What makes a lender an “Alternative Lender”? This is certainly a question for Small Business owners seeking to apply for capital whether they are an existing business or a start-up, and have faced challenges through normal retail lending channels.

Alternative Lenders for the most part are for-profit lenders that are not FDIC insured like traditional banks. They are often not regulated for the same borrower protections that banks typically would have. The organizations will usually specialize in a few loan products for small businesses with faster application and decision times.

However, borrowers should be alert to potential downsides to these loans such as higher interest rates, and well as more aggressive repayment schedules, with greater penalties that regulated bank lending.

What makes a CDFI Lender? CDFIs are mission-driven financial institutions that have been certified by the U.S. Department of Treasury’s CDFI Fund. They include Credit Unions, Banks, Non-Profit loan funds and venture capital funds that operated to serve low-income communities.

The “Community” piece of these loans means you’ll first need to meet the CDFI’s definition of the local community they serve. Borrowers will also need to meet other key requirements for a CDFI loan – such as completing the application, providing financial statements and documenting how the funds will be used. CDFIs often offer other benefits like a local office, educational workshops and on-the-ground support – and some CDFIs also participate in SBA guaranteed lending programs. Many borrowers appreciate the benefits of a CDFI’s strong sense of community and networking with other small business professionals through community events.

When seeking capital evaluate the pros and cons for your business as business needs will differ from one another. Understanding your short-term and long-term needs is also crucial when applying for capital. A short-term need might mean that your business can take on a higher interest cost, but a long-term need might mean that your business looks at a lower monthly payment with lower interest rates.

Prestamos CDFI is here to help answer your questions whether it is lending-related or business consulting related. We have been serving our communities for over 50 years!

Written by Mark McKenna

It is never too early for businesses and individuals to start thinking and planning for their taxes. With so many efforts around business pandemic-related resources and assistance programs through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) – many business owners can come out feeling confused and overwhelmed with deadlines and next steps.

One of those assistance programs that has reached its sunset is the Employee Retention Credit (ERC). The ERC is a refundable credit that businesses can claim on qualified wages, including certain health insurance costs, paid to employees. The ERC was available only to eligible small business owners who met the following criteria:

Based by the number of Full Time Employees in 2019

• 2020: Under 100 Full-Time Employees
• 2021: Under 500 Full-Time Employees

While the qualifications were determined based off of two ways:

• Business Operations were stopped/reduced due to a government mandate

OR

• Gross sales were reduced:
• In 2020 gross sales reduced by 50% vs 2019
• In 2021 gross sales reduced by 20% vs 2019
• The analysis is done on a quarterly basis

While businesses can no longer pay wages to claim the Employee Retention Tax Credit, you have until 2024 to do a look back on your payroll during the qualifying time frame and retroactively claim the credit by filing an amended tax return.

Here are a few things to take into consideration:

• If you received the PPP loans you may be eligible to receive the ERC but you cannot double-dip. Any PPP funds towards payroll, will not qualify as eligible for Employee Retention Credit purposes.
• If you received the EIDL Loan you may qualify for the ERC.
• The difference between the PPP Loan, EIDL Loans and Employee Retention Credit is that the ERC does not have to be forgiven or paid back. There are no restrictions on how you spend your money.
• Employees must be W2 – 1099 contractors do not qualify as employees.
• If your business gets the credit, this is how it will impact your business and personal tax returns:
  • If you already filed your 2020 and 2021 tax returns – you WILL need to amend
  • If you have not filed your returns, you WON’T have to amend as long as you factor in the credit info
• Below are the expiration dates for the credits:
  • For 2020: The credit does not close until 04/15/2024
  • For 2021: The credit does not close until 04/15/2025
• A Full Time Employee is defined as someone who works 32 hrs a week or 130 hours per month.

If you have any questions on the ERC and if you qualify, reach out to Josue Castro – josue.castro@cplc.org, from our Prestamos team.

We would like to thank Aldo Aprile, CPA for his contributions to this article.

Everyday, entrepreneurs are forced to make decisions that have major impacts on their business. These decision are guided by your intuition, trends, habit, or experience. When making a decision that may not be your area of expertise, wouldn’t it be great to have a guide or a mentor that can help you identify potential risks with your decision? Or maybe a mentor to help you feel more confident with your decision. Prestamos CDFI offers no cost, accessible Business Empowerment Services, that offer just that. We offer the opportunity for you to learn about areas within your business, that you may not be most comfortable with, along with a variety of ways for you to access our curriculum.

Whether that be through one-on-one coaching meetings, or instructor led classes, we can help you feel more confident in areas you want to master. We seek to empower all entrepreneurs with a major focus on minority owned, women owned, or under resourced businesses. We have a full team of Business Advisors who have a passion for helping others through their knowledge and direct business experience.

Our services don’t stop there. Are you a business owner interested in applying for a Small Business Loan, do you know the typical guidelines of small business loans? It could also be that you need feedback on your Business Plan, or need support in completing your projections. Our Business Advisors can help guide you through these items, all while helping you understand why the feedback provided and improvements are needed. Maybe you want to learn the best marketing strategy for your specific industry, you can work with a Business Advisor, to help you identify the best Social Media platform for you, and the strategy for you to use to post content. We even help with support in developing your brand, and creating a logo.

Our clients have experienced major growth and have achieved many milestones by working with our expert Business advisors. For example, Hilda Pena, owner of Botas Juarez, a western wear retail store in Phoenix, AZ. When she began utilizing our services in 2020, she only had one full time employee and one part time employee. Hilda has now grown her staff to five full time employees and one part time employee. Botas Juarez has also increased their net sales by 105% from 2020 to 2021. While the financial support provided to Botas Juarez by Prestamos CDFI was extremely important to keep the business strong during the pandemic, much of their success was to the dedication that Hilda had to growing and learning from her assigned Business Advisors. In the words of Hilda Pena, co-owner and General Manager, “it was the implementation of the strategies deployed via technical assistance the critical factor that made Botas Juarez to pivot in the right direction and achieve a growth net sales more than double in one single year.” Hidla utilizied multiple services from our Advisors, from help with financials and human resources, to brand development, social media strategies to even having a professional photography session to revamp the website.

Another example of success has been the collaborative branding effort with Brandee Dunn at Polished Clean Co. Our team of Business Advisors worked together to help create a brand strategy, with clear Mission and Vision standards. As a result, a clear messaging strategy was implemented which helped Brandee target her ideal audience. Additionally, with the help of our creative exper Polished Clean Co. was able to obtain a new logo that elevated the business to new heights.

Wherever your business may be leading you, we want to make sure you know we are here to be your partner through the journey. Whether that is just meeting with us to ensure you are prepared for potential roadblocks, or guide you while you navigate through a business decision, we have the resources to help. To sign up for our Business Empowerment Services, sign up here, and schedule your intake meeting now! We look forward to inspiring you towards empowerment!