Congress is on the brink of approving the next round of small business stimulus funding in the form of the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan program (EIDL). The first round worth $349 billion ran out in less than two weeks. This round of $310 billion in funding, is expected to run out even faster. Will your business be able to receive funding from the EIDL or PPP funding?
How to Apply
The first step to potentially receiving funding from the stimulus programs is to apply. The PPP application process requires applying to an SBA approved lender like a bank. Many banks have disclosed that they already have thousands of PPP applications on hand ready to submit for SBA approval when the funding is released. This means that in order to be considered for PPP funding, you may need to apply ahead of Congressional approval.
Will You Receive PPP Funding?
It is expected that the PPP funding will run out in a matter of days. Banks are still wary of lending to new businesses over their established customers, so even finding a lender may still be a challenge the same as the first round of funding. In order to maximize your chances of receiving funding before it runs out, it’s worth contacting SBA approved lenders now and establishing a relationship and application for the funding.
Will PPP Funding Be Enough for Your Business?
The next question is whether the PPP funding will be enough to carry your business through the shelter in place effects on your cash flow. There is no hard ending date for the current drop in business that we are experiencing. The PPP funding is in place to support small businesses with employees that need regular paychecks. When this funding hits and goes to your employees, you may still be short on cash to continue operations and generate more revenue for your business. Your cash flow going out to your business expenses like rent, utilities, supplies, and production costs may show you that you aren’t generating enough revenue to turn a profit or even to keep your business afloat indefinitely. This is where you can be creative in your funding solutions.
Apply for the PPP. It’s a forgivable loan if you use the funding to maintain payroll, but also consider additional funding sources that can improve your cash flow to help your business take on new and larger sales and generate business growth. Invoice factoring is a business funding option that aims to increase your cash flow. This allows you to meet your business costs without having to sacrifice new orders to do so.
Can You Get the PPP and Invoice Factoring Simultaneously?
Yes. Invoice Factoring works alongside stimulus programs like the PPP to generate more money for your business. With the PPP you can cover your payroll, and with invoice factoring services you can cover your supplier costs and general overhead to increase or maintain the scale of your operations. Invoice factoring is essentially an advance on your receivables. Rather than waiting for credit terms for your customers to pay you, an invoice factoring company pays you immediately for your open invoices and then waits to collect from your customer after credit terms expire. You no longer have to monitor your collections or fine tune your invoicing process. Instead, you outsource these roles to the factoring company and focus on running your business and making sales.
Why Should You Use Factoring with the PPP?
Factoring is a debt-free method of business funding. This means you have no repayments to make since the money is already yours. There is no drain on your daily, weekly, or monthly cash flow. Instead you have the cash on hand to be creative and pivot in uncertain times of business. Factoring is flexible. We work with other lenders to create the unique funding solutions that your business needs to operate at its best. Factoring is inexpensive. Compared to online loans or merchant cash advances (MCAs) your business will save money. Banks are historically known to not lend money to small businesses during recessions. Factoring is known to increase lending to small businesses during recessions. Why? Because factoring doesn’t rely on your credit score or ability to repay. Instead, factoring companies look at the strength of your receivable to determine funding eligibility. As long as you run a strong business, you can have strong funding. And lastly but most importantly, factoring is FAST. Your business can be approved within a week and have same-day funding from then on. Each new sale you make means immediate customer payment through your factoring facility. You don’t have to wait 23 days or longer for EIDL approval. You don’t have to wait 2 weeks or more for an online loan. Within a week or even as fast as 24 hours you can have approval for immediate funding.