Recently we conducted a survey on our YouTube channel and found that 85% of businesses are still waiting for their EIDL loan increase — loans of up to $500,000 with 3.75% interest over 30 years. The SBA may be changing its processes in the coming weeks to speed up EIDL loan increases, but that roll out will still likely take time. If you need financial assistance for your business but don't want to wait for the EIDL loan increase — or can't wait — you may want to consider private lending alternatives. In this post, we'll highlight two other private lending alternatives to EIDL loans and EIDL grants.
EIDL Loans vs Private Loans
The Small Business Administration's (SBA) Economic Injury and Disaster Loan (EIDL) program has provided funding to nearly 10 million small business owners since the start of the pandemic. Most businesses have already used their allotment and are waiting for an increase. While many have been approved for an EIDL loan increase, many are still waiting.
One of the benefits of the EIDL loan is the interest rate will not be above 4%. Repayment of the loan may also be up to several years. For small businesses, this flexibility is very useful. Perhaps you are one of the business owners that are waiting for approval, and you're running out of time. What do you do? Well, consider a private lending alternative. There are dozens of fin-tech companies that have made it easier for independent contractors or small business owners to get the capital they may more efficiently then traditional big banks or lenders.
Fin-tech companies, short for financial technology, provide financial assistance, generally loans or lines of credit, to qualifying businesses. The downsides of pursuing a loan with a fin-tech company are that the amounts are normally smaller than what the SBA can loan, interest rates are higher, and the repayment plan is generally shorter. However, the plus side of fin-tech is that you can get approved within days. If you need capital now, pursuing a fin-tech option may be your best alternative to an EIDL loan.
We want to highlight two of our lending partners and the funding options they offer. Both of our partners work with small businesses, not corporations, and have each provided funding for over 100,000 businesses.
Private Loans Up to $500,000 Through Funding Circle
Funding Circle's (FC) vision is to make business capital more accessible. Lengthy business applications and long wait times can be disheartening and frustrating. FC can help your business determine the best financing options with one 6 minute application. After your application is submitted, an Account Manager will review it and contact you with your options. Your funds can be available in as little as 24 hours from the time of approval.
With a loan from Funding Circle, you can borrow anywhere from $25,000 to $500,000 with rates starting at 4.99%. The lending terms are six months to 60 months with no prepayment penalties. Funding Circle is ideal for businesses that have been in business for at least two years, have a FICO score of 700 or more, and have a monthly revenue of $20,000 or more. If you are interested or would like more information, follow our link to Funding Circle to get started.
Up to $150,000 Business Line of Credit through Fundbox
Another viable option is a business line of credit. With a line of credit, you get approved for a certain amount and only pay for the amount that you use. A business line of credit is handy when you don't need a full loan but sometimes need a boost here and there. It's also great to have on hand for emergencies or when payroll is coming and there aren't enough funds in the business account.
Fundbox offers business lines of credit up to $150,000. You can link your bank account for fast transfers and repay your credit over 12 or 24 months with no prepayment penalty. If you think your business would benefit from having an existing line of credit as a "rainy day fund," or to use while you wait for your EIDL approval, Fundbox is a good choice to consider. You can learn more and apply by using our link to Fundbox.
EIDL grants and loans are made available by the SBA and are great resources for small business owners. The SBA also offers 7(a) loans to businesses. The problem with government loans is the long approval time that businesses face. When time and finances are running out, Fintech businesses may be your solution. Our partners at Funding Circle and Fundbox are two options to consider that can get capital into your hands in as little as a few days.