Since launching April 3, the Paycheck Protection Program (PPP) has disbursed billions of dollars to businesses affected by the coronavirus pandemic. For many business owners, the PPP offered a crucial lifeline in an uncertain time.

But according to a recent survey of 1,500 businesses that participated in a Goldman Sachs training program, 84% of small businesses will have used up their PPP loans by the first week in August. Although Congress extended the PPP application deadline to August 8, that means little for businesses that have already exhausted these loans. Worse, more than 60% of respondents said their revenue is still less than three-quarters of what it was before the pandemic.

The PPP was never intended to be a permanent solution. But with no end to the coronavirus pandemic in sight, many business owners are now caught in a difficult position. Banks are experiencing “PPP fatigue” and Congress is finding it difficult to roll out new loan programs that could save businesses.

It’s not all doom and gloom, however. Your PPP loan may be almost up, but your business has options. While Congress and banks try to settle on a new relief program, small business owners should look into these alternative funding sources.

During PPP, the Small Business Administration (SBA) has continued to partially guarantee low-interest loans to businesses administered by traditional banks.

SBA loans have long been a sought-after option for small businesses. With these loans, the SBA guarantees a portion of the bank’s small business loan, mitigating the risk for lenders. Because there’s less risk, lenders consider more small business owners for the traditional longer-term, lower-rate financing that comes from banks. On the other hand, small business owners often need strong credit or positive loan history to get SBA loans.

Typical SBA loans don’t offer the same generous forgiveness policies of PPP loans, but they have other benefits. There are fewer restrictions for using the money, the repayment terms are longer, and the rates are still competitively low.

There are a variety of SBA loan products, but the best options for businesses looking for an alternative after PPP are SBA 7(a) loans and SBA 504/CDC loans.

7(a) Loans

The 7(a) loan program is the SBA’s biggest loan program. Businesses typically use these loans as working capital for expansion, improvements, or other growth opportunities. Business owners often use them to refinance debt or as a seasonal line of credit, as well.

Given the volatility of our current economic conditions, 7(a) loans are especially good options because you can use them for a wide range of business purposes. The 7(a) loan program offers the following loans:

• Standard 7(a) Loan
• SBA 7(a) small Loan
• SBA Express Loan
• Export Express Loan
• Export Working Capital
• International Trade Loans
• SBA CAPLines Line of Credit

Standard 7(a) loans are loans of up to $5 million partially backed by the SBA. The 7(a) Small Loan is good for loan amounts under $350,000, the 7(a) Express Loan allows you to progress through the application process in exchange for a higher interest rate, and there are more nuanced programs for international export businesses.

SBA 7(a) loans are subject to guarantee fees, range in interest rates depending on the lender, and typically have repayment periods of up to ten years for working capital loans and equipment loans, and 25 years for commercial real estate loans.

504/CDC Loans

SBA 504/CDC Loans help owners buy fixed assets or upgrade existing assets. Now, the temporary 504 Refinancing Program allows you to use funds to pay salaries, rent, utilities, inventory, or pay off or down business credit. If you’re struggling to make rent or utility payments on an office space or storefront, these loans are worth a look. Likewise, if you want to expand your business by purchasing real estate, 504/CDC Loans are for you.

With a 504, banks will extend half the total loan amount, SBA-approved certified development companies (CDC) companies extend 40% of the loan amount, and the borrower puts the remaining 10% as a down payment.

Interest rates on CDC/504 Loans aren’t set until roughly 45 days after your down payment since both CDCs and banks must weigh in on them. Typically, they’re about 5-6%. Fees are usually about 3% of the loan amount and maturity terms of 10 and 20 years are available.

Community Lenders

National banks aren’t the only ones who can issue affordable loans. Especially during the first round of PPP funding, community banks have made concerted efforts to fund both existing and new customers.

If you use a major bank or online-only bank for your business banking needs, it’s worth exploring the smaller banks in your community. Many community banks recognize the challenge the pandemic presents for small business owners and are working to offer innovative lending options. If the first bank you contact can’t help, they may still be able to connect you with another viable lending option.

You may have to move your business banking to a community bank to obtain a loan. But that may also be a good decision anyway, to support your community in these uncertain times.

CDFI Loans

Alternatively, community development financial institutions (CDFIs) are private financial institutions that are 100% dedicated to delivering responsible, affordable lending to help community businesses thrive. They support small businesses, nonprofits, commercial real estate, and other community businesses in disadvantaged markets across the country.

CDFI loans have competitive interest rates, aim to minimize the borrower’s risk, and often work with the borrower to improve their chances of success, both in the near- and long-term.

Online Lenders

Online lenders are a good option if you need capital quickly. Online lenders often offer business loans at higher rates with less stringent requirements, but many stopped lending to small businesses or tightened their credit boxes at the beginning of the pandemic.

Now, some are returning and may be a viable option for small businesses looking for a lifeline after PPP expires. If you’re shut out of traditional lending options like bank and SBA loans, online lenders are a convenient, albeit often expensive option. Still, new businesses or business owners with less-than-stellar personal credit may find online lenders offer what they need.

Crowdfunding

Finally, sometimes you can rely on the kindness of strangers. Although many people don’t have quite as much disposable income these days, crowdfunding is still a viable form of funding.

Crowdfunding platforms like Kickstarter and Indiegogo offer small businesses a relatively simple way to raise money from their communities. During the second half of March, daily funds raised on Indiegogo were up 24% compared to the previous year, thanks largely in part to its Local Business Relief Program. This program waives Indiegogo’s platform fees for local businesses in the service industry, like restaurants and music venues.

On Kickstarter, the percentage of successful campaigns is at 57.75%, well above its lifetime success rate of 37.65%, while campaigns run between January 1 and April 3, 2020 raised 38% more than the previous period in 2019.

Before launching a crowdfunding campaign, however, remember to read the fine print. Some platforms have payment-processing fees or require businesses to raise their full goal to keep any of the money.

There Is A Future After PPP

Although PPP funds may be drying up for many small businesses, there are still a number of viable funding sources. Traditional SBA loans can offer small business low-interest, low-risk relief, while community lenders, online lenders, and crowdfunding all stand as unique options. Depending on how Congress chooses to address the pandemic going forward, there may be more loan options available soon. One thing is for sure: There is a future for your small business.