The Definitive Guide to Same-Day Business Loans & Financing

From traditional banks, credit unions, online lenders and other sources, there have never been more financing options available in today’s business environment. Thanks primarily to the emergence of online lenders, small businesses can now be approved and receive access to funds in a matter of days, rather than weeks.

But there are times when approval within days still isn’t fast enough, and small business owners wonder just how fast they can get a business loan. In those situations, same-day business loans can be the answer. For small business owners who have asked, “How can I get a business loan in the same day?” Well, now you can. But as with all business loans, the key is finding the loan that best fits your needs.

Same-day business loans are normally provided through online lenders rather than traditional banks. That’s primarily because banks are more cautious about to whom they lend money. This caution results in a long application process that could include providing a business plan and a detailed plan on how the business will plan to use the loan. A long loan application process also requires a long review process.

Traditional banks also closely examine the owner’s credit score, credit history of the business and its balance sheets, bank statements, cash flow and income statements. Banks often ask for collateral for business loans. The valuation of these assets further lengthens the loan approval process.

What is a Same-Day Business Loan?

Same-day small business loans are a form of financing that allows small business owners to receive funds within 24 hours. Such an option is typically needed when a business runs into sudden cash flow problems or an emergency, such as building or equipment repairs. In addition, a small business may suddenly be faced with a chance to expand or to acquire another business, and a prolonged wait for funding approval may compromise this opportunity. For situations like this, a fast business loan is often required. So how can you get a same-day funding option?

While there are a wide variety of small business loans available to business owners, only a handful of these options can provide same-day funding. When it comes to how to get an instant business loan, there are a variety of same-day funding options that can help businesses get a small business loan fast.

Where Can I Borrow Money for My Business Immediately?

Since alternative lenders have a faster approval time and more streamlined approval process than traditional lenders, small business owners are more likely to find same-day business loans online. In fact, some alternative lenders can provide same-day business loans with no credit check. So, for small business owners asking, “Can you borrow money for a business online instantly?” The answer is yes.

That also applies for small businesses with a history that includes tax liens, poor or inconsistent cash flow and lower credit scores, or those small businesses that have been in business less than a year. The more forgiving underwriting requirements of online lenders makes them a natural source for small businesses of all types that need same-day funding.

How to Qualify for a Same-Day Business Loan

Even with the relaxed underwriting requirements of online lenders, a small business borrower often needs to have been in business for a minimum amount of time, such as one year, to qualify for a same-day business loan. Minimum revenue requirements – both annually and monthly – may also exist. These will often include annual revenue minimums, as well as time in business thresholds that your company must surpass. Minimum personal credit scores for business owners may also apply.

Same-Day Business Loan Options

1. Business Line of Credit. One of the most popular business loan options is a business line of credit. This is especially true when it comes to small business owners who need business financing immediately and cannot afford to wait several days for a loan application to be approved.

   In fact, more than 40% of business owners who apply for financing apply for a business line of credit. This popularity is based on the fact that small business owners can apply for a line of credit before the need for financing arises, then draw against the credit limit whenever needed and receive the funds the same day. Funds can be used for any purpose. In addition, interest rates start at one percent and interest is only paid on the amount withdrawn. Repayment is weekly.

   On the downside, past due payment penalties can be expensive. Reckless use of a business line of credit can also damage the credit score of the business and its owner.

   To qualify for a business line of credit, a small business typically needs to be in business for a minimum of three months. The minimum FICO score required is 450.

2. Unsecured Business Loans. Qualifying for an unsecured business loan through a traditional bank or through the Small Business Administration (SBA) can be a challenge. The requirements for this type of loan are stricter; for instance, the minimum FICO score is 650 and the minimum amount of monthly revenue a business needs is $5,000. Interest rates start at 7.5 percent and a small business must be operational for at least six months to qualify. Repayment terms are also typically short.

   But that alone does not answer the question of how quickly you can get a business loan. Online lenders tend to have a faster, more efficient, and more forgiving application process that provides funding quicker.

   But funding can be provided within three hours and, since there is no collateral required, unsecured business loans come with no risk to the personal assets of a small business owner. Unsecured business loans can also be of a longer term than is normally considered short-term, but shorter than what is considered long-term.

3. Equipment Loans. Equipment loans have the same characteristics and terms as unsecured business loans, but require collateral. To expedite the loan process, however, the equipment itself can be used as collateral. Business lenders focused on equipment will often have same-day options depending on the kind of equipment that can be used to secure the loan.

4. Business Credit Cards. While all small businesses can benefit from a business credit card, startup businesses can find business credit cards especially helpful. That’s because it is much more difficult for startups to acquire financing any other way since they have little or no credit history. Given their ease of use, business credit cards also provide the fastest small business loan.

   Business credit cards allow businesses to pay for expected expenses that they know they can pay off quickly without compromising the financial health of the business. By paying off these balances, a business can gain the type of credit history that can eventually lead to the type of financing available to established firms.

   A business normally needs to be in business three months before it can qualify for a credit card. Two potential immediate benefits are zero percent interest rate for the first 15 months after qualifying for the card and cash-back rewards on all purchases. Such rewards generally start at one percent.

More Same-Day Financing Options

In addition to more traditionally structured financial products for businesses, there are also unique options that can even qualify for near-instant approval. One of these options is a merchant cash advance, which is known for offering fast funding. Another is invoice factoring that can be used to secure capital now on the basis of outstanding invoices. Let’s explore one of these alternative options in detail so you can understand how this type of financing typically works.

Merchant Cash Advance, which is not a loan, can also provide a small business a lump-sum within four hours. In addition, an MCA does not tie the business to a regular repayment schedule since it is repaid by automatically deducting a percentage of future debit and credit card transactions. As a result, however, this means that more payments are made over a shorter period of time. MCAs also are known for having the highest interest rates among all small business loans, starting at 10 percent.

Businesses must be operating at least three months to qualify. Applicants need a credit score of at least 500 and repayment terms can be daily or weekly.

MCAs are easy to qualify for and the funds are allowed to be used in a wide variety of ways. But the high interest rates and short-term repayment can lead a business to take on dangerous levels of debt.

Invoice Factoring. Under the terms of invoice factoring, the provider of the invoice financing forwards a small business the majority of the past-due funds that customers owe it, then pays the balance after collecting those funds from those same delinquent customers. The factor company then keeps a percentage of the amount collected as payment for its services.

Invoice factoring is thus an effective way to boost the cash flow of a small business when expected payments are delayed. Funds can be available within three hours. Interest rates range between two to four percent, with repayments required on either a weekly or monthly basis. A minimum FICO score of 500 is typically required.

Still, the effectiveness of invoice factoring depends on delinquent customers reconciling their delinquent invoice. The process of reconciliation falls on the factor company, which could potentially damage the customer relationship for the small business. Factor rates, which is the amount that the factor company, keeps as payment, can be costly.

But, because the effectiveness of invoice factoring depends on the ability of the delinquent customers to pay, the importance of the credit score of the small business needing the funds is minimized.

Is it Possible to Get A Same-Day SBA Loan?

Since SBA loans are popular with small business owners, it is natural for business owners to ask, “How quickly can I get an SBA loan?” Unfortunately, SBA loans carry stringent requirements and generally are not available this quickly.

SBA Express loans are the loans with the fastest turnaround that the SBA offers. Approval can come within 36 hours, although this is somewhat unlikely and usually only the case for a business with a significant history with the lender already. Since eligibility requirements are strict and new businesses can find it difficult to be approved, the SBA Express loan is best for established businesses with specific, time-sensitive needs. While SBA Express loans may be processed faster than other SBA loans, it is important to note that the SBA lending option will vary by the lender that is issuing the loan, and this generally does not provide same-day funding. Bank loans such as these will also come with a larger number of documentation requirements, and may require an interview with a banker to proceed.

SBA Express loans max out at $500,000. Still, they can be a perfect solution for eligible businesses that urgently require capital. Interest rates may be fixed or variable. For SBA Express loans of $50,000 or less, interest rates cannot exceed the prime rate plus 6.5 percent. For loans of more than $50,000, the cap on interest rates is the prime rate plus 4.5 percent.

Repayment terms for an SBA Express loan can be up to 10 years for working capital and inventory loans and up to 25 years for real estate loans. Terms for equipment loans are typically 10 years but can be extended depending on the useful life of the item. Loans for improvements to a leased property also normally have a 10-year repayment term but can be extended by an additional 12 months if necessary to complete the improvements.

Pros and Cons of Same-Day Business Loans

The biggest advantage of a same-day business loan is speed. No matter what the funds are needed for or the loan amount, small business owners will have access to the funds they need as quickly as possible. In some instances, getting the business funding in time can be the difference of whether the business stays open. The easy application and approval process for same-day loans through on-line lenders is another benefit. This flexibility is especially true for newer businesses or businesses with bad credit.

On the downside, the speed with which online application can be approved and funded can often result in a higher interest rate and more fees. The faster the funds are needed, the more expensive they will be.

Same-day business loans also typically have shorter repayment terms. As a result, small business owners will have to repay the short-term loan at a higher interest rate within a shorter period of time. Of course, it’s important to understand that business owners seeking same-day financing may also be required to complete a personal guarantee for this kind of financing, especially given the short amount of time given to the funding provider to vet the business.

All in all, same-day business loans or financing are a good option for most business owners to keep in mind as they run their operations day to day. You may or may not need capital that quickly on a normal basis, but when you do it is good to know how to go about securing it.