4 Things that Automatically Disqualify You for a PPP Loan - Nav

4 Things that Automatically Disqualify You for a PPP Loan - Nav


4 Things that Automatically Disqualify You for a PPP Loan - Nav

Posted: 09 Apr 2020 12:00 AM PDT

As millions of small business owners are applying for low-interest loans associated with the Paycheck Protection Plan, I can't help but think of all the small business owners I personally spoke with over Facebook last weekend as the PPP got off to a rather bumpy start as lenders tried to absorb the new regulations associated with the SBA's disaster relief loans. With that in mind, it seemed like a good time to share 4 things that automatically disqualify you for a PPP loan and talk about an option or two for next steps.

As lenders across the country are starting to come online, myself and everyone at Nav has been committed to provide the most accurate and up-to-date information we could to answer questions and provide actionable information to hopefully help you make decisions. It has not been easy as rules have been vague—and even changed over the days and weeks. Because I'm neither an employee of the SBA nor an attorney or accountant, I encourage you to consult with your attorney, accountant, or CPA if you fall into any of these categories before you apply for a PPP loan.

What 4 Things Automatically Disqualify You For a PPP Loan?

According to the SBA, and clearly spelled out in the application for a PPP loan, the following four things will automatically disqualify you for a loan.

You Have Defaulted on an SBA Loan in the Past

"Has the Applicant, any owner of the Applicant, or any business owned or controlled by any of them, ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted in the last 7 years and caused a loss to the government?" 

If the answer is "yes" the application will not be approved. 

You are Suspended or Voluntarily Excluded by any Federal Agency from Participating in this Transaction

"Is the Applicant or any owner of the Applicant presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily excluded from participation in this transaction by any Federal department or agency, or presently involved in any bankruptcy?"

If the answer is "yes" the application will not be approved. 

If You Are Subject to an Indictment for Criminal Charges or are Presently Incarcerated or on Probation or Parole 

"Is the Applicant (if an individual) or any individual owning 20% or more of the equity of the Applicant subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction, or presently incarcerated, or on probation or parole?"

If the answer is "yes" the application will not be approved. 

If You've Had a Felony on Your Record Within the Last 5 years

"Within the last 5 years, for any felony, has the Applicant (if an individual) or any owner of the Applicant 1) been convicted; 2) pleaded guilty; 3) pleaded nolo contendere; 4) been placed on pretrial diversion; or 5) been placed on any form of parole or probation (including probation before judgment)?"

If the answer is "yes" the application will not be approved. 

Are the Options if my Application for a PPP Loan Will be Automatically Declined?

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A lot of time and good credit behavior will mitigate some of the challenges associated with these four conditions, but some of them are more complicated to overcome than others and will definitely require legal counsel to review your situation and make decisions about next steps. If you've defaulted on an SBA loan, but it was longer than seven years ago, for example, there are law firms that specialize in helping businesses though the process, but many of them suggest it will likely take up to 10 years of exceptional credit behavior and a protracted legal process.

A felony on your record doesn't necessarily disqualify you provided it is not recent and you currently have a clear record.

If you have a strong credit history, there are some options available to you for alternative forms of financing, but they will not be the same low-interest loans currently being offered by the SBA.

Other Financing Options

Business Credit Cards

If you are experiencing one or more of the 4 things that automatically disqualify you for a PPP loan, a business credit card can be a good option. Especially given the recent cuts to the Prime Rate by the Federal Reserve, which means credit card APRs could be lower than they were last year at this time. Although a number of credit card providers are accepting fewer credit card applications right now, there are still some that are.

A Business Line of Credit

A business line of credit is a time-tested way for a small business to have quick access to cash to meet an unanticipated need. The upside of a line of credit is you pay for what you borrow, but know the full line is available if you need it — a good option for business owners who haven't been hit yet, but want to be prepared nonetheless. 

If you already have a line of credit, Nav is already talking with customers who have seen their total credit lines cut, so we encourage you to take a draw now before the funds are unavailable. This is a precaution, and one we wouldn't normally recommend if we didn't anticipate continued tightening among business lenders.

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Non-Traditional Funding Sources

A crowdfunding campaign or micro-lender might be a good source of capital to get you over the next several weeks. I became familiar with the micro-lender Kiva a few years ago and have become a big fan. They will offer up to $15,000 0% interest loans to small businesses that meet a few important qualifications.

Kiva says it doesn't judge borrowers just by their credit history. You will need to provide information about your monthly debts, though, and you cannot currently be in bankruptcy. 

To complete your loan request you'll need to share a personal story that explains why you are passionate about your business, as well as describe how you will use the funds. If approved, you'll need to find people in your network (friends, family, fans of your business) to initially fund a small portion of your loan. (According to Kiva, borrowers must invite between 5 and 35 lenders from within their network depending on the loan size and other factors.) Kiva says this step helps provide accountability and demonstrates social capital.

Access Home Equity

There are a lot of reasons to avoid using your home equity to access capital in a crisis, but many businesses turn to home equity when there is't credit otherwise available. Please consult with your accountant or CPA before taking this step. This is not something we would regularly recommend and would be a last choice.

Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors. To review your real-time funding options with one of Nav's lending experts, please contact us.

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Blue Diamond Business Solutions Help Small Businesses and Entrepreneurs Obtain No-cost Business Credit - Virtual-Strategy Magazine

Posted: 17 Apr 2020 06:53 PM PDT

Building a business takes capital and the more money you have access to the faster you grow. Most business owners use their own personal credit to fund their business by draining their personal savings or borrowing money from family and friends.  But why do this if you don't need to?

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You can build your business credit quickly, obtaining access to working capital as you go. Your business credit quality will determine if you get approved for a business loan, the amount you'll be approved for, and the rates and terms you'll pay.  So, as your business credit is established you become more lendable and can get the best terms on the money you obtain.

Blue Diamond Business Solutions will provide you with an easy step-by-step system to build business credit through their cutting-edge finance suite platform. Login and you'll find a custom experience built exclusively for you to obtain credit and financing for your company. And, you'll be guided through the process with your own business advising team who will help you with all aspects of building your business credit.

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Set up your business credibly, establish a positive business credit profile and score quickly, obtain vendor, store, fleet, and cash credit in your business name with business reporting, and become more lendable by building your business credit.

At Blue Diamond Business Solutions, their mission is to help entrepreneurs obtain the capital and credit they need to fuel their dreams. Whether you are just starting your business, or looking for millions in capital to expand, Blue Diamond Business Solutions LLC has solutions that can help you fund your endeavors. Their business credit solutions help you build credit for your business EIN that's not linked to your personal social security number. This credit can be obtained quickly regardless of personal credit quality, collateral, or cash flow. And you can get approved with no personal guarantee.

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If you're interested in obtaining capital for your company at the best terms, Blue Diamond Business Solutions LLC has solutions for you. Contact them today to learn more about how you can get credit for your business EIN that's not linked to your personal social security number (no-cost business credit) and loan consultation.

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Media Contact

Company Name: Blue Diamond Business Solutions LLC

Contact Person: Media Relations

Email: Send Email

Phone: (877) 557-0579

Address: 3626 North Hall Street, Ste 610

City: Dallas

State: TX 75219

Country: United States

Website: https://www.bdbusinesssolutions.com

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