rates than online lenders. A report earlier this year by S&P Global Market Intelligence predicts that online lending will exceed pre-pandemic levels within the next three years. Small- and medium-size business lenders are expected to increase loan originations by 16% for a projected total of $15.8 billion annually by 2024. Online lenders typically are more willing to lend to newer businesses and those with bad or fair credit.
Nonprofit lenders and community development financial institutions, or CDFIs, can be great sources for affordable financing, especially for smaller loans. These mission-driven organizations are also particularly good options for underserved businesses, such as women-owned businesses and minority-owned businesses. For example, the Southern Opportunity and Resilience Fund offers loans of up to $100,000 to help businesses get through the current crisis.
