What is Going on with the Paycheck Protection Program?
According to the New York Times, “Four weeks before its scheduled end, the federal government’s signature aid effort for small business ravaged by the pandemic — the Paycheck Protection Program — ran out of funding on Tuesday afternoon and stopped accepting most new applications.”
Unfortunately, this is nothing new. The Paycheck Protection Program has run out of money before – almost exactly a year ago, to be precise, on April 16th.
And then in August of 2020, that round for the PPP ended with money left over. So, in essence, the amount has gone up and down, regardless of who has been occupying the White House or which party is controlling Congress.
Paycheck Protection Program Fraud Does Not Help Matters
According to the National Law Review, by last month, the SBA, “provided a total of $934 billion in funding to companies impacted by the COVID-19 pandemic. As of September 2020, Congress had already identified billions of dollars in suspect loans issued under the PPP; and, in the months since, the U.S. Department of Justice (DOJ) has continued to pursue fraud investigations targeting PPP loan recipients across the country.”
In fact, it turns out to be good employment news for lawyers. The Department of Justice is currently hiring trial attorneys to prosecute loan fraud cases. But there are more reasons why the Paycheck Protection Program may have burned through its funds more quickly than its expected end date of May 31st.
Paycheck Protection Program Loans Going to Places That Do Not Need Them is Another Issue
In a paper published by NBER.org, that organization found, “funds were targeted towards areas less severely affected by the virus, at least initially.” While things have changed, and the distribution process has improved dramatically, there may still be some questionable places where PPP funds went but were not needed – at least not as desperately as they have been needed in other industries and other parts of the country.
PPP Set Aside Still Has Some $$ – For Now
Also per the New York Times, “Some money — around $8 billion — is still available through a set-aside for community financial institutions, which generally focus on lending to businesses run by women, minorities and other underserved communities. Those lenders will be allowed to process applications until that money runs out…”.
Hence if you are a member of a protected class, you may be in luck. If you want a Paycheck Protection Program loan, and you have not acted yet, then your best (and only) bet is to go through a community financial institution. And you had best hurry.
Will more money be released to bolster this program for yet another round of funding? It is hard to say. Given that there was an April hiring boom, it is entirely possible that Congress and the President will decide to wait and see. Or, maybe, forgo another round while the economic recovery stays strong. As always, that could change at any time.
As a result, it is probably a good idea to look at alternatives to the Paycheck Protection Program.
3 Great Alternatives to the Paycheck Protection Program
3. 401(k) Financing
This is not a loan. You will not have to pay an early withdrawal fee or a tax penalty. You put the money back by contributing, just like with any 401(k) program. This means you won’t lose your retirement funds. This is a 401(k) Rollover for Working Capital program. The IRS calls it a Rollover for Business Startups (ROBS).
Per the IRS, a ROBS qualified plan is a separate entity with its own set of requirements. The plan, through its company stock investments, rather than the individual owns the trade or business. Therefore, some filing exceptions for individuals may not apply to such a plan. This type of financing isn’t a loan against, your 401(k), so there’s no interest to pay.
It does not use the 401(k) or stocks as collateral. Instead, this is simply a movement or change of custodian.
Credit Suite offers 401(k) financing.
401(k) Financing: Terms and Qualifying
The Credit Suite 401(k) financing offers a powerful and flexible way for new or existing businesses and franchises to leverage assets that are currently in a 401(k) plan or IRA. In as little as 2 weeks you can invest a portion of your retirement funds into your business, giving you more control over the performance of your retirement plan assets and the working capital you need for business growth.
401(k) financing is easy to qualify for as you won’t need financials or good credit to get approval.
To qualify for 401(k) financing all any lender will require is a copy of your two most recent 401(k) statements. If your 401(k) has a value more than $35,000 you can get approval, even with severely challenged personal credit.
Pay low rates, often less than 5%.
Can usually get up to 100% of what’s “rollable” within your 401(k). The lender will want to see a copy of your two most recent 401(k) statements.
You can get 401(k) financing even with severely challenged personal credit. The 401(k) you use cannot be from a business where you are currently employed. So it will need to be from older employment. You cannot be currently contributing to it.
Do You Have Credit Issues Now?
Our 401(k) financing program is perfect for business owners who have credit issues. Lenders are not looking for, nor do they require good credit to qualify. You can even get approval for a low-interest credit line, even with severely challenged personal credit and low credit scores.
You can get approval for a credit line, regardless of personal credit quality, even if you have recent derogatory items and major collections on your credit report.
This is one of the best and easiest business financing programs in existence that you can qualify for and get really good terms even if you have severe personal credit problems. You will need to pay a lender fee; it will include 5 years’ worth of management and consulting.
2. Account Receivable Financing
Many businesses wait weeks, even months to get paid on their outstanding account receivables. This typically creates major cash-flow issues as they provide their goods and services and absorb those costs until they eventually get paid sometimes 90 days later.
Hence another funding option is to use outstanding account receivables as collateral for financing. Receivables should be with the government or another business. If you also have purchase orders, then you can get financing to have those filled. You won’t need to use your cash flow to do so. You can get an accounts receivable credit line with rates of less than 1% with no consumer credit requirement.
Account Receivables Financing: Terms and Qualifying
Use your outstanding account receivables for financing. Get as much as 80% of receivables advanced ongoing in less than 24 hours. Remainder of the accounts receivable are released once the invoice is paid in full. Factor rates as low as 1.33%. Get an accounts receivable credit line with rates of less than 1% with no consumer credit requirement.
Account Receivables Financing Through Credit Suite
With Credit Suite Account Receivable Financing you can get rates less than 2% and financing as high as $20,000,000 even with severely challenged personal credit.
Easy Qualification Process
To qualify for AR Financing your business must be open for at least 12 months. The lender will review your existing receivables or purchase orders and will look into the company that your receivables are with.
If the companies who owe you money have a good history of paying their debts, you can easily get approval regardless of your personal credit quality.
Do You Have Credit Issues Now?
The Credit Suite Account Receivable Financing program is perfect for business owners who have credit issues. Lenders are not looking for, nor do they require good credit to qualify. You can even get approval and be advanced 80% of your receivables, even with severely challenged personal credit and low credit scores.
Get approval with a personal credit score lower than 500, even if you have recent derogatory items and major collections on your credit report. Lenders truly don’t care about your personal credit; they care more about the credit of the company where you have the receivables.
This is one of the best and easiest business financing programs in existence that you can qualify for and get really good terms even if you have severe personal credit problems.
You can get paid tomorrow instead of waiting weeks or months for payment. And you can do this for less than the cost of you accepting a credit card payment from your customers.
There are very few other programs in existence that can give you these low rates even if you have severe personal credit challenges.
The Credit Suite Credit Line Hybrid is a Terrific Alternative to a PPP Loan
A credit line hybrid is a form of unsecured funding.
Our Credit Line Hybrid program is extremely popular due in part to how easy it is to get approval. To qualify lenders will look solely at your or your credit partner’s personal credit quality. They are looking for very good personal credit with no derogatory items reporting.
Our credit line hybrid has an even better interest rate than a secured loan. Get some of the highest loan amounts and credit lines for businesses. You can get 0% business credit cards with stated income. These report to business CRAs. So you can build business credit at the same time. This will get you access to even more cash with no personal guarantee.
Credit Line Hybrid: Terms and Qualifying
You need a good credit score or a guarantor with good credit to get an approval (a FICO score of at least 700). Your credit utilization on each of your revolving accounts has to be less than 40%. You can have no more than six inquiries per bureau in the past six months. Fewer inquiries are preferable.
You cannot have more than four unsecured accounts opened within the past 12 months. And you cannot have any bankruptcies in the previous seven years.
Plus, there can be no open (unpaid) collections, liens, or judgments. And no late payments in the last 24 months. You will need to have a seasoned bank card trade line with a $2,000 limit or higher. A higher limit is preferred.
Plus, you must have at least two open revolving accounts with a good payment history spanning a year and a half to two years.
No financials are necessary. You may be able to get a loan of more the amount of current highest revolving credit limit account. This is up to $150,000.
Do You Have Credit Issues Now?
If you have good credit there is a good chance you can get approval for our Credit Line Hybrid. But even if you have personal credit issues now and no established business credit, we still might be able to help.
You can qualify for our Credit Line Hybrid program with a personal guarantor. If you have someone such as a business partner who does have good personal credit, they can apply and qualify for unsecured financing for the business.
Our collateral-based financing programs are perfect for consumers with personal credit challenges. Get approval with great terms and get approval even with severe credit issues. You can also qualify for financing with us if you have been open more than a year and have active cash flow for your business now.
You can use our Business Credit Building Program to help quickly establish a business credit profile and score so you can qualify for unsecured financing based on your business credit. We even work with a powerful network of credit improvement specialists who can help you repair your personal credit damage.
Paycheck Protection Program and its Alternatives: Takeaways
The Paycheck Protection Program has been in flux ever since it was first announced over a year ago. And the fact that it’s again out of funds should come as no surprise.
But don’t despair if you feel you’ve missed out on business financing. Try any of our alternatives to the PPP – and these three just scratch the surface when it comes to all that Credit Suite has to offer.
You can get business funding and stay afloat – no matter what’s going on with the PPP. Why not reach out today to find out the details on what you can get for your business?