November 5, 2021 | Last Updated on: June 15, 2023
Let’s face it; sometimes, small business owners have unplanned expenses. Whether your company has experienced equipment malfunction or you need to cover payroll, taking out a small business loan might be just the thing to help with your business needs. But if you haven’t heard, taking out a loan at a bank can be time-consuming, and when you need cash fast, you’re not going to want to go through a lengthy loan process. The good news is that there’s a way to speed things up. With alternative lenders, you may be able to secure a business loan much faster than you would with traditional lenders. In this article, we’ll discuss the pros and cons of getting a fast business loan, the types of loans available, and the various steps you can take to find one online.
Receiving your money as quickly as possible is by far the most significant benefit of a fast business loan. Your business is on a timeline. If you’re looking to secure cash fast, then you don’t want to wait for weeks, or even months, to learn whether you’ve been approved. If the answer is “yes,” then you want that cash as quickly as possible. And if the answer is “no,” then you need to know so you can pursue other financing options.
Another benefit is the quick and easy application process. When an online lender can offer you the option of filling out a short application online in just a manner of minutes, it will save you both time and stress in your pursuit of business financing.
With a fast business loan, your interest rate will be higher than with a traditional loan (but still significantly lower than a business credit card). As a result, you’ll be paying more for the money you receive, and you’ll need to make sure that taking out a fast loan still makes sense for your business. After all, there’s no sense putting your company in debt if it ends up sinking your business.
Another con is that the loan amounts are smaller and you’ll be limited in the size of the lump sum that you can take out. Fast business loans won’t be able to cover a large purchase, so you will need to assess whether or not taking out a loan makes sense if you’ll still be left with a significant gap between what you have and what you need.
If you decide that this is the right loan option for your business needs, the following steps will help you get started:
Before applying for any business loan, you should first determine which ones you qualify for and compare them with what you need.
Lenders will typically consider your credit score (both your personal credit score and business credit score), time in business, and income when determining if you qualify for a loan. They need to know that you will be able to cover your monthly payment schedule, either through your annual revenue or from your personal bank account if your business goes under. If you have bad credit, you are much less likely to get the business funding you are looking for.
With a business line of credit, a lender will pre-approve you for a maximum credit limit, and you can withdraw as much as you need up to that limit. A business line of credit can sometimes be approved in less than 24 hours, and may only require a credit score of 500, so many business owners who have less than satisfactory creditworthiness choose this option. These types of loans can be beneficial because you only pay interest on the amount you withdraw. If you only withdraw a portion of what you qualified for, you will only pay interest on the amount you withdrew. The downside to this type of loan is that the interest rate can be higher than a standard business loan. On the plus side, a business line of credit can still help you establish business credit for future loans.
A short-term loan is one that you only have a short period of time to repay. The repayment rates can sometimes be hefty, though, and the payments will be more rapid. With these types of loans, it’s best to fully understand how the use of this loan will increase your revenue so that you know how you will repay it. Payment terms can sometimes be as often as once a week with a short-term loan.
Some short-term loans allow a business to make extra payments to pay it off quicker, while others will give you a penalty for early repayment. So be sure to check the terms and conditions of the lender you’re hoping to use before applying for a short-term loan.
This is a method of financing where you sell your accounts receivable at a discount for a lump sum cash amount. It’s a little different from applying for a loan but can quickly provide the same result in receiving cash. This type of financing would be ideal for a business that doesn’t qualify for other loans due to credit score requirements, or for someone who was hesitant to provide a personal guarantee. There would be a slight discount (3 percent) to account for the factoring fee. Once the accounts receivable has been sold at a discount, the factoring company would be responsible for collecting payments from your customers.
While this type of financing can be finalized quickly, there are a couple of drawbacks. Future lenders might see this type of activity as a sign that your business is struggling. You would also be surrendering control of your accounts receivable. How the purchaser deals with your customers and collects payments will be out of your hands. The cost of selling your accounts receivable can be a drawback as well. However, it would be similar to taking out a loan and paying the additional cost of the interest rate.
With a merchant cash advance, debt is repaid by giving the lender a percentage of credit card sales. You can receive the funding quickly; however, a fee will be tacked on to the advance, which will also have to be paid back. The size of the fee will be determined by how much of an advance you receive. One of the benefits of receiving a merchant cash advance is that the repayment is automatic, so you won’t have to think about making weekly or monthly payments. Of course, the downside is that you are likely to pay higher costs for this type of financing, so make sure you are clear on the repayment terms.
Even though you’re looking for a quick business loan, the paperwork and information you’ll need aren’t much different than if you were applying for a standard loan. You’ll want to have the following documents on hand to ensure you’re able to fill out the application accurately:
When it comes to finding a quick business loan, your best bet will be to stick to alternative lenders. Going the traditional route, through banks or the Small Business Administration (SBA), could slow down the process immensely. Many alternative lenders, like Biz2Credit, have an easy application process and a fast turnaround time. Online applications can be filled out within minutes and can usually have an answer for you within 24 hours. Once your application has been accepted, alternative lenders will also be able to supply funds rapidly, where SBA loans may be slower to get to qualifying borrowers.
With alternative lenders, the application process is simple compared to the extensive paperwork application you’d need to fill out with your bank. For example, at Biz2Credit, you can apply in 4 minutes, have an answer within 24 hours, and receive funding within 72 hours.
When choosing a business lender for a fast loan, your best bet lies with an alternative lender that specializes in small business financing. The processing time of your application will be shortened to a matter of days, applying is more straightforward and less time-consuming, and if approved, you’ll have access to your cash a lot quicker than if you were to secure a loan or credit line through a more traditional route.
Applying for a business loan can be time-consuming. But as a business owner, there are times that you don’t have the option to wait for an answer. Sometimes, how quickly you receive cash will be what determines whether your business sinks or swims. If you are tight on working capital, you may need cash now. This isn’t something you should undertake lightly, but if you have weighed the pros and cons, and fast financing is what you need, alternative lenders may be just what you need.
