7 Things to Know About Getting a Quick Business Loan

Find out how to get the financing you need fast.

Perhaps you’re facing a cash flow emergency, need to pay some bills, stock up on inventory, or take advantage of a great business opportunity.

No matter the reason, standard forms of small business financing from traditional financial institutions often take too long to secure to meet emergency cash needs. For instance, traditional term loans from banks can be challenging to apply for, come with a lengthy approval process (sometimes a month or more), and you may end up ultimately disappointed if you’re not approved. After all your effort, you’re still dealing with your financial issue or have missed out on an opportunity.

That’s why small business owners facing a cash crunch turn to alternative or online lenders to get emergency financing. In many cases, the application and approval process can be done in a single day, and the lender could deposit cash into your business bank account one day later. These types of lenders use technology and artificial intelligence to significantly speed up securing small business loans.

Before you decide to apply for a loan with an alternative or online lender, you need to know that their qualification criteria are typically less strict than for traditional lenders like banks or credit unions. In return for the laxer standards, you could be forced to pay a higher interest rate (cost of capital) for your loan. While the speed of getting financing could also increase your interest rates, the efficient operations of online and alternative lenders could help keep them in check.

The only way to know the interest rates and terms of different loan types from various providers is to do your due diligence and apply for loans from several loan companies.

Here are answers to common questions about securing fast small business financing.

How can I get a small business loan fast?
How do quick business loans work?
Why do small business owners need fast financing?
How do I evaluate lenders?
How much cash can I borrow quickly, and how fast do I have to pay it back?
What kind of financing can I qualify for?

1. How can I get a small business loan fast?

Traditional loans like those offered through banks can take a long time to apply for and get approved, and the qualification requirements can be challenging, especially for business owners who have low credit scores.

Because of these things, if you need fast working capital, it’s probably wise to consider other financing options.

Online and alternative lenders can quickly approve and fund your business loan, sometimes on the same day, usually by the next. If you need fast capital, seeking financing outside the traditional lending system could be a smart move for you.

2. How do quick business loans work?

Some loans from online and alternative loan providers are very similar to those from traditional lenders.

One of the key differences is how providers determine creditworthiness. Alternative lenders typically look at factors beyond credit scores, such as annual revenues and owned business assets. Because many don’t look as deeply into your credit history and business financials, and due to the fact that many use advanced technology, they can make application approval decisions faster, sometimes almost instantly.

If you input information about your business bank account in the lender’s system, your loan funds will be deposited into it in as little as one business day, giving you almost instant access to the cash you need.

3. Why do small business owners need fast financing?

There are many reasons companies need quick small business loans. A primary one is a cash shortage, leaving you struggling to pay your bills. A quick loan can get you the money you need to get them paid on time, so you avoid penalties.

Another reason is to load up on inventory after a sales spike or hire new employees to help get you through an unexpectedly busy period. In the first case, an emergency loan will provide funds in time to place the order. In the second, you’d get your money quickly enough to make payroll.

Fast financing could also come in handy if you have a chance to grow or expand your business, purchase a new location, or take advantage of other opportunities.

4. How can I qualify for fast financing?

The first step is to complete an online business loan application. Depending on the lender, you may need to upload identification, tax forms, bank statements, a business plan, and other documents. You may also have to provide information about business cash flow, annual revenues, sales projections, and your time in business and operations history. You might need to identify a business or personal property you’re willing to put up to guarantee your loan.

The loan company will use some or all of this information to determine your creditworthiness and whether you qualify for a loan.

5. How do I evaluate lenders?

Many online and alternative lenders are as reputable and secure as traditional banks. However, as with most things, there are a few bad actors. It’s important to check things like the financial stability of the lenders you’re considering, along with the Better Business Bureau and online ratings and reviews, to make sure you’re getting financing from a company you can trust.

6. How much cash can I borrow quickly, and how fast do I have to pay it back?

It all depends on the lender and the financing option. It’s possible to get a loan amount from $2,000 to $250,000 or more. In most cases, you may have between six months or two years to pay it off in monthly payments. Some financing types may need to be paid off more quickly, and payments can be as often as daily or weekly. Most options come with interest rates between 10 and 40 percent, although certain types of loans can come with higher interest rates, especially if you have poor credit scores or have been in business for a short time.

7. What kind of financing can I qualify for?

There are many types of small business loans from various small business lenders that can get you business cash fast.

Short term loan

A term loan provides a small business with a lump sum of capital, which gets paid back over a defined time with an agreed-upon payment schedule. These loans usually come with the lowest interest rates and most favorable repayment terms of all the business financing options.

One issue is that you need a solid credit score to qualify (people with bad credit won’t be approved). You might also be required to put up some personal financial assets or business assets as collateral for these loans. The application process — along with the approval process — through traditional lending institutions can take a month or more. You may be able to expedite this by applying for a term loan through an online lender like Biz2Credit. You complete a digital application, including uploading financial statements, tax returns, a business plan, balance sheet, and other documents, as needed to determine eligibility. In many cases, you could be approved in as little as one day and get the funding deposited into your business bank account the next day.

Business line of credit

A business line of credit could be a good option if your company has regular emergency cash needs. It’s suitable for organizations that want on-demand access to funds, at a competitive interest rate, with reasonable repayment terms. A loan issuer approves you for a revolving line of credit, similar to a credit card. You don’t use the funding until you need it, and you only pay back your credit line when you’ve accessed it. You can use a business credit line for virtually any emergency cash or other business needs. To qualify for a business credit line, you must have solid credit scores, a well-established personal credit history, and access to a significant amount of available credit that you haven’t used. You also don’t want too many hard credit checks on your record over the last year. A business line of credit is not exactly the same as a business credit card. It has a much more rigorous approval process. A line of credit also has lower interest rates and comes with no cash advance charges.

Merchant cash advance (MCA)

If your business accepts credit cards and has a regular flow of payments, an MCA could be a fast cash loan option for you. It provides an advance on your anticipated credit card sales, and the loan provider takes a significant cut on those receipts. Most MCA providers can give you an answer to your application the day you apply. You’ll likely have funds in your business bank account within a day or two. Be aware that the costs of MCAs are incredibly high, and you need to make sure your margins can cover them.

Credit cards

Credit cards may not seem an obvious choice for small business owners seeking fast financing. However, if used correctly, they can be a quick and easy source of business capital. If you have a business credit card, you may be able to use it for emergency expenses. Just make it a point to pay the entire balance every month. It will help you keep interest payments in check and have an ongoing balance to borrow from. Surprisingly, many business credit cards have lower interest rates than some loan options covered in this article. Also, you may be able to take advantage of zero percent introductory card rates if you have good credit and can qualify for the offer. You may also benefit from cashback, frequent flier miles, hotel stays, and other credit card benefits.

Invoice financing

Do you have cash flow problems because you’re waiting for your customers to pay their bills for goods or services you sold to them? Invoice financing, also called invoice factoring, can be a good option for businesses with extended invoice payment cycles. Invoice financing allows you to get paid immediately rather than waiting for your customers to pay you. The financing company will purchase your accounts receivable from you at a percentage of face value. Then they’ll be allowed to make efforts to collect on them. The good news is that getting approved for invoice financing is not dependent on your business credit score or personal credit score. It could be one of the few financing options available to a new business. The issue with invoice financing is that the cut taken by the financing company is often high, and the collection efforts could harm your relationships with customers and cause them to lose trust in you.

Real estate loans

If you’re fast-cash need is an opportunity to purchase commercial property, a real estate loan can get you long-term financing at low rates because the real estate can serve as collateral. In most cases, you can get approved in time to take advantage of business property purchase opportunities.

Equipment financing

If you have an urgent need to purchase a piece of equipment, such as a computer, manufacturing machine, or refrigeration unit, equipment loans could be a great solution. No down payment or upfront cash is required, and the equipment you buy acts as collateral for the loan, reducing the interest you pay. You don’t need to put up personal assets to qualify, and getting approved is easy.

SBA 7(a) express loan

The Small Business Administration (SBA) SBA 7(a) loan program is very popular because the financing comes with a government guarantee, which means they have relatively low-interest rates. The issue is that it often takes weeks to a month or more to get approved for one. The good news is that the SBA offers an SBA 7(a) express loan option. If your credit is solid and you can wait a week or two for financing, this could be a good option. SBA express loans top out at $150,000. If you need more money, you could use the express loan for immediate emergency cash needs and get another SBA loan or financing elsewhere.

Cash flow loan

A cash flow loan is a form of unsecured financing that could be used for emergency cash needs. Cash flow loans are not like traditional bank loans, which require a thorough credit check. Instead, a lender assesses the cash flow generation capacity of the borrower when figuring out the terms of a cash flow loan. These loans could be suitable for startups and small businesses with significant revenue potential but a limited credit history. The additional risk of these loans results in higher interest rates than most other loan types. You may be able to lower your annual percentage rate by putting up business or personal collateral or making a personal guarantee to back the loan. Cash flow loans come with higher fees and penalties than other loan types.

Family or friends

It might be an option for you to get funding from family or friends. However, borrowing from people close to you could harm your relationship with them if you default. If you have someone you trust and who, in return, has faith in you and your company, getting this type of financing could be a smart move for you. Before you accept the money, work with your lawyer to draft an agreement that protects both your business and personal relationships.

Now that you have a better understanding of the fast small business funding options available to you, do your due diligence to select the right funding option and provider that can help you with your cash emergency.