If your business needs funding and needs it fast, the speed of the loan process should be a top priority. Do you need money within a week to cover payroll or pay vendors? A month to purchase new equipment or supplies? Or longer to invest in expansion?
Stay tuned as we’ll bring to your notice everything you need to know and how to get that fast loan for your business in this article.
Types of Fast Business Loans and Lenders
When you need cash fast for your business, you have a few good options to choose from.
1. Term Loans
Term loans provide a lump sum of cash that you repay over a fixed period of time with interest. Banks, credit unions, and online lenders offer term loans. The application process is usually pretty quick, within a week or so you can have funding. These loans typically range from $10,000 up to $500,000 or more with repayment terms of 1 to 5 years.
2. Lines of Credit
A business line of credit gives you access to funds that you can draw from as needed. You only pay interest on the amount you use. Lines of credit are very flexible and funding can happen almost immediately. Amounts range from $10,000 up to $500,000 or more. You can get a line of credit from many of the same lenders that offer term loans.
3. Merchant Cash Advances
Merchant cash advances provide funding in exchange for a percentage of your future credit card sales. Funding usually takes around a week and amounts range from $5,000 up to $500,000. The catch is that the fees for these loans tend to be higher, in the range of 15-50% APR. On the other hand, repayments are flexible and move up or down with your sales volume. Several nationwide companies specialize in merchant cash advances.
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What You’ll Need to Qualify for a Quick Business Loan
Lenders want to see that you’re in a position to repay the loan, even if the turnaround time is fast. Be prepared with the following:
1. Financial statements
Provide profit and loss statements, balance sheets, cash flow statements, and tax returns for at least the past two years. These give lenders insight into your business’ financial health and stability.
2. Business plan
A well-thought out business plan shows lenders you have a vision and strategy for growth. Include details on your business model, target market, marketing plan, operational processes, and financial projections. Your business plan should map out how you will use the loan funds to advance your company.
3. Credit score
Most alternative lenders will check your personal and business credit scores to help determine your eligibility and loan terms. Aim for scores above 650, higher if possible. Check your scores in advance and look for any errors. You may be able to take quick steps to improve your scores before applying.
4. Collateral
For larger or higher-risk loans, lenders may require collateral to secure the loan. This could be business equipment, real estate, vehicles, or other assets. The collateral helps reduce the lender’s risk and may allow you to qualify for a bigger loan.
5. Owner information
Be prepared to provide basic information like your name, address, Social Security number, and photo ID. Lenders will also want details on your ownership percentage, role in the company, experience, education, and personal financial statements.
With these items in order, you’ll be poised to get approved for speedy funding. Do your homework, gather the necessary documentation, and work with lenders that offer fast turnaround times and a simple application process.
Tips for Getting Funds in Your Account Quickly
By following a few tips, you can have money in your account within days.
1. Ask friends or family for a loan
If your business needs cash fast, consider borrowing money from people close to you. While it can be awkward, friends and family understand your situation and may be able to provide funds quickly with little hassle. Be sure to put the loan terms in writing to avoid confusion down the road.
2. Apply for a line of credit
If your business has good credit, you may qualify for a line of credit from your bank. This provides access to revolving funds you can draw from as needed. Most banks can establish a line of credit within a week. Once approved, you can withdraw cash immediately.
3. Get a short-term business loan
Online lenders and alternative financing companies offer short-term working capital loans that can provide funding in as little as 1-3 business days. The application process is fast and funds are deposited directly into your bank account. Loan amounts vary but can be up to $500,000. Terms are usually 3 months to 2 years. While interest rates tend to be higher than traditional bank loans, the speed and convenience may offset the cost.
4. Use a credit card
If other options aren’t viable and you need immediate funding, a credit card can work in an emergency. However, only borrow what you can pay off quickly, as interest charges accrue from the moment you make a charge. Look for business credit cards with a 0% intro APR to avoid interest for 6-18 months.
Getting fast cash for your business may require paying higher interest rates or fees, but when an urgent need arises, speed is often the priority.
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The Pros of Fast Business Financing
Fast Approval and Funding
The biggest benefit of fast business loans is rapid access to capital. If you have an urgent need for funding, the speed of these products can be appealing. Approval often takes just a day or two, and funding can be deposited in your account within a week. This quick cash infusion can help solve short-term cash flow issues or take advantage of time-sensitive opportunities.
The Cons of Fast Business Financing
1. Higher Costs
The trade-off for speed is usually a higher overall cost of capital. Interest rates on fast business loans are often significantly higher than traditional bank financing. Fees also tend to be higher, including origination fees of a few percent of the loan amount. The higher rates and fees mean more of your monthly payment goes toward interest charges rather than paying down principal.
2. stringent Requirements
While fast business lenders promise quick approvals, they still have eligibility criteria you must meet. Requirements typically include a minimum credit score, annual revenue, and time in business. If you have a newer company or poor credit, you may not qualify for some fast financing options.
3. Repayment Terms
Fast business loans usually come with relatively short repayment terms, around 6 months to 2 years. The short terms mean higher monthly payments, reducing your cash flow. Some lenders will allow you to pay interest only for part of the term to lower payments, but that further increases the total cost.
Conclusion
If you need funding quickly and understand the additional costs, fast business financing can be useful. But for many small businesses, traditional bank loans or SBA programs may provide more affordable long-term financing, even if the process takes a bit longer. Evaluate your needs and options carefully to find the best solution for your business.
