PPP loans kicked in like a fresh breath of air for small and middle-sized businesses struggling with money. The unique type of loan was introduced during the Donald Trump administration as soon as the coronavirus pandemic kicked in – its purpose was pretty obvious.
The loan was meant to help businesses struggling to keep employees, keep the payroll going, and make necessary payments. The program brought in nearly $800 billion, and close to 11 million borrowers took advantage of it.
What happened to the PPP?
The PPP loan reached to an end in May 2022. It had a limited lifetime, and while the coronavirus pandemic is not over yet and cases still float, the program has been ceased. Indeed, business closures and harsh restrictions are less likely to get back, but many businesses still struggle.
Apart from having the pandemic under control, another reason for the ending was the lack of money. The program finished all the funding allocated to help small business owners. Unfortunately, many borrowers were investigated for false claims and even imprisoned.
Now that the PPP is over, are there any other alternatives? Absolutely.
Business term loans explained
Business term loans are not new, but they make a solid alternative to the PPP. Basically, they can give you quick and easy access to money – pick the right lender, and you may have the money in your account within a few days only.
There are more limits, depending on which lender you choose. You might get as little as $5,000 or more than half a million. Some loans extend over a few months only, while others may go up to 10 years. Obviously, each business has its own unique needs.
Considering business credit cards
A business credit card works like a regular credit card, only used for business purposes. Basically, you get some credit that you can spend if you need money. You no longer need to apply for the loan if you have the credit.
The bad news with business credit cards is that they come with relatively high fees. While there are other options, these cards are quick and nearly instant – you have the card, so you can use the money whenever you need it.
Analyzing merchant cash advances
The merchant cash advice is a fairly good option. Basically, you get some money today, but you end up trading your upcoming profits in. This option is more suitable for businesses with a poor credit history. Prove that you have a decent income, and lenders will take your income for some quick cash.
This is one of the easiest and most convenient types of loans out there. It is not the cheapest, but it works for business owners who need money immediately. It is also worth noting that a merchant cash advance will not necessarily work for a new business with no proven history.
How about a business line of credit?
A business line of credit is a convenient option. You can get one even if you do not necessarily need it – basically, you have the opportunity to get a financial backup plan should any unexpected situations arise. This option provides access to revolving credit, which can be used for anything or kept as backup.
You can use this option as your emergency fund or use it for random expenses. You will, indeed, pay interest on it. But then, the interest only applies to the money you use. It works like a credit card – once you repay everything, you can access funds straight away, without having to reapply.
Invoice factoring – Who is it for?
Invoice factoring is suitable for businesses whose income depends on invoices getting paid on time. Unfortunately, many businesses fail to do it, so they usually take weeks or even months. This issue can easily affect the cash flow.
This type of loan implies no collateral at all. Instead, you trade your invoices in – basically, the money you are supposed to get at some point. The money you get will depend on the amount on your invoices. This type of loan is quick and convenient.
Back to basics – Microloans
Microloans can get you as much as $50,000, and they are only suitable for small businesses. It is not a bad option for your business, especially if you think about the average size of a PPP type of loan – just over $100,000.
Compared to other loans, microloans offer less money, as well as shorter repayment periods.
Traditional small business loans
This is the traditional way to get a business loan. Sure, it may not have all the good terms and conditions associated with PPP loans, but the option is still worth some attention. Interest rates are quite decent and low, repayment terms will not disappoint, and loan amounts can be quite impressive.
You can use a classic small business loan for all sorts of expenses. You can handle your working capital, equipment, debt refinancing, employees, maintenance, bills, expansion, you name it. Obviously, lenders will want to know what you need the money for, but there are no reasons to lie.
PPP loans were extremely useful for a lot of people and could have been even better if the system had been better set. All in all, it reached an end, and there is nothing you can do about it.
The good news is there are a few good alternatives out there, and each of them comes with its particularities.