With the stay-at-home orders stretching, your small business is struggling with cash flow. If you had applied for a PPP loan, but it was denied, you are probably wondering what other financing options are left.

What is a PPP loan?

The Paycheck Protection Program (PPP) is a loan program by the federal government to help businesses that were affected by the coronavirus pandemic. You don’t require any collateral, credit score, or personal guarantee to qualify for the loan. However, there are millions of small businesses and the loan program may not work for every business. It is for this reason you may have a PPP loan denied. If you get a PPP denial, you will need another financial resource for your small business. You must apply for the PPP loans through an SBA-authorized lender.

What are the reasons for your PPP denial?

The PPP loan has broad eligibility requirements. To qualify for the PPP loan, you must be a nonprofit, small business, Tribal concern, self-employed, sole proprietorship, or an independent contractor with 500 or fewer employees. Your business must also have been operational by February 2020. Other situations that can make your PPP loan denied include:

• Your business is engaged in illegal activity under federal, state, or local law.
• You have defaulted on a guaranteed loan from another federal agency within the past seven years.

Choosing the right loan

Getting a business loan may sound simple, but you’ll be overwhelmed by the choices that exist. We understand and that is why we give you this guide on how to find the right business loan.

If you have been denied a PPP loan, then you should look for loan options elsewhere. When choosing a loan offer, you should not go for the first one that comes your way. If you don’t give careful thought to the loan you take, you may end up throttling your business cash flow. There are several factors you should put into consideration when choosing your small business loan. Here are some factors you should consider.

Why you need the money

The first thing is to decide on why you need the loan.  What do you need to use the cash on and how will the loan help grow your small business? For instance, if you need a loan to improve your cash flow, you can decide on a line of credit. If you want the loan to buy a new building, then you have to go for a commercial real estate loan.

Loan amount

You should have an idea of how much money you need for your business. Be realistic and flexible when choosing the loan amount. Most lenders see the range you ask for as a reflection of how you understand your growth potential. It’s not worth taking a loan that is too small. Ask for a loan amount that is too big and it could be an issue. When comparing loan offers, look for the one that is just right for your business needs. You have to think carefully about how you’ll spend the loan amount you’ll be offered. When choosing the loan amount, find a balance between an amount that is enough to stay manageable and large enough to cover the business expenses.

Interest rate

The interest rate is a vital factor to consider when choosing loan options. You should ask for the annual percentage rate (APR) which takes into account the loan processing charges. With the APR, you can have an accurate estimate of the loan’s total cost. It is also advisable to ask whether there is a penalty when you repay the loan.

Loan term

Some loans have a repayment period of 6 months while others have 10 years. A multi-year loan can seem like a long time to be making loan repayments. For shorter-term loans, you’ll make smaller payments, and is the opposite when you have longer loan terms.

How fast do you need the money?

Fast cash is always expensive when you want business financing. The price will be higher when you want quick capital because need to cover any losses. If you can wait for weeks or months, then you’ll get an affordable loan.

Now you know how to choose a loan, the next question is where to get one. MobyCap has loan options that you can choose from depending on your needs. Call (737) 577-1180 or email info@mobycap.com to discuss how we can help you grow your business.