The coronavirus aka COVID-19 is lasting much longer than most had thought and all had hoped. The wake of its destruction has left a decimated U.S. and global economy, and small businesses struggling to stay afloat and re-open as local governments begin to relax stay-at-home guidelines. The Paycheck Protection Program (also known as the PPP) is a program that was released by the Small Business Administration on April 3, 2020 to help supply funding to small businesses, nonprofits, sole proprietors, and business entities affected by COVID-19. $660 billion of total PPP financing was approved under The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. Business owners interested in applying for a PPP loan must do so before June 30, 2020.
Relaxing PPP Loan Terms
It was expected that when the second round of PPP funding was released on April 27, 2020, that funds would go in a matter of days. As a surprise to many, there is over $100 billion of PPP funding still available. Changing SBA, Treasury, and IRS guidance has caused many business owners to return their PPP loans, or choose not to apply for a PPP loan at all. However, the House has recently approved a bill to lengthen the time that PPP funds can be used to pay employees from 8 weeks to 24 weeks. Additionally, these new relaxed guidelines (if signed into law), will allow up to 40% of PPP funds to be used for non-payroll related business expenses (i.e. mortgage, rent, utilities, etc.). A basic overview of PPP loan terms are listed below:
Loan sizes up to $10 million
- Interest rate of 1%
- Maturity of 2 years
- First payment deferred for six months
- No collateral
- No personal guarantees
- No borrower or lender fees paid
- Loan forgiveness available
Where to Get a PPP Loan
Your local bank is a great place to apply for your PPP loan, as small and regional banks have been very successful processing and obtaining PPP loans for their clients. If you don’t have access to a local bank, or would prefer an easy, automated application process, then the below PPP loan providers are an excellent option. As of the date of this article, LendVer is not aware of any lending restrictions issued by the firms outlined below. Please defer to the providers’ main websites regularly for updated guidance and potential program changes.
Fundera is one of the largest online business loan marketplaces in America and has provided in excess of $2 billion to over 50,000 small businesses. The firm was also one of the first technology-based loan providers to implement an effective PPP loan application and processing system. Through its proprietary technology, Fundera has streamlined the PPP loan process enabling even the smallest of businesses to apply for, and obtain a PPP loan from its extensive network of approved lenders.
Lendio has been highly successful in processing and facilitating PPP loans through a user-friendly, technology-based platform. Via its unique software, and deep lending relationships, it has provided over $5.8 billion of PPP loans to over 70,000 small businesses. It also has a relatively low average loan size of $82,000, compared to other banks and lenders more focused on processing applications for larger businesses.
Although popular interest in the PPP program has waned, obtaining a PPP loan is still an excellent opportunity. The relaxed PPP guidelines and forgiveness parameters that should be signed into law soon, will make the program more appealing than it already is, and will likely accelerate the depletion of the remaining program funds. Even if your PPP loan does not become fully forgivable, you’ll still have a loan to help your business survive or grow, and at terms that would never have been available to you under regular circumstances.
Don’t hesitate to contact us if you are unsure of which financing option is the right choice for you, or if you need additional lender recommendations beyond those mentioned in this article.