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New PPP Loan Applications Start Accepting Today

Are you ready to apply for the new PPP loan?

The Paycheck Protection Program (PPP) is an SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. The loan provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program. The SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.

According to the SBA website, the SBA will open the portal for the new PPP loan on Monday, January 11, 2021 at 9 am ET. When the PPP loan portal system opens, it will initially accept First Draw PPP loan applications from participating CFIs, which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries.

If you are thinking about getting the new PPP loan or any other business financing, then you should know about the basics before you get started. If you understand the basic dos and don’ts of loans, then you will be better equipped to find the best loan for your needs. Whatever type of loan you are applying for, be it the new PPP loan or something else, you should follow these basic rules to help you determine the best solution for your needs.

Shop around

When searching for a loan, it pays to do your research. Look for as many suitable lenders as you can, so that you can find the very best deal. There are many online pages that allow you to compare loan rates from a variety of lenders. In additional to looking online, check out your local banks and mortgage lenders for deals too. If you ask for a detailed quote, the lender will have to look at your credit report which will result in a hard inquiry. Too many lenders looking at your credit report can affect its rating, so make general inquiries until you are sure the lender is right for you.

Look beyond APR

When shopping for a loan, you should look past the promotional APR rates and terms, and ask the lender what the monthly repayments are. Low APR rates are good, but you need to find out what rate you can actually receive, what the repayment terms will be and if there are any additional charges. Think about the total interest payments on the loan rather than just the monthly payments. Low interest rates is one reason the new PPP loan is a great option for small businesses.

Look at protection

When taking out any loan, it pays to have insurance protection in place in case you fall ill or otherwise have your business activities interrupted. This way you won’t be left unable to repay your loan obligations. Look at the cost of taking out such coverage, both with the lender and with other companies. Also make sure that you cover as many risks as possible. At the bare minimum, you will need liability protection but a comprehensive business owner’s plan will provide you the best bang for your buck.

Avoid using collateral

If possible, try and avoid taking out secured loans. If the amount you need to borrow is small or you have good enough credit to borrow without collateral, then do so. Although unsecured loans have higher rates, they are less risky because your assets will not be at risk if you cannot make the payments.

Check and double-check

Before signing any agreements, check and double-check all of the terms and small print. Some lenders will put the most unfavorable clauses in the agreement in a place you might overlook. Look at what happens if you miss payment or the payment is late, and if there are any additional penalties or charges, such as charges for early repayment. If possible, have an attorney review the loan agreement as well.

Get short terms

Try and take a loan out over the shortest period you can afford. Taking loans out over 10 years or more can be risky, and you cannot be sure what your financial situation will be at that time. Of course, taking out a long-term loan for real estate may be acceptable, but the longer the period of the loan, the more you have to pay back.

New PPP Loan applications start accepting today - FREE GRANT LIST

Whatever type of loan you want, be it the new PPP loan or another type, make sure that you know you can afford to make the repayments, and that taking out the loan will help you financially.

I’m here to support your small business growth and development. Contact me if you have questions or schedule your FREE Business Breakthrough Strategy Session to figure out exactly what you need to do to take your business to the next level.

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How to Get a Small Business Loan Despite Bad Credit

Have you had the misfortune of falling into bad credit? It should surprise and delight many of you, that small business loan for people with bad credit rating is available. You can get a small business loan despite bad credit.

Now the question arises; how can one avail of such financing. Well, read on.

To be frank, dont even think of going to banks. No bank worth its salt is going to touch your business loan if you have personal credit score less than a certain limit. But there is much more to the business lending than just banks.

For other types of lenders, your personal and business credit score will still be important parameters, but not to the same degree as the Banks.

Let me explain the credit score first. In short, your credit score is a numeric result generated from an algorithm used by the credit reporting agencies to determine an overall level of credit worthiness. The algorithm considers multiple factors that contribute to your overall score.

Bad credit score apart; the following can also make you a bad credit candidate:

  • NSF Checks
  • Recent Late Payments
  • Historical Bankruptcy
  • Loan Write-offs and Settlements
  • Credit In Arrears
  • Numerous Credit Inquiries

Remember; the more recent your repayment bouncing, the more difficult it will normally be for you to acquire any type of financing.

Get a Small Business Loan Despite Bad Credit - FREE GRANT LIST

Take the following steps before applying for a small business loan despite bad credit:

  • Separate your business credit from your bad personal credit by forming a corporation or LLC (Limited Liability Company) and applying for an EIN (Employer Identification Number).
  • Use your EIN to establish a business credit profile completely separate from your bad personal credit.
  • Build a strong business credit profile while repairing your poor personal credit.
  • Prepare separate financial statements for your business.

Bad credit financing is usually provided by asset based lenders or cash flow based lenders.

Asset based lenders provide financing against assets such as: real estate or machinery.

Bad credit financing from asset based lenders can be very expensive. They are also very stringent in case of any miss in repayment: they seize the assets pledged as soon as possible as per law to liquidate them.

Success in securing bad credit financing depends on the following factors:

  • Your ability to explain; why and how the bad credit happened and how you tried to avoid all that.
  • Your short term ability to repay.
  • The type and quality of the assets and/or cash flow.

Business Cash Advance, a Good Alternative:

You can also opt for cash advance. Business cash advance is not a loan and the organization offering this cash advance gets their money from the credit card sales that the business does in a specific period, there by reducing the burden of paying back the loan, and the terms and conditions to qualify for such cash advance are also relatively simple.

There are quite a few organizations which provide such cash advances. Organizations like MerchantCashDirect usually provides cash advance for working capital needs. They more often than not, target specific industries. To expand the example of above mentioned organization: They seek to provide funds to people into restaurant, retail or service industry processing at least $4000 in credit card receipts per month.

You can not wish away your bad credit history, but you can improve your bad credit financing options by starting to pay your debts on time, thereby reducing as much debt as possible.

Need more help to grow your small business to profitability? Contact us!