Since the beginning of the epidemic, the SBA has been working to save the country’s most vulnerable small businesses. COVID has provided more than $ 1 trillion in financial assistance. As of October 17, the Pay Performance Program (PPP) pardons have reached approximately 70% of the total PPP loan amount. Approximately 92% of PPP loans for 2020 are forgiving.
Following the end of the PPP, small business owners had to look for other sources of funding. S.B.A. Covide-19 Economic Damage Disaster Credit Relief It is receiving applications by December 31, 2021. As of October 14, over $ 288 billion, more than $ 3.8 million of CVD EDL has been approved, and applications will remain open until December 31, 2021.
Changes to the COVID EIDL program policy that came into effect on September 8 include:
1. Increase the maximum loan amount to $ 2 million
2. Use of Expansion to Include Non-Federal Debt Payment and Prepaid Business in Any Time (Past or Future) and Federal Debt Payment
3. Extend the original extension period to 24 months for all loans
4. Minimize the membership requirement for which the trustee is supervised by the owner or the owner owns an additional 50% ownership.
5. Additional ways to meet program size requirements for businesses assigned to NAICS code, starting with 61, 71, 72, 213, 3121, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532 or 812.
However, one of the most common challenges for business owners regarding EIDL funding is the length of time it takes to get the money into the hands of borrowers. S.B. It has a lot of applications to work with, and it has a lot of rules to follow before releasing money for any business. The result is that most businesses get initial confirmation, but it can sometimes take 3-4 months for the money to arrive.
So what does a business owner who wants money do to stay alive while waiting for EIDL funding?
Bridge Finance may immediately reduce the need for cash for business owners, but SBA will do the important work of reviewing and approving this continued EDL funding for small businesses in the United States.
Also known as bridge loan, bridge finance or gap finance, it is a short-term loan that lasts from a few weeks to a month. This short-term financial solution can be used to build a “bridge” between more traditional loans to keep operations running smoothly and efficiently.
Although we have reached the peak of the epidemic, small business owners are still concerned about the financial stability of their companies, especially as fuel costs and labor costs continue to rise. It can take 3-4 months to process an EIDL loan. With utility bills, many companies do not have this time until money arrives.
How can a bridge loan help your business?
With the forgiveness of PPP loans no longer available, it may take time to get financially viable. In difficult times, business owners may need to capitalize quickly. Banks can take months to review all of your business information and make a decision. Bridge loans are designed to fill the gap.
A bridge loan may be available for real estate purchases that often require businesses to act quickly before taking advantage of another interested buyer. Companies also need immediate financial support to make purchases and purchases of materials and equipment. In these cases, a business can borrow a short-term loan and then re-evaluate its value after deciding on a long-term financial option.
It is important to note that bridge loans often come at high interest rates due to their short duration. Depending on the situation, the benefits can offset the negative, and rates may be more reasonable for businesses with a strong credit history and record.
Meanwhile, the percentage of microfinance lending in large banks ($ 10 billion + assets) rose from 13.9% in August 2021 to 14% in September, and the approval of small banks also increased to 19.5% in September. Until recently Biz2Credit Small Business Lender Directory ™.
Business owners are investing in their companies, and many banks are unwilling to lend as fast as they had hoped. However, over the past five months, every small business lending category — including bank and non-bank lenders — has seen a rise in credit approval rates on a monthly basis.
Along with traditional banks, non-bank lenders continue to be a lucrative source of income for companies that need money quickly. Their approval rates increased again in September.
For example, institutional lending increased to 24.5% in September, 24.3% in August and 2.3% a year ago. Meanwhile, the approval of alternative lenders rose from 25.2% in August to 25.4% in September 2021. Last year, the percentage for alternative lenders was 23.1%.
Credit unions approved 20.6% in September, 10 percent from August, but decreased by 21% in September 2020.
These numbers are strong, but there is much room for improvement. Overall, the economy is recovering well from the epidemic, but it is not perfect. Small business owners still face three times the cost of increased fuel, materials, and labor costs, and when they return home following the epidemic, they continue to seek debt to cover those costs.