Is PPP Money Still Available for Small Businesses?
According to the New York Times, 5.2 million businesses sought out forgivable loans during the COVID-19 crisis. Additionally, Investopedia states that 2 to 3 million job-years (one job for one year) of employment were protected by PPP small business loans. Even though there were some bumps in the road, the general consensus remains that these loans had a significant impact on mitigating job loss caused by the pandemic.
Although the rollout of vaccines and reduced COVID-19 restrictions have helped some small businesses get back on their feet, new economic challenges—including supply chain issues and surging inflation—have caused many small businesses to seek out PPP loans in 2022 and 2023.
But, is PPP still available in 2023? According to the most recent PPP loan update, the program ended on May 31, 2021.
So, where does this leave small business owners? Are there other types of small business financing that offer just as many benefits as the PPP solution did? Thankfully, there are many possibilities.
Will There Be Another Round of Funding for PPP?
No additional PPP funding will be distributed in the coming years. Although, many existing borrowers are eligible for PPP loan forgiveness if they apply. According to the Small Business Association (SBA), businesses that successfully submitted a PPP loan application but haven’t applied for forgiveness are required to pay back funds. To learn more about how to apply for PPP loan forgiveness, visit the SBA’s website.
Even though PPP loans are unlikely to return any time soon, there are many other loans available through the SBA and other financial institutions that are just as beneficial for small businesses in need of a funding boost.
Additional Small Business Financial Solutions
Aside from PPP loans, there are several SBA loan options for small business owners to explore. Additionally, lenders like Backd offer alternative funding solutions to help businesses relieve some financial pressure.
Types of SBA Loans
SBA 7(a) Loan
7(a) loans are extremely common. In fact, nearly 52,000 7(a) loans were given to small businesses in 2021. These loans can be used for any reasonable business purpose and offer up to $5 million in either short or long terms. However, it’s worth noting that securing an SBA 7(a) loan can be difficult if your annual revenue is low, your credit score is below 690, or you have been in business for less than two years.
SBA 504 Loan
504 loans are meant to go towards purchases that will fund the growth of your business overall or help promote job creation. Like 7(a) loans, the maximum amount awarded in a 504 loan is $5 million. Unlike 7(a) loans, 504 loan options are offered for longer terms. Some purchases that can be covered by a 504 loan include:
Purchasing land or real estate
Purchasing heavy equipment and machinery
Building new facilities or making improvements to your existing building(s)
Anything outside of these areas cannot be purchased or financed through a 504 loan. Additionally, you must meet several requirements and find a Certified Development Company (CDC) in order to obtain an SBA 504 loan.
SBA Microloan
An SBA microloan is much smaller than the other solutions mentioned so far and offers small businesses $50,000 maximum. These funds can function as working capital and can be used to purchase items and make enhancements to your business. However, they cannot be used to purchase any form of real estate, including land.
You may apply for an SBA microloan via an experienced lending or business management assistance non-profit in your community. It’s worth noting that requirements will vary depending on the organization you choose to work with.
Working Capital and Line of Credit Options
The qualifications outlined by the SBA and banks are often very strict and limiting, making it difficult for many small businesses to secure the funding they need. That’s where alternative business financing solutions like working capital and line of credit options come in handy.
Backd’s working capital solution enables you to access the working capital funding you need as soon as you need it. Backd can help you:
Mitigate cash flow gaps
Afford inventory
Invest in facility improvements and new equipment
Fund opportunities to help your business grow
The Backd line of credit option provides you with immediate access to a revolving line of credit with fair rates for your business. You can use part or all of this credit on almost anything, and access it whenever you need within your draw period. A line of credit with Backd offers:
The ability to draw funds whenever you need
Unlimited terms
A wide range of funding amounts ($10K to $750k)
Soft credit pulls that won’t damage your credit score
Every small business should have an equal opportunity to succeed. Backd makes that possible. Apply in less than 3 minutes today, or contact us with any questions!
