Just think: you’ve got a business, and it needs cash-fast. Maybe you broke your biggest piece of equipment, or just found out there was a phenomenal opportunity to buy out a competitor. Whatever it may be, time’s important. Getting the right business loan fast could be the difference between surviving and failing. Fortunately, several fast business loans are offered. Clearly, understanding how to explore options is the first step.
Let’s explore why most businesses are in need of funding; what types of loans can deliver quickly; and the top tips to improve your chance.
Reasons Your Business May Need a Business Loan Immediately
There are many reasons why a business might need a business loan immediately. Sometimes there are emergencies and sometimes there are opportunities to expand. It could also be caused by a cash flow issue within your business. Let’s take an even closer look.
Unexpected Expenses and Emergencies
Something breaks. It’s just the nature of life and it certainly is a part of running a business. Think of it: suddenly your delivery van just dies on you. You then absolutely have to have it fixed pronto-scheduled deliveries are at stake. Or, what if a customer slips and hurts themselves in your store? That’s a big lawsuit looming right there. A fast business loan can help cover unexpected financial hits to keep your business afloat.
Taking Quick Advantage of Opportunities
Sometimes you just need to be fast to get a really great deal. For example, one supplier may come up with an unbelievable markdown on bulk inventory. Or, a competitor would like to sell a list of their customers. You’d need that fast business loan to snag those opportunities before they vanish. Losing out may mean money lost.
Short-Term Cash Flow Gaps
Cash is the life of the business. If cash is not flowing in fast enough to meet the expenses, then problems will arise. This usually happens in businesses with seasonal revenues like Christmas tree lots, where most income is collected at that time of the year. A quick loan could also act as a bridge in those unfortunate events when your clients take too long to pay their invoices. There will thus be enough cash to take care of the payroll and other bills while waiting for payments from customers.
Fastest Types of Business Loans
Knowing which loans can be availed of quickly is significant when speed is of the essence. Obviously, each of the options comes with its own requirements, costs, and speed at which funding is made available. Here is what you need to know below:
Online Term Loans
These are loans that online lenders offer without undergoing the process of a bank. Often, applying for loans through them takes relatively shorter time than conventional banks. While you fill out an online application form, provide some documents and wait, you could even be approved within 24 hours. Loan amounts range anywhere from a couple of thousands to hundreds of thousands. Loan repayment terms vary between a few months with most loans being from a few to a few years. The loan amounts are anywhere between 8 percent to more than 99% depending on your credit score.
Business Lines of Credit
A line of credit for businesses is similar to a credit card; however, it’s for the business entity. You get a certain dollar amount approved to spend. You actually pay just on interest on the amount of the borrowing. Such flexibility itself makes lines of credit more perfect for cash-flow gaps and surprise expenses. Availability again uses line-of-credit once the funds are paid.
Invoice Factoring
You can factor unpaid invoices by selling them to a factoring company at a discounted price. Your factoring company then takes care of the collection of payments from your customers. That way, you do not have to wait for your invoices to be paid before you have access to this cash. It works well if you have too many invoices outstanding at the moment and you need cash quickly.
Merchant Cash Advances
Merchant cash advances (MCAs) give an instant cash amount in exchange for an agreed percentage of future credit card sales. They are one of the fastest loans usually obtainable in the world. However, without doubt one of the costliest. Interest may be much higher, and repayments are typically made either daily or weekly. You should only consider the MCA after careful review of the terms so as not to regret signing.
SBA Express Loans
SBA Express Loans boast of being faster than the traditional SBA loans. Whereas ‘express’ generally sounds like it would be fast, it usually is weeks, not days, to get an SBA loan.
Factors Affecting Loan Approval Speed
A lender will usually consider a number of different parameters before deciding whether or not to grant a loan and how quickly to process it. Typical factors will include your credit score, the financial condition of the company, and whether or not you can offer collateral for the loan.
Credit Score and History
Your credit score is basically an abstract numerical measure of how trustworthy you are with credit. Hence, for an individual who has a good credit score, that is indicative of good, responsible borrowing; hence the lender, being more comfortable to lend you the money.
Conclusion
Fast business loans can be helpful and understanding the various schemes available is key when it comes to the time your business needs money urgently. Online term loans, business lines of credit, invoice factoring, and even SBA Express loans each offer unique benefits and drawbacks. Alternatives also include bootstrapping, crowdfunding, and even grants. Superexpensive types of borrowing, like Merchant Cash Advances, need to be avoided. Weigh all of your options carefully and consider talking with a financial advisor to find the best path forward for your business.
