There are over 43,500 small businesses in Puerto Rico, accounting for 99.7% of all businesses on the island and $60.6B in total exports.

Businesses in Puerto Rico face a number of unique challenges that can make it difficult to access the funding they need to thrive and grow, including:

Fragile economy: The state of the territory’s economy is the top recurring concern for over half of small business owners in Puerto Rico. According to the most recent available data, Puerto Rico’s economy contracted at an annual rate of 3% to $1.1B in 2018.
Lack of access to capital: Puerto Rico’s commercial banks are notoriously conservative, private equity and venture capital are stingy, and alternative lending is limited. Greenbox Capital® is one of the only alternative lenders to fund businesses in Puerto Rico, funding over 165 deals on the island.
Natural disaster: Hurricanes Irma and Maria did significant damage to businesses in Puerto Rico. Special funding and grant programs emerged after these events, but this funding has since dried up and many businesses are still struggling with the island’s poor infrastructure.
Labor shortage: Increasing outmigration, especially among younger workers, has contributed to an overall labor shortage across the island.
COVID-19: Leisure and hospitality businesses were among the hardest hit by the COVID-19 pandemic. 67% of jobs lost in leisure and hospitality in mainland United States in April 2020 were recovered by October, compared to just 41% in Puerto Rico.
Small business funding can help business owners in Puerto Rico overcome these challenges and continue to grow. But between different federal programs, grants, bank loans, and alternative lenders, it can be hard for business owners to understand their funding options and determine which option is best for their business.

In this post, we’ll compare two sources of funding in Puerto Rico: SBA loans and alternative funding. Let’s jump in.

SBA Loans in Puerto Rico
The Small Business Administration (SBA) offers the same funding programs to businesses based in Puerto Rico as they do in the mainland United States. They are facilitated by commercial banks that operate in Puerto Rico, such as First Bank and Banco Popular de Puerto Rico.

SBA loans offer the longest terms, largest loan amounts, and lowest rates, but they are the most difficult to acquire with very strict approval requirements that exclude many small businesses. Preferred Lenders offer an expedited loan approval process, but SBA loans can still take weeks or months to approve with no guarantee of approval.

The SBA offers a number of funding programs for businesses in Puerto Rico, including:

7(a) Guaranteed Loans: The SBA’s flagship program offers up to $5M in funding. Funding is disbursed by commercial banks and guaranteed by the SBA up to 85%, depending on the amount of the loan.
504 Community Development Loans: This program provides loans to small businesses to cover fixed assets, such as real estate, buildings, renovations, or machinery. The commercial lender provides up to 50% of the project’s financing, an additional 40% comes from the SBA, and the remaining 10% is provided by the applying business. 504 Loans are available through certain commercial lenders and community development corporations in Puerto Rico.
Express Loans: Express Loans offer an accelerated turnaround time for SBA review (within 36 hours) and a maximum loan amount of $350,000 with a maximum SBA guarantee of 50%.
Export Express Loans: These loans provide exporters and lenders with a streamlined method to get SBA-backed financing for loans or lines of credit up to $500,000. These loans are guaranteed up to 90% depending on the amount of the loan.
Veterans Advantage: A funding program that offers veteran-owned businesses reduced fees.
Small Loan Advantage: This program offers up to $350,000 and is guaranteed up to 85% depending on the amount of loan.
These forms of SBA funding can be used for:

Starting up or expanding your business
Acquiring a business
Purchasing machinery or equipment
Purchasing inventory
Purchasing or improving commercial real estate
Refinancing existing business debt
Working capital
Depending on which funding program you opt for, there may be restrictions on how you’re able to use your funding.

SBA funding is ideal for:
Established businesses with strong financial histories and extremely good credit
Businesses seeking long-term funding
Businesses that can offer collateral or a personal guarantee to secure a loan
Learn more about SBA funding.

Other SBA programs in Puerto Rico
In conjunction with local agencies, the Small Business Administration also oversees a number of specialized funding programs for businesses in Puerto Rico, including:

Small Business Innovation Research (SBIR) Program and Small Business Technology Transfer (STTR) Program
Also known as “America’s Seed Fund”, the SBIR/STTR funding programs are highly competitive sources of funding designed specifically to encourage small businesses to engage in Federal Research or Research & Development with the potential for technology commercialization. These programs are ideal for high-technology businesses engaging in research or research and development with intent to commercialize, as well as businesses with partnerships with nonprofit research institutions.

Puerto Rico Small Business Technology Development Center
The PRSBTDC offers “tangible solutions to establish or expand a business, and offers assistance for the commercialization of technology and innovation projects through the Center for Innovation and Technology”. The Center also offers consulting services and technical support to apply for or administer a grant from SBIR/STTR programs free of cost. This funding is ideal for STEM businesses and businesses seeking support in addition to funding.

Puerto Rico Science, Technology & Research Trust
The Puerto Rico Science, Technology & Research Trust offers multiple technology development and commercialization initiatives to help researchers, scientists, tech entrepreneurs, university officials, and investors meet business development objectives, including Innovation & Technology Resources and Funding, the Advanced Research Grants Program (ARG), and the Catalyzer Research Grant Program (CRG). This funding is ideal for tech businesses in one of Puerto Rico’s targeted industries, as well as businesses seeking funding to support research and development activities in these industries.

Alternative Funding in Puerto Rico
Alternative lenders offer a different portfolio of lending options, with simpler applications, faster turnaround times, and more lenient approval requirements that are more favorable to businesses in Puerto Rico.

With a streamlined online application and approval requirements that focus more on the health of a business rather than it’s financial history, alternative lenders are able to make funding available to more small businesses that might not be able to access the financing they need through the SBA and banks.

While alternative lenders do offer some financing options similar to traditional lenders, including collateral real estate loans, lines of credit, and alternative small business loans, these lenders typically specialize in non-loan forms of financing such as:

Merchant cash advances: MCAs are a non-loan form of financing known as an asset purchase or a purchase of future receivables. This means that a lender will essentially purchase a portion of your business’s future revenue in exchange for cash up front. You’ll receive an advance of working capital when you need it, and your lender will receive a portion of your daily or weekly debit and credit card sales until the advance has been repaid. Learn more about merchant cash advances.
Invoice factoring: Invoice factoring is a non-loan form of financing known as accounts receivable financing. Instead of receiving a lump sum that will be repaid over a certain term, a business will sell their unpaid invoices to a lender, called a “factor”. The factor owns the invoices and will advance the money your clients already owe you, typically between 70-90% of the invoice’s value. The remainder of the invoice’s value will be paid out to you once your client pays, minus any lender fees. Learn more about online invoice factoring.
Alternative small business funding is ideal for:
Businesses with lower credit scores
Businesses that need fast funding
Younger businesses
Businesses that don’t have collateral
Businesses in fields that are not eligible for federal or other grant funding
Greenbox Capital is one of the only alternative lenders to operate in Puerto Rico.

Fast, Direct Commercial Loans in Puerto Rico
Because of unique economic and regulatory factors, commercial loans in Puerto Rico can be especially difficult to obtain from traditional lenders. With a streamlined online application and flexible approval requirements, alternative lenders like Greenbox Capital make more funding available to small businesses in Puerto Rico. Funding from as little as $3,000 up to $500,000 is available, including merchant cash advances, online invoice factoring, lines of credit, and other alternative business loans, with funding delivered in as little as one business day.

Learn more about alternative funding in Puerto Rico
Sources
“SBA Awards Grant to Puerto Rico Small Business and Technology Development Centers.” The Weekly Journal. August 13, 2021. Updated September 29, 2021.
“Rural Business Development Grants (RBDG).” U.S. Department of Agriculture. Last updated December 2019.
“Economy, Not COVID-19, the Top Challenge for Puerto Rico Businesses.” Giovanna Garofalo. The Weekly Journal. Decemver 16, 2020.
“Puerto Rico – Overcoming the Barriers to Growth for Small Businesses.” Universidad del Sagrado Corazon. 2020.
“2021 Economic Outlook for Puerto Rico.” Rosario Fajardo. The Weekly Journal. December 30, 2020. Updated January 4, 2021.