Every small business needs capital now and then. Being it the lifeblood of a small business, it’s not only essential for success but also to keep it from falling behind the competition and failure.
Awkwardly, for most small businesses, there are not many options for fast business loans. For many, banks are the first source to secure capital. However, getting a bank loan with favorable terms and lower interest rates might not be possible especially when you have less than stellar credit ratings. Securing credit from a bank takes time, approximately 60 – 90 days simply for loan approval. If you’re able to gather all the necessary paperwork for bank loans, and waited for months to be approved, what if you could be declined? Even if you get a bank loan approval, you might have to wait another few weeks to get the cash in your hand.
Alternative Lending for Fast Business Loans
Since there are limited financing options for small business owners, it doesn’t mean you’re not fundable. The alternative lending industry is on the rise offering a wide variety of business financing options to struggling business owners like you to help you get the capital you need to grow your small business. Alternative lenders are non-bank lenders who specialize in financing small and mid-size businesses with “non-bankable” financing options within a quick timeframe and at favorable terms. The small business loan underwriting criteria is more flexible and doesn’t depend on your credit score solely, enabling you to secure business capital fast.
Before applying for fast business loans with alternative lenders, do your homework properly. The convenience that comes with alternative lending also carries costs and they can be expensive, based on the funding option you will apply.
Fast Business Loan Options
Alternative lenders offer a variety of fast business loan options with varied turnaround times to receive funding. Here’s an overview of the most common fast business loan types:
- Short-term Loans
Short-term loans are the most appropriate business funding option for businesses that need quick access to capital for immediate funding needs, to bridge a cash flow gap, leverage on a business opportunity, or to manage the unforeseen expenses. You can have the cash in as little as 24 hours with a credit score requirement of at least 640 and 2 years of time in business.
- Business Lines of Credit
A business line of credit is another suitable funding option for small businesses. A business line of credit works similarly to a credit card where you’re approved for a predetermined credit limit, which you can draw from as and when required. You only pay for the money you’ve withdrawn from your credit line plus the interest.
- Equipment Financing
If your business needs capital to purchase equipment, equipment financing is the best loan option for you. You can use equipment financing, such as restaurant equipment financing, to finance any needed vehicles, furniture, machinery, and much more. The turnaround time for your equipment purchase typically takes about 5-7 days. The best thing about equipment financing is that the equipment itself serves as collateral for the loan, which in turn gets you more flexible terms and lower interest rates. If you default on the loan, the lender can seize the equipment to and sell it to recoup the loss.
- Merchant Cash Advance
Merchant business cash advances are another quick funding option where you receive a lump sum of capital upfront in exchange for a fixed percentage of your future credit and debit card sales. It’s not a loan, but an advance on your future receivables. There are no fixed monthly payments and you’ll pay when your business makes money. This is the most convenient funding option for seasonal businesses where payments are based on your business sales. You pay more when you make more sales and vice versa. A merchant cash advance is an expensive funding option, but you are able to obtain the cash within 24 hours. It’s a viable option when used properly and definitely relieves the hassle of not being able to get a bank loan.
- Invoice Financing
In Accounts Receivable Financing, your business sells your outstanding invoices to invoicing companies in exchange for capital. The invoicing companies will then advance you up to 80% to 90% of the total value from each invoice, providing you fast funding. After your customers pay the invoices, the lender transfers the remaining 10% to 20% after deducting a small fee.
- SBA Loans
The Small Business Administration (SBA) loans are the most sought after loan programs for small business owners with longer repayment terms and lower interest rates and higher loan amounts. The SBA itself doesn’t lend them money, instead their network of lenders lend money and SBA guarantees up to 85% of the loan amount to mitigate the risk for lenders. However, the SBA loan process is typically longer (30-45 days) and qualification criteria are stricter than other loan types.
- Asset-Based Loans
Asset-based loans are collateral based business loans where your existing assets such as commercial real estate, accounts receivable, purchase orders, machinery and equipment used as collateral for the loan.
Do Alternative Lenders Offer Fast Business Loans?
The answer is yes; if you need funding in as quickly as 2-5 business days. You will get the approval decision within 24 hours and can have the capital in your bank account within days. All you need is to fill an online loan application form, provide the documentation including your recent 3 months of business bank statements, returns, and credit reports to access capital quickly.
Fast business loans are ideal to increase your business cash flow, make necessary purchases, hire new workforce, expand to a new location, buy supplies, or make payroll.