At CapFront, our focus is on complete transparency with our clients, and our dedicated relationship managers are bona fide experts in business funding. With the recent updates to the Paycheck Protection Program (PPP), we’ve received a lot of inquiries from business owners who are unsure of whether to choose a PPP loan or another funding option. That’s why we believe it is important to share what we know in order to help you evaluate your options and decide what is best for your business.
The Paycheck Protection Program (PPP)
The Paycheck Protection Program (PPP) was specifically designed to provide financial assistance to eligible small businesses to help them maintain payroll during the COVID-19 pandemic. A CapFront, we can help you with your PPP application and assist you deciding if it is right for your business.
Here are some of the most important pros and cons of the program to be aware of:
- The good news about PPP loans is that they can potentially be 100% forgiven if the funds are used properly.
- For borrowers with PPP loans under $150,000, there is a new simplified forgiveness process.
- In order to qualify for forgiveness, you must meet specific criteria. This means that at least 60% of your PPP loan must be spent on eligible payroll costs and the remaining 40% must be used on eligible non-payroll expenses.
- The loan forgiveness application process can be complicated for loans above $150,000, and you have to keep accurate records of your expenses.
Maximum Loan Amount
- For First Draw PPP loans, the maximum amount your business can receive is 2.5X your average monthly payroll costs up to $10 million. For Second Draw PPP loans it is 2.5X the average monthly payroll costs up to $2 million.
Depending on the size of your business or if payroll is not one of your biggest expenses, your PPP loan amount may not be enough to help you stay afloat.
Time Frame for Approval
The SBA is aware of bottlenecks and glitches causing delays to applicants, and is working towards fixing it. Those businesses with 20 or fewer employees are now those that are being prioritized.
For struggling businesses, time is of the essence and the SBA’s processing delays are a real concern.
Once you’ve evaluated your options, we can help you apply for a PPP loan. But, if you find that the funding process is taking too long, that you are not eligible for enough PPP funds to meet your needs, or if you simply change your mind and decide the program is not right for your business, CapFront can provide you with funding directly…in as little as 48 hours.
Dual Track Funding
Dual track funding from CapFront is a short-term AND long-term financing solution that helps you bridge the gap while simultaneously working with us on long-term funding. With minimal paperwork to complete and flexible repayment options, bridge funding is an ideal solution for businesses that need a quick solution to cashflow problems, and with sustainable rates and terms, long-term funding is the ideal permanent financing solution. You’ll get immediate access to capital to use for a number of situations while we work on your long term funding solution such as:
- Taking advantage of a lucrative business opportunity
- Making a strategic acquisition
- Stocking up on inventory
- Purchasing new equipment
- Covering operating expenses
With minimal paperwork to complete and flexible repayment options, bridge funding is an ideal solution for businesses who need a solution to cashflow problems. You’ll get immediate access to capital to use for a number of different situations. For more information on Dual Track Funding, click here.
Line of Credit
A Line of Credit is very similar to a business credit card. You can draw only the funds you need from your approval limit, only pay interest on what you draw, make fixed weekly payments, and pay it back early anytime without penalty. A Line of Credit gets you funding pretty much instantly as needed, since you don’t have to take out the whole approval limit all at once. Normally, business owners use lines of credit to handle gaps in accounts receivable, make payroll or manage surprise expenses. If your PPP loan application is taking a long time, and you want access to funds you can use whenever you need them, a Line of Credit may be the best choice for your business. For more information on Lines of Credit, click here.
At CapFront, we’re here to help, every step of the way. If you have any questions at all, please reach out to us at 844-466-6394 or click here to contact us.