8-min read Feb 24, 2022

PPP Alternatives Guide

PPP Alternatives Guide

What Is A PPP Loan?

The paycheck protection program or PPP loan is a program that the government started during Coronavirus to help small businesses stay afloat. The government offered the PPP program to small businesses who were unable to pay their employees due to a decrease in sales as an incentive to keep their employees on payroll. They could apply for the covid stimulus loan which had a very low interest rate of 1% and PPP loan forgiveness for businesses who met the criteria of using the money directly for payroll.

The PPP forgivable loan program initially ended in August but a second round of loans was just announced and finalized in January 2021. The loans will be available again to small businesses even if they received funding in the first round, but this time there are more restrictions which will prevent many businesses from qualifying.

The rules are that businesses must have less than 300 employees and have lost revenue in the past year by at least 25%. Even if you qualify, it may take time until you receive the PPP loan.

PPP Alternatives

Businesses whose revenue was not down by the full 25%, cannot get funding in this program, but you should know that there are alternatives. If your business has been adversely affected by Coronavirus and you have come to the point where you need the funds to operate effectively throughout this pandemic, there are other loan or lending options available right now to help you run your business until things improve. Keep reading to find which option will work for you.


The Small Business Association, a government funded program to help small businesses during disasters, made a loan called the EIDL – Economic Injury Disaster Loan available to small businesses impacted by Coronavirus.

The SBA Disaster loan program ended but was recently reopened for additional applications. The application process has an estimated time of 2 hours and 10 minutes to complete the application and can take up to 21 days for approval. There is also a SBA Express Bridge Loan which businesses can apply for and get up to $25,000 in advance of the EIDL loan, to be deducted from the approved loan amount.

The EIDL Advance loan, a forgivable loan up to $10,000 or $1,000 per employee which was available while businesses waited for their EIDL approval is no longer available.

Although the SBA Disaster Loan is available to some businesses who may be eligible up to $2 million, there are certain criteria. Businesses must have less than 500 employees, and use the money for expenses related to payroll, businesses operational expenses, and other bills. You won’t receive the funds right away, so if you need the money now it might not be your best option.

Small Business Loans

A traditional small business loan is a line of credit or a lump sum loan available to businesses to either pay for ongoing operations or to finance longer term business goals such as purchasing assets.

When applying for a small business loan or a business line of credit, there are some things the lender will consider to determine if you qualify or not. First, they will check your credit score, and if you have bad credit you are less likely to be approved for the loan. Next, they will want to know about your cash flow and income, and if it does not look good it will impact your chances of receiving business funding. There are other things that will determine the chances of you being approved for a loan, like the length of time you have been in business, how much collateral you have, the amount of debt you have incurred, and the industry you are in.

The reason you are applying for the loan may be the reason you are disqualified. If you cannot get approval for a small business loan, you still have other options.

Merchant Cash Advance (MCA)

A Merchant Cash Advance is a loan that is based on your future projected sales. The lender will have access to your financial accounts and take a portion of each days sales out of the accounts.

The advantage of an MCA loan is that you pay back the loan based on actual sales. When sales are good, you would pay more of the loan balance and when sales are not good, you would pay less. In addition, there is no collateral required other than your future sales.

The downside to an MCA business loan are that its associated interest rates and fees are very high making it an expensive option. In addition, you are giving up a portion of your cash flow each and every day vs. being able to shift the repayment to days which work out better for your business.

There are other business funding options that are a better choice.

Invoice Factoring

Invoice factoring is when your business sells outstanding invoices to factoring companies in exchange for a percentage of the invoice value. This percentage amount is determined by your customers’ credit histories to determine the likelihood of them paying the invoice as well as the number of customers you have so that they can properly diversify their risk. The company will then collect on your invoices to reclaim the money from your customers.

Invoice factoring is safer than MCA because instead of an advance on future sales, which can be risky, invoice factoring is a way of buying a company’s invoices.

This may be a good option for businesses that have a lot of good credit customers who buy from your business on specific terms who need cash upfront without the infrastructure and time to collect it. Staffing companies frequently use invoice factoring companies as the staffing company needs payroll funding in order to pay their employees on time, however they don’t get paid for their invoices until 30-90 days later.

Nonetheless, this kind of loan may not be right for your business if you want to maintain a good relationship with your customers. This is because the factoring company is more concerned about collecting the moneys owed vs. maintaining your long-term relationship. In addition, if the customer does not end up paying the invoice, you may not be able to keep the advance which the factoring company provided for that invoice.

Equipment Financing and Leasing

All businesses use equipment such as desks, chairs, and cubicles, and many businesses use large equipment that they use to operate the business. This can be copy machines, dental equipment, an office fridge, or construction machinery. The cost of purchasing the equipment can be high, and you may be able to get an equipment loan.

Alternatively, equipment leasing and finance companies allows you to get the equipment you need fast, without having to pay for it upfront. While leasing means you are renting the equipment and paying a fee to the company who owns it, equipment financing means you own the equipment and pay it off in small increments. The equipment itself acts as collateral which is why it is easier to get such a loan, but the equipment must remain in good condition in order to retain its value.

As you won’t be paying upfront for the equipment, you can then use your available funds on other business expenses such as payroll instead of sinking the cash flow into the equipment up front. This can work for a company who is about to buy equipment and is therefore able to shift the funds via leasing and financing instead.

Payroll Funding

If you are struggling in your business like many others and need money for payroll, payroll financing could be the solution for you. A payroll funding company like Payro Finance does not require collateral for the loan and there’s no long application process. To get approved for payroll finance you simply need to apply. You can quickly be approved for a payroll line of credit of up to $500,000.

This will offer you a huge relief allowing you to cover payroll and make sure your employees are taken care of, and you’ll pay us back once you receive the payments from open invoices.

Payroll financing is a short-term loan option that poses little risk to the borrowing company as there is no collateral required and you are not selling your invoices or future sales. It is therefore an ideal solution for a company with a temporary cash flow problem.

Morris Reichman


Morris Reichman is the founder and CEO of Payro Finance. Former Vice President at Infinity Capital Funding an alternative finance company, Morris possesses a versatile background in the finance industry. Having spent 7+ years working across global macro operations and start up corporate finance Morris's expertise is in business accounting, risk management and investment analysis. Morris founded Payro Finance to support business owners and ensure their business continuity.

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