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Fast Small Business Loans

Anne Miller

Maybe a piece of your equipment malfunctioned or you are stuck with lots of unpaid invoices. While you can afford certain matters to wait for funding, others need immediate attention. No matter what the cause of your constricted cash flow, there are options available for you. Business loans may be your first choice because the terms are better than other lenders, but the application process is very tedious. It can take months before you get approved. Because of the nature of your need, you need to look into quicker alternatives.

How do you get small business loans fast?

Look for non-bank loans

With banks, the application process usually takes months, depending on the amount you want to borrow. However, there are now other options such as online lenders. They generally have a quicker funding time, but the interest rate is also usually higher. However, if you are looking to get something funded immediately, this is the price that you have to pay.

Start using a bookkeeping service for your financial records

Especially with your alternative lenders, they would want to view your revenues and expenses easily. This would greatly speed up the application process, as your potential creditors could now quickly assess the risk of lending you money.

Always have the necessary documents on hand

No matter how quick the application and funding time for your loan is, that would not matter if you cannot fulfill all the necessary documents required by your creditor. Here are the most common requirements lending institutions ask for:

  • Personal information
  • Business plan
  • Business credit report
  • Personal credit report
  • Collateral
  • Financial statements
  • Income tax return

Why would you need fast business loans?

Below are the most common reasons that one would need fast business financing:

Payroll

If you are a responsible business owner, you should consider your employees’ monthly wage as non-time negotiable. Unlike the owner whose savings may be a lot bigger than theirs, whether they would be able to pay their bill or not depends on their salaries. Failure to religiously compensate your workers may encourage them to look for other job opportunities.

Emergencies

Emergencies are inevitable, and as its nature, unexpected. When waiting for weeks or months I out of the question, you would need to secure a business loan fast.

Repairs

No matter the nature of your business, it still relies on some form of machinery or software that may either become damaged or unreliable over time. Thus, you would need to acquire immediate funding to continue business operations.

Taxes

Unless you invite tax lien on your company, you would want to settle your tax payments with the IRS. Knowing the repercussions of failure to pay and of late payment, you would be better off taking out a business loan for such purposes. Else, you may see your bank accounts being levied.

Rent

A full and complete inventory becomes useless if you do not have a place to process this in. If you are leasing a place, paying your rent should be one of your top priorities. However, when business is slow and there are more pressing expenditures, taking out a fast business loan will allow you to proceed with the business operations.

Why are quick business loans more available now than ever?

Today, no matter the urgency, you can always find and apply for a fast business loan from a variety of lending institutions. Since the bank tightened its borrowing policies because of the 2008 recession, more and more small business owners are finding it hard to secure a loan in such institutions. From here, an opportunity arose. Alternative lenders have allowed small businesses, even those with bad credit rating, to lend money at a quicker pace than banks have ever provided.

How much can you borrow for a fast business loan?

There is no general set amount or limit that one can be awarded for a small business loan. However, you can have an idea on how much you can borrow by looking at the following factors:

Time of continuous business operations

Small businesses who have successfully stayed running is considered by most lenders when deciding on whether to grant your business your desired amount or not. The longer your business has been running, the less risky they would deem lending you money is. However, new businesses are not automatically rejected. Some creditors only need require that you have been in the business for at least two months.

Reason for borrowing money

While they essentially still earn no matter your reason for borrowing money, they base the amount that you will need here. For example, if you need $3,000 to pay rent, the approved loan may not exceed 3 thousand dollars.

Cash flow of the business

Here, they ask, “Will you be able to pay us back?” Your cash flow determines that. If your business is not earning much, you may not get much even if your loan is approved. Worse, you may not get approved at all. However, a healthy cash flow is an indication that you have the capacity to pay them back. Your past and current business revenue is also a factor in setting an interest rate for your fast business loan.

What fast business loans can I apply for?

Invoice financing

If you want your cash ASAP, this can get your funding to you as soon as 24 hours after application.

How does it work?

In invoice financing, you use your unpaid invoices as collateral. The amount you get can be up to 95% of the total invoice value. However, only a fraction of this would be awarded to you, while the rest will be given after the invoice is paid. In return for providing you the funds, your creditors will charge an additional fee for each week that invoice goes unpaid. This fee can range from 1% to 2% of the invoice value, so it is only a good option when you are sure your client will pay his balance immediately.

Cash Advance

You can get your cash advance within one to three business days.

How does it work?

With cash advance, your creditor will award you money amounting as much as $50 thousand. The interest rates vary depending on the lender, with some offering it for as low as 1.16% and others for 35% per year. At most, the life of the loan lasts only three months. What lenders do is get a portion of your daily sales that go directly to your business’ account. Because you know the terms early on, you would have an idea how much of your revenues you would have to allocate for your debt each day.

Accounts receivable financing

Some credits can promise the agreed lent amount within 24 hours of application

How does it work?

Accounts receivable financing is a type of loan that is inherently secured, with your accounts receivable serving as the collateral. Depending on your lender’s risk appetite, you can be awarded as much as 90% of the total outstanding invoices. The interest rate is variable, meaning it can change month after month depending on the market as well as your ability to pay. Aside from the interests, you will also be charged with a processing fee that ranges from 2% to 3% of the total borrowed balance. With the loan term lasting only 90 days at most, your business will have to settle the balance within this period or risk incurring additional charges or worse, your accounts receivable.

Personal credit card

There is an assumption that you have at least one credit card you can use to fund business expenses. You can use it for different kinds of business expenses depending on your business needs.

How does it work?

One of the advantages of having a credit card is the funds are not allocated for specific purposes. Therefore, for as long as the merchant is an accredited partner of your credit card company, you will have no problem with purchasing. Because it is for personal use, the credit limit will vary depending on your credit rating and credit history. The same goes for the interest rate. If you want instant access to funds, this can be a little risky but still be an effective way to finance small business purchases. In the end, it will still depend on how much you are looking to spend and what credit limits do you have.

SBA loan

As surprising as it may be to see SBA on this list, it is actually possible now to know whether you qualify or not within minutes, and get the funding within a week.

How does it work?

Small Businesses Administration is a part of the federal government that caters to the needs of small businesses. While their requirements remain very strict, it is now possible to know the results quickly through SmartBiz. If you do not qualify, you can easily move on to your other options. One of the features of an SBA loan is lower interest rates compared to the industry standard. However, to avail of their financial products, you must have good credit rating. On average, SBA loan small businesses around $380,000, but they also cater borrowers needing even as little as $5,000.

Personal loan

With a personal loan, you can get funding in less than a week

How does it work?

Originally for borrowers with good credit rating, you now only need to have a credit score of as low as 650 depending on your creditor. A personal loan does not have a collateral, so none of your assets, especially your business, is in danger in case you would not be able to make the payments. At most, you can be awarded $60 thousand, with the annual percentage rate (APR) ranging from 5% to 20%. What yours exactly would be depends on how risky they would view awarding you money. If your business’ financial needs do not exceed the balance given to you, it is a viable option. Still, remember to be diligent in making your payments as this will reflect on your credit record and your credit score.

Business line of credit

Similar to a personal credit card, a business line of credit provides ready access to a set amount of credit.

How does it work?

While the application and approval itself for business line of credit does not qualify for our definition of fast business loan, having one has the same effect. Here, you have a set amount, a credit limit let us say, that you can withdraw when needed. Like on your regular credit card, only the amount that you actually withdraw or spend is charged with interests. Thus, as soon as you settle the payments, your line of credit would be refilled. This type of loan is usually short-term with the maturity in six months to one year. However, the APR is pretty steep with some lenders setting it at three digits percentage. Of course, this still depends on your credit rating.

Business Credit Card

For businesses with good credit rating, one fast business loan option to consider is the business credit card.

How does it work?

This is like merging personal credit card and business line of credit into one. Like the former, you have a plastic card which you can use to make purchases directly. Moreover, there is a limit on the funds you have access to, and this is specifically for business expenditures like the latter. Again, the interest rate that your lender will charge varies, depending on a number of factors. For this fast business loan option, you would need to pay 1 to 2 percent of your credit limit at the beginning at the term. However, only the amount you actually use would accrue interest. Your business credit card is terminated after one year, so you will have to settle your balance before then. However, you have the option to renew your card by paying a fee as agreed by you and your creditor.   Having numerous ways to get funds for your business needs, there is sure to be one that will appeal to you. Before choosing, remember to assess its situation and its needs, so you can manage the payments more easily.

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