two people in kitchen working on laptop
A nonbank lender, such as a commercial real estate lender or microloan company, might be the best route for your business to take for its PPP loan, depending on certain factors. — Getty Images/shapecharge

February 22, 2021 Update: The Biden Administration has announced changes that will impact access to Paycheck Protection Program (PPP) loans. The Small Business Administration (SBA) will only accept applications for PPP loans from businesses and nonprofits with fewer than 20 employees for two weeks starting February 24. After the two-week period ends, all other companies that have not already applied for first- and second-draw PPP loans will be able to apply until March 31, 2021. The SBA will also initiate additional changes designed to “open the PPP to more underserved small businesses.” Read more from the SBA here.


There’s still time to apply for a PPP loan from the new stimulus bill: Funding for first-time PPP loans is available through March 31, 2021, or until the new funds have run out. The latest stimulus bill adds 501(c)(6) nonprofits, local news media organizations and housing cooperatives to the list of businesses eligible to apply for a loan.

Nonbank lenders, such as commercial real estate lenders and microloan companies, are accepting PPP loan applications. You can find a complete list of nonbank lenders that are accepting PPP loan requests from Forbes.

Here’s what you need to know about the process of applying to a nonbank lender and why this avenue might be right for your business.

[Read more: Small Business Update: PPP and Stimulus Q&A]

Why should you apply to a nonbank lender?

CO– spoke to Alexander Cohen, CEO of Liberty SBF, a nonbank lender that’s currently processing applications for PPP loans. He noted that there are a few advantages to applying for funding at a nonbank lender compared to a traditional financial institution.

“First, there’s speed. A number of nonbank lenders, including Liberty, have dedicated resources specifically to PPP loans. We’re using a combination of our technology platform and our people to qualify loans and get applications in the queue for the SBA as quickly as possible,” said Cohen.

Banks are subject to a number of regulations, including Know Your Customer and the Banking Secrecy Act that strictly govern the way a financial institution can collect and process your application. Each bank has its own set of fraud protection measures, user authentication steps, and underwriting requirements. Nonbank lenders are also subject to anti-fraud regulation, but they more often use technology to meet those regulatory requirements.

Cohen says that some banks may not even be accepting PPP applications from new applicants.

“We’re hearing that banks are either not participating in PPP at all, or that they’re only processing requests from existing depository customers. There are some banks that processed loans for non-customers last time, and they won’t be doing that again. Other banks are only processing loans for customers who were approved in a previous round of PPP funding,” he said.

Nonbank lenders are a good option if you’re a sole proprietor or independent contractor that qualifies for PPP, or if you’re a first-time applicant hoping to speed up the process.

A number of nonbank lenders, including Liberty, have dedicated resources specifically to PPP loans.

Alexander Cohen, CEO of Liberty SBF

How to apply to a nonbank lender

The PPP loan application requirements are the same regardless of whether you apply from a traditional bank or a nonbank lender. The first step is to gather the documents you’ll need to submit to complete a successful application. While there are no signals that the program’s funding will run out, it’s better to get your funding request in sooner rather than later, especially with the March 31 deadline fast approaching.

“Make sure you have the documents ready to go when you start the application so you can process everything straight through on the first go,” recommended Cohen.

[Read more: Coronavirus Small Business Resources Guide]

He also noted that businesses classified under NAICS code 72 — e.g., restaurants and hotels — are eligible for additional financing relative to other borrowers. “These borrowers are eligible for additional financing, relative to other borrowers. These businesses can qualify to use a higher calculation of 3.5 times average monthly 2019 or 2020 payroll costs, where other businesses get 2.5 times,” said Cohen.

There are other subsidies and larger loans for which some companies may be eligible, so do some research and speak to an accountant to learn what funding options may be available to your business. Find a lender near you using the SBA’s search tool.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Follow us on Instagram for more expert tips & business owners stories.

The guidance your business needs, delivered.

Want the latest expert guidance on COVID-19 vaccines and prevention measures delivered directly to your inbox? Sign up for the Rally for Recovery! You’ll get the information you need to help protect employees, inform customers and support your local community.

Published February 22, 2021