Lending Opportunities in the Era of COVID-19

Are you trying to secure financing for your business? Since making landfall at the beginning of 2020, the novel coronavirus (COVID-19) has shuttered businesses throughout the United States. Local and state governments have forced many nonessential businesses to close. Combined with decreased consumer confidence, many businesses are now struggling to stay afloat. There are financial lifelines available, however, to help your business weather the storm.

Lending Opportunities in the Era of COVID-19

Government Lending Programs

There are government lending programs available to provide financing to eligible businesses. The Paycheck Protection Program (PPP), for instance, is a low-interest loan program that’s designed to cover the cost of payroll and other expenses. The U.S. Small Business Administration (SBA) also offers Economic Injury Disaster Loans (EIDL), which are designed to provide economic relief to businesses affected by COVID-19.

Bank Loans

While their requirements have changed, banks are still lending money to businesses. If your business needs financing, you can apply for a traditional loan from a local or online bank. Keep in mind, though, that banks now have more stringent requirements than they did in the past. With so many businesses suffering a loss of revenue due to COVID-19, they want to ensure that businesses can repay the borrowed money. Therefore, banks will look more closely at your business’s financial records, and most of them will require a personal guarantee and/collateral to secure a loan.

Hard Money Loans

Another financing option in the era of COVID-19 is a hard money loan. Hard money loans are offered by private lenders. As a form of private financing, they are easier to obtain than traditional bank loans.

As long as you have real property with which to secure it, you can typically obtain a hard money loan. You don’t need a stellar credit history or FICO score; all you need is real property to serve as collateral. Furthermore, hard money loans have a shorter approval time. While it may take over a month for a bank to approve you for a traditional loan, you can get a hard money loan in just seven to 14 days on average.

Factoring Loans

Depending on the type of business that you operate, you may be able to finance it with a factoring loan. A factoring loan is a unique form of financing that involves selling your business’s outstanding invoices to a financing company known as a factor.

Rather than exhausting your time and resources trying to collect on outstanding invoices, you can sell the invoices to a factor. The factor will then collect payment from your customers or clients, after which it will transfer the paid money — minus a fee — to your business.

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