If you’re thinking about getting a small business loan, it helps to be prepared. Applying for and getting approved for one can take time and research. And finding the right option for your business depends on a number of factors, including how quickly you want to receive the funds.
Some business loans can take weeks or months to be approved. SBA loans can take up to 90 days to receive funds after an application.
But fast business loans could offer financing in as little as 24 hours. Read on to learn how to get fast financing for your small business.
Know how much you can afford
If you want a quick business loan, start by finding out how much you can afford to borrow. Take a look at your business income and compare it to your current expenses. Then use a small business loan calculator, which can show you total loan amounts, monthly payments, and how much interest you’ll pay over the life of the loan.
Find the type of fast business loan you need
Some types of business loans offer funds much faster than other types. While some traditional banks and credit unions may offer fast financing, fast business loans are usually found with alternative lenders. Here’s a look at some common types of fast business loans and their advantages and disadvantages.
Online Term Loans
Online lenders often focus on quick financing more than larger traditional banks. For example, business loans from Credably can be approved in as little as four hours, with funds possibly arriving in less than 24 hours. Another benefit is that these lenders are often more accessible to a wide range of borrowers, including business owners looking for business loans with bad credit.
One potential drawback is that the fastest online financing can come in smaller amounts. These loans also tend to have higher interest rates compared to traditional bank and credit union loans.
SBA Express Loan
SBA loans tend to have favorable rates and long repayment terms, making it worth the long wait.
For businesses that want an SBA loan but need quick cash, the federal government created SBA Express Loans. There are two types of these fast business loans, SBA Express and Export Express. For SBA Express, the SBA will respond to your application in as little as 36 hours. Export Express is set up for the SBA to respond to your request within 24 hours. Even though you get faster response, it will still take more time to receive your funds than the speed of online lenders.
Another downside is that even though these loans are set up for faster approval, the credit score requirements for SBA loans tend to be higher than other types of loans, typically in the mid-600s. It may require a commercial guarantee, which means that the lender can take any assets you pledge to help secure the loan if you default on it.
business lines of credit
Business lines of credit offer flexible credit that you can borrow, up to a certain amount, and only pay interest on what you use. Online lenders tend to offer quick approval and financing time and have relaxed requirements like lower credit scores.
One potential drawback is that lines of credit tend to have smaller loan amounts and shorter repayment periods. With a term loan, you repay the lump sum you borrowed over the course of the term, often anywhere from six months to seven years or more. Line of credit repayment terms, especially with online lenders, can be as short as six, 12, or 18 months.
Invoice Financing and Invoice Factoring
With invoice factoring, you sell your invoices to a factoring company and receive a percentage of the invoice upfront immediately. On the other hand, invoice financing allows you to borrow directly against unpaid invoices.
Both have the potential to be good short-term options when you need quick financing that can be paid back quickly. And since invoice financing and factoring lenders are more concerned with the payment history of invoiced customers, they are considered a type of bad credit business loan open to start-ups and bad credit business owners.
The downside to invoice financing and factoring is that you lose the opportunity to get the full value of your invoices, since you will have to pay fees.
equipment financing
Equipment financing can typically only be used to purchase equipment, such as office equipment or semi-trucks. Many lenders won’t require you to put up anything you already own as collateral for this type of loan, since the equipment you buy collateralizes the loan.
Depending on the lender, you may be able to secure financing in a matter of days compared to weeks with traditional lenders.
Merchant Cash Advances
A merchant cash advance (MCA) allows you to borrow against your future credit or debit card sales. You can also find this option through online lenders, with one-day applications and funds available in as little as 48 hours in some cases. You can open faster and more stable cash flow for business expenses.
The biggest drawbacks to MCAs are high interest rates and often short repayment periods. Lenders may charge factor rates for this type of financing. This not only makes it harder to understand the true cost of the loan, but rates can go as high as 80 percent or more.
Find the right lender
Once you decide how much you want to borrow and the type of loan that’s right for you, it’s time to find a lender. You can check out our list of the best small business loans, search for yourself, or ask in your industry.
Below, compare the eligibility requirements listed. Lenders often list how long you need to be in business, annual income requirements, and minimum credit scores.
Also, evaluate approval times and funding speeds. Online lenders are especially prone to listing how long the application process takes and how long it takes for the funds to reach your bank account.
Compare rates and conditions
Before deciding on a loan, you should compare various options from different lenders. The downside to this is that it can be difficult to find all the details you need to help you compare. Some lenders may only list initial rates and financing speeds. Some may not include any information at all.
To get an accurate picture, you may need to contact each lender or apply to see the rates and terms you’re eligible for.
Pros and cons of fast business loans
Getting a loan is a big decision that can affect your finances for years. We’ve listed several pros and cons below to see if it’s right for you.
advantages
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Faster funding than traditional banks, sometimes offering funds in 24 hours
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You often have the ease and convenience of a completely online experience.
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A wide variety of loan types offer quick financing options, including SBA loans
Cons
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Online lenders tend to offer higher interest rates and lower loan amounts than bank and credit union loans.
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Quick financing options are often only online, which can be inconvenient for anyone who wants in-person assistance.
Bottom line
You have a number of options for fast financing, which can get you approved in as little as a few minutes or a day. Funds can also appear in your account in a matter of hours. But it is important not to let the ease and speed of the process become an impulsive action. Take the time to carefully compare loan types, rates, terms, and other features.
Frequent questions
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How fast can you get a business loan?
Many online loan options advertise that you can get approved in minutes and receive funds within hours if you qualify. Other options can take up to days to be approved and you may see funds within 48 hours. These options are preferable for some business owners, as traditional lenders can take weeks to approve a business loan.
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What is the easiest business loan to obtain?
The easiest business loan to obtain may depend on your background and what you are looking for in a loan. Most business loans can be easy to obtain if you have excellent credit, have been in business for years, and have a high annual income. Other types of loans, such as equipment financing, invoice factoring, and merchant cash advances, may be your best option if you have bad credit or a new business. SBA microloans are also an option for business owners with bad credit and start-ups.
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What is the fastest SBA loan?
The SBA Export Express loan will respond to your application within 24 hours, much faster than other types of SBA loans, while the SBA Express loan has a 36-hour response time on applications.
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