Much Financial technology and alternative lenders have started to resume funding operations after holding financing packages for over 90 days due to the economic uncertainty, making sure that small business owners that have been negatively impacted by the coronavirus and the economic fallout resulting are able to protect their financial future and save their businesses moving forward. As many larger institutions focus on the PPP funding many of them have stopped lending on the traditionally available programs outside of the SBA.
It’s no secret that the coronavirus has absolutely flipped the US economy on its head in a ridiculously short amount of time and its no surprise that financial institutions would change the way they take risks during these times.
Millions and millions of people are unemployed and out of work, millions more are afraid that their jobs are on shaky ground and could disappear at any time, and small business owners across the country are having to shut their business – some of them permanently – and aren’t sure of how they are going to make money in the short or long-term.
According to the US Small Business Administration, 24% of all small businesses have already shut their doors at least temporarily.
Of the small businesses that have not yet shut their doors, 40% believe that they will have to within the next two weeks, and 43% are under the impression that their businesses will have six months of life left until they have to be closed permanently if the economy and the nation doesn’t open back up soon.
The government has been moving swiftly and decisively (while working in a bipartisan fashion) to get relief to those that need it most, but especially to get relief to small business owners.
The Paycheck Protection Program (PPP) – part of the over-arcing CARES Act – was originally funded with $349 billion, all of that earmarked to go to small business owners that were negatively impacted by the coronavirus.
The program was provided with another $320 billion allocations in late April, and while there are rumors throughout Washington DC that another round of funding will be necessary if the economy remains shuttered there are other options and alternatives available for small business owners – While the SBA is still funding its traditional 504 and 7a funding other programs are a bit scarce.
Nathan Abadi – President of Excel Capital Management has helped guide some of the alternative lending programs that have started to extend capital again. Excel held up funding for about 30 days during the height of the coronavirus. However, “as we saw the ways the American people continued to operate and start building back their business, we believed it was the right choice to start funding again” He explains.
“I also wanted to educate the public about what options are currently available since navigating the financial lending space is tricky during these times”
The Small Business Administration has been moving very aggressively to help entrepreneurs and small business owners dealing with the economic collapse caused by the novel coronavirus, opening up new avenues of financing and helping to expedite their traditional loan packages as well.
SBA Express Loan offers are particularly popular right now, helping small business owners to receive funding inside of 36 hours – cutting out a lot of the delay that the traditional SBA lending route inevitably causes.
Those looking to invest in commercial real estate or those that want to purchase equipment for their business are encouraged to pursue SBA 504 loan offers. 20 year and 25-year loan repayment terms are available on the real estate side of things with 10 year loan repayment terms for equipment purchases – all of which require a 10% down payment.
Finally, the SBA 7(a) loan program is available for those that need to access “general-purpose” funding of between $50,000 and $5 million.
A variety of different loan terms are available, terms that stretch from five years to 25 years depending on how you hope to use this cash and capital. Working capital plans, business acquisition, and expansion plans, equipment purchases, and real estate investments can all leverage this particular SBA set up.
Unsecured Business Loans
Unsecured business loans (particularly those available from financial technology companies or nontraditional lenders) are incredibly popular in the economic wake of the novel coronavirus global pandemic.
These kinds of loans give you access to cash and capital without having to put up collateral for use your assets to secure the funding you receive, working a lot like traditional personal loans or private term loans – but with more cash involved to help you run, operate, and expand your business in these trying times.
Peer to Peer Lending Programs
Peer-to-peer (or P2P) lending has taken off like a bottle rocket in the last 15 years or so, with people all over the world getting a lot more comfortable with the idea of seeking out private capital and private financing in the non-traditional space.
Companies like Prosper and Upstart are just a couple of the best examples of organizations doing well in this space, platforms that put those that are looking to take advantage of financing in contact with those that can provide the funding they are after – facilitating these transactions, guaranteeing that everyone involved is on the up and up, and handling all of the administrative backends for a small fee.
These kinds of lending solutions are usually a lot more flexible and a lot more versatile as far as not just the kind of funding you can receive but how you can take advantage of that financing and how you go about repaying those funding packages, too.
Personal Loan Options
Of course, you can always go the more traditional personal loan route option if you need to put cash into your business – especially if you have fantastic personal credit that allows you to capitalize on offers from companies like Avant and SoFi.
You want to speak to an accountant before you start to mix your personal and business finances (for obvious reasons), but when you’re dealing with an economic situation like the one we all have to contend with right now the odds are good that you’ll want to do anything and everything you can to keep your business going and to secure your financial future.
Accounts Receivable Financing
There are a number of different accounts receivable financing options you can take advantage of – including Asset Based Lending (ABL), Traditional Factoring, and Selective Receivables Financing – from traditional and nontraditional lenders in the commercial lending space.
The big benefit here is that you’re essentially able to turn one of your most valuable business assets (your outstanding accounts) into viable cash flow right now, at the moment without having to pay a sky-high premium to do so.
Granted you’ll actually have to have outstanding accounts receivable to put up as collateral to leverage these kinds of financing packages (and that may impact just how much money you’re able to get through this form of fun) before established businesses dealing with the coronavirus this isn’t a bad route to go down.