I Got Rejected from PPP. Now What?

These days, businesses need a little help to overcome the difficult times that they are currently facing. These uncertain and difficult times may be coming to an end soon, but it’s not soon enough for businesses. The good news is that even if you were rejected from PPP, you do have options thanks to small business loans and alternative business funding. You just need to find the solution that works best for your business’ needs.

Reasons Why Businesses Are Denied PPP

Wondering why you were denied a PPP loan? There are actually a few reasons why this may have happened to you. There are strict requirements that businesses are expected to meet if they are going to qualify for help with the PPP loan. In order to qualify for these loans, your business must be:

• A small business with fewer than 500 employees (or more, depending on your industry)
• Non-profit organization
• Veteran’s organization

Your business must meet these requirements and at least have been in business prior to February 15, 2020.

There are several reasons why you may have been denied PPP, including:

• Your business activity is considered to be illegal according to state, federal, and local laws.
• Someone who owns 20% or more in your business has had legal issues including convicted a felony within 5 years, on parole/probation, is subject of an indictment, or is currently incarcerated.
• You or any other owners have been delinquent or in default on a loan from the SBA or another federal agency within the past 7 years.

Even if you do meet these requirements, there’s no guarantee that you will get this loan. That’s why it’s important to understand your options for alternative funding.

Alternative Financing Options

It’s normal to feel discouraged if you were hoping to get the PPP loan and get denied. This isn’t your last chance option. This section will take a closer look at your alternative financing options so that you can make an informed decision as to which one will work best for your specific business and needs.

Merchant Cash Advance

A merchant cash advance is an option that is a bit different than the traditional small business loans you can get. If your revenue primarily comes from the use of credit or debit card sales, this is a great option to consider. What happens with these types of loans is that you will get a lump sum of cash that is repaid directly from your credit or debit card sales. These payments can be made daily or weekly, depending on the terms of your loan agreement.

Your fees for this funding option can depend on your ability to pay the loan back from your sales. The higher risk you are considered to be, the higher the fees that you will have to pay. The better your sales are doing, the faster you can pay this type of loan off. The terms for these loans are typically shorter than other loans, often between a couple of months to just over a year. If you can guarantee that your sales will be enough to earn a profit and pay back your loan, this is a good option to consider.

Unsecured Business Line of Credit

Also referred to as “revolving line of credit”, this is a versatile alternative financing solution that can really work for your business. This type of credit allows you to get a larger lump sum of money, but you don’t necessarily have to use it all right away. Best of all, you only have to make payments based on how much you actually use rather than the entire amount of the loan. This means that you can take only what you need, when you need it, and then pay that amount back. What makes this type of loan even more appealing for small businesses is that they can keep borrowing and repaying this loan as they need to, as long as they don’t go over their credit limit.

You can get your money very quickly with this loan option, often getting your money within a few days of your application process. With this option, you can borrow up to $500,000 and there are short repayment terms of often up to a year. Plus, since this option is an unsecured loan you won’t have to put up collateral though you may end up with higher interest rates.

Unsecured and Secured Business Loans

There are alternative funding companies that can offer you both unsecured and secured business loans. The primary difference between these two options is that your creditworthiness is all you need for an unsecured loan whereas a secured loan requires collateral. It’s important to know while you don’t have to risk any property should you default on your loan; you will end up paying more in fees and interest rates because you are considered to be higher risk.

Equipment Leasing/Financing

Do you need to replace any current equipment or just think it’s time for an upgrade so that your business can keep up with it’s needs? Some good solutions to consider are equipment leasing and financing. With equipment leasing, you are essentially renting the equipment that you need. This means that you won’t actually own the equipment. At the end of this leasing period, you can either purchase the equipment to own it, renew the lease, or return the equipment and start the process again with another piece of equipment.

With equipment financing, the lender gives you the money to buy a piece of equipment. After you pay this loan off, you will own the equipment which is the biggest different between this option and equipment leasing.

There are some things to consider. When you are leasing, you don’t have to put up a down payment or collateral for the loan. The lessor is also responsible for any repairs the equipment may need, whereas you are responsible for repairs when you are financing your equipment. In both cases, the loan process is relatively easy and allows you the ability to quickly get the funding that you need for your equipment.

Cannabis, Hemp, and CBD Business Loans

If you are looking for cannabis funding, there are specific CBD business funding that you can find to help your business out. These loans are specifically made for the unique needs of this industry, giving them the financing solutions that they need to thrive. These loans are made for funding cultivation, packing, production, research and development, and marketing cannabis, hemp, and CBD products. In the past, it was hard to find loans for companies in this industry because there are many areas where these items are considered to be illegal. Thanks to alternative funding solutions, there are a lot of options available to them that may not have been around otherwise.

You can potentially get approval for loan amounts between $100,000 and $5,000,000 with terms of up to 4 years. You can get funding within 7 days of your approval, which can take up to 48 hours after the application is received to get.

Conclusion

You do have options if you were rejected from PPP that can help you get the funding that you need to keep your business moving forward. These are difficult times, but with the right financing solution you can overcome these uncertain times and help your business thrive in the face of adversity. This article has the information that you need to select the right alternative financing solutions for your business.