Miss Out On a PPP Loan and Still Need Capital?

One of the most well-known coronavirus relief measures, the Paycheck Protection Program (PPP), was designed to help business owners keep employees on payroll while public health authorities began to shut down businesses. Congress and the White House realized that while the nation grappled with the public health aspects of the crisis, they also had to figure out a way to keep workers able to feed their families, and employee jobs and business intact, for when the economy eventually reopened. So as part of a broader package — the Coronavirus Aid, Relief, and Economic Security (CARES) Act, roughly $350 billion for PPP loans was appropriated to meet the needs of the nation’s business community.

PPP loans provided employers with funding equal to 2.5 times their average monthly payroll costs to cover payroll, as well as other expenses, such as mortgages, rent, and utilities. All or some of these loans can be forgiven, if the funds were used to keep workers employed. So, for example, take a restaurant owner whose business was closed for several weeks by a local public health authority. Even with delivery income, they would probably not be able to keep covering payroll for all staff without being able to serve guests. But they could use PPP loan funding to keep paying their workers until they were able to reopen. Workers could keep their jobs and pay their bills; owners wouldn’t have to worry about finding and training new workers when they reopened.

While the program received significant criticism during the rollout for being underfunded and difficult to access, an extension of the program, included in the subsequent Paycheck Protection Program and Healthcare Enhancement Act, provided even more funding. Further, over time, the federal government enacted additional laws and provided more official guidance providing loan recipients and applicants more flexibility, leading to significant improvements.

However, the program closed on August 8 to new applicants. To date, Congress and the White House have been unsuccessful at enacting a compromise bill that would reopen the program as part of a broader coronavirus relief package. And despite the more than half-trillion dollars spent, businesses in some industries are still operating in survival mode. High unemployment, coupled with state and local eviction moratoriums, is hurting property management companies. Restaurants, especially those in urban centers with limited or no ability to provide outside seating, are in dire straits. And while large scale airline and hotel layoffs have made the news, plenty of small businesses that depend on tourist traffic face devastation as well.

Your business may still need funds for any number of reasons:

  • You have not been able to secure PPP financing
  • You didn’t need a PPP loan initially, but with increasingly unstable demand, you may need to furlough staff
  • Local economic factors, such as higher-than-average regional unemployment, have depressed revenue below your forecasts
  • Recent outbreaks and consequent shutdown orders have slowed sales
  • Your suppliers have hiked prices
  • Cash flow issues have hindered your ability to scale up production to fulfill larger orders

Both parties have expressed support for another extension of the Paycheck Protection Program. But pundits expected the next relief package to be passed by now, so there’s no telling when PPP may be extended. The program details could change as well, based on the prevailing economic factors at the time of its passage. In short, a new PPP loan could be more challenging to obtain, provide lower financing, or have a shorter payback period. Further, when the program closed on August 8, $130 billion went unspent. Negotiations have stalled over total costs, and with costly priorities on both sides, there’s a slight chance the government may not see the need to extend the program at all.

And you don’t have time to wait for Washington to figure it out. Bills are coming due this week, next week, and by the end of the month. Without immediate access to capital, you’ll have to take drastic steps, like temporary layoffs, to keep your business going. And with consumer demand (and accordingly your revenue) tied to local COVID-19 outbreaks, you may be in serious trouble. You don’t have time to wait for compromise from Washington, and whenever a compromise is reached, the resulting program may or may not provide the financing you need.

There are other options besides PPP loans, such as term lending and merchant cash advances. Moby Capital, an experienced lending institution, can help you walk through your options to find the financing you need at affordable terms. Our practice has helped small and medium businesses secure as much as $5 million in capital through:

  • Business lines of credit
  • Invoice factoring
  • Merchant cash advances
  • Small Business Administration (SBA) loans
  • Term loans

Working with a network of trusted and credible lenders, we’ve helped companies walk away with the cash they need quickly. Contacting us today is the first step to take towards securing your company’s future.

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