Missed out on the PPP loans? Here’s what you can do instead

The Paycheck Protection Program (PPP), as part of the CARES Act, provided much-needed funding for small businesses who are feeling the pinch from COVID-19 and the associated economic downturn. But the program received so many applications that it ran out of funding in just a few days. What can small businesses do if they missed out on getting a PPP loan? Fortunately, you have options. 

Main Street Lending Program

The Federal Reserve has instituted the Main Street Lending Program to help small and medium-sized businesses. This program will provide loans for businesses with up to 10,000 employees or revenue of less than $2.5 billion in 2019. Businesses can apply for new loans or to increase the size of an existing loan. Ninety-five percent of the loan will be purchased by the Federal Reserve, so lenders will only take on 5% of the risk. 

You can get a Main Street Lending Program loan from an eligible lender (a U.S. bank or credit union), and you can qualify for this program even if you have also received a loan from the Paycheck Protection Program. Loans are available for $1 million to $25 million for four years at an adjustable interest rate. 

Microlenders

If your financing needs are more modest, you may find the help you need from a microlender. Microlenders make loans to small businesses, even if the businesses aren’t currently served by a bank. Some microlenders invest their own money, while others aggregate funds from a large number of investors in amounts that may be as small as $25. Microlenders may make loans that charge low or no interest and have a payment schedule, or they may take an equity position in the company they are financing. 

Crowdfunding

Crowdfunding lets you raise money from friends, acquaintances, and even strangers. You can publicize your product or service and take orders in advance of availability. Investors can send money for pre-orders or invest in your project with the expectation of a future return, depending on the platform you choose and the way you set up your campaign. 

Paycheck Protection Program part two

While the initial $349 billion provided by the Paycheck Protection Program was quickly exhausted, additional funding has been approved. Another $320 billion in funding will be available to small businesses to help with payroll and other costs. 

If you want to apply, don’t wait – this money could be depleted quickly too. Contact your bank right away to let them know you will be applying. Have your payroll records for the past twelve months available so the bank can verify your expenses.