When your business faces a cash crunch and you need money ASAP, a quick search for fast business loans may be the first place you turn to get some perspective.
Well, look no further! This guide will break down all your options so you can compare small business loans with ease and move forward with the option that will result in the fastest possible funding.
Who Needs Fast Business Loans?
Probably you – most entrepreneurs will experience a sudden need for extra cash at some point during their career.
Sometimes it’s for an unfortunate reason, like if you need to replace an essential piece of equipment that died unexpectedly.
Other times it’s for an exciting reason, like buying the extra materials and labor you need to fill a large order.
And sometimes business has just been slower than usual and you need money by next Friday to make payroll.
What each of these scenarios has in common is that you’ll need to compare fast business loans that won’t require weeks of back-and-forth with a bank and reams of paperwork.
Fortunately, getting small business funding can take as little as 48 hours in some cases.
7 Fast Business Loans for Funding in a Pinch
Below are our recommendations for getting a business loan as fast as possible:
Quick Working Capital Business Loans
Working capital loans can be used for almost any purpose that helps your company pay for its operating expenses or take advantage of a business opportunity.
Businesses usually borrow anywhere from $2,500 to $250,000 with these loans, which have terms of 3 to 18 months because they’re designed to meet short-term needs
Interest rates vary significantly, from 7% to 99% annually, but you can get a working capital loan in as little as 48 hours.
Working capital loans require little paperwork and can be available even with poor credit.
They offer flexible payment structures and generally do not require collateral.
However, your business will need to make daily payments.
Companies with negative working capital, or that have ample working capital that will soon be depleted by a large payment or expense, may need a working capital loan to keep things running smoothly.
Even well-run businesses can hit speed bumps, like when too many customers don’t pay on time.
A working capital loan can minimize the effects of short-term difficulties like these by giving you the cash you need to make payroll, order inventory, pay taxes, and more.
Get Financing Fast with a Business Line of Credit
Business lines of credit may also make ideal substitutes for fast business loans — especially if you’ve got one set up ahead of time.
With an active line of credit, you can access emergency funds anytime you need them.
If you haven’t, that’s okay. You can still get approved in as little as 48 hours.
With a business line of credit, you’ll have a certain amount of money available to borrow whenever you need it, whether for an emergency expense or an unexpected opportunity (as long as you haven’t already reached your borrowing limit.)
The biggest advantage of a business line of credit compared to other fast business loans is that you only pay interest on what you’re currently borrowing, but you have access to additional funds without applying for another loan.
A major disadvantage is that a lender can reduce or close your line of credit at any time, so the funds may not be there when you need them.
In addition, lenders may require you to submit collateral and updated financials from time to time to maintain your line.
With a business line of credit, you can access fast business loans $10,000 to $1 million with a business line of credit and repay the loan over 6 months to 5 years at interest rates of 7% to 25%.
A business line of credit is similar to a credit card in that any funds you repay become available to re-borrow almost immediately.
Short Term Business Loans Are Generally Quick to Fund
If you need a lump sum quickly and will be able to repay it within 3 to 18 months, consider a short term business loan, which can get funding to your small business in as little as 48 hours.
The biggest drawback? Quick business loans of this kind can be expensive, with costs similar to those of credit cards.
Short term business loans are available from $2,500 to $250,000 based on your company’s financials and creditworthiness.
You may not be able to borrow as much with a short term loan as you could with a long-term loan because of the limited repayment period.
Fast Business Loans for Financing Equipment
Whether you work in heavy construction, healthcare, or another industry that uses pricey equipment, equipment financing can provide the money you need for a purchase in as little as 48 hours.
Suppose a major power surge during a storm kills several pieces of equipment in your restaurant’s kitchen.
You’ll want to minimize the downtime before you lose too much revenue and your customers turn to your capable competitors, but that replacing that equipment could cost tens of thousands of dollars
Thankfully, an equipment loan can help you get operations back to normal quickly.
You may need a down payment of 10% to 20%, but loans are sometimes available for up to 100% of the equipment’s value.
Repayment terms can be as long as the equipment’s estimated life, but the average heavy equipment loan term is 7 years.
Interest rates typically range from 8% to 30% per year. Rates are relatively low since the equipment serves as collateral.
If possible, avoid lenders that require you to put up a savings account or your home as collateral, since these loans require you to take a great deal of personal risk.
With an approval rate of around 60%, we suggest going through an online lender for fast business loans for equipment; a bank will almost certainly take longer.
Invoice Factoring Can Get You Business Capital Fast
If you are a B2B company, invoice financing allows your business to sell its unpaid invoices to a finance company in exchange for a lump sum payment of 50% to 90% of the total value of the invoices.
After the customer pays, you’ll receive the remaining value of the invoices, minus the finance company’s fees.
Even though the invoices are considered collateral for the loan, borrowing fees are higher than with other forms of financing, and there may be additional fees for canceling the service or deciding not to renew.
In addition, you’ll pay a factor rate of about 3% per week while you wait for your customers to pay.
You must be able to make weekly or even daily payments, which are based on a factor rate instead of an APR.
While the names are different, both represent how much you’re paying to borrow.
Factoring Fast Business Loans – How It Works
If you take out a $30,000 loan with a factor rate of 1.15, your total amount owed would be $34,500.
If your loan lasted 12 months and required payments every business day, you’d need to make 264 payments (or about $131 per day.)
To understand how invoice factoring compares with the pricing of other loans, you’ll have to convert the factor rate to an annual percentage rate.
However, invoice financing is still a favorite among small business owners seeking fast business loans with funding available in 24 hours in some cases.
Not to mention, the application is relatively easy since this form of financing is not technically a loan, it’s considered a service.
The same is true of a merchant cash advance: this is because where there’s no loan underwriting, you can expect funds faster.
But you still must consider how outsourcing invoice collection will affect your client relationships; the factoring company will be the one that oversees their collection and contacts your customers.
For maximum flexibility, choose spot factoring so you can finance receivables only when you need to, down to a single invoice.
The unique feature of invoice financing is that, unlike installment loans, it depends on your customers’ credit (as well as your own.)
Remember: This form of borrowing is only an option if you and the financing company can actually rely on your customers to pay what they owe you.
Get Funds Fast with a Merchant Cash Advance
A merchant cash advance or MCA allows you to sell a portion of your business’s projected future revenues to a lender so you can receive a lump sum to meet current expenses.
Advances of $2,500 to $250,000 are available, and funding can be almost immediate.
Instead of an interest rate, you’ll pay a factor rate that typically ranges from 1.14% to 1.18% (similar to invoice financing).
Payments fluctuate with your sales volume and will be automatically deducted from your merchant account daily.
Technically, a merchant cash advance is not a loan and does not have to be repaid if your business goes under, so it might be a good choice if you’re in dire straits.
But like a loan, you’ll still need to provide merchant processing statements and bank statements to determine how much you qualify for.
Your personal credit might be factored in, too.
Depending on how much time you have to repay the loan, the APR can be quite high.
If your factor rate is 1.2 and you borrow $50,000, you’ll repay $60,000. That’s $10,000 in interest.
Repay the loan over 12 months and you have a high but not unreasonable APR of 20%.
But repay the loan over 2 months and the APR is sky high.
If cost is a factor for you, read on for fast business loans that are less expensive.
Personal Loans Are Processed Faster Than Business Loans
You might be wondering why we included personal loans in this list of fast business loans, but we have several good reasons.
A personal loan for business could be a good solution to your fast cash needs, especially if you have a high personal credit score that will make it easy to borrow at a low rate and a limited business credit history that prevents you from getting a business loan.
You may be able to borrow up to $100,000 with a repayment period as long as 7 years and an APR of 4% to 36%.
The terms will depend on the lender, your creditworthiness, the amount you’re borrowing, and the loan length.
The riskier the loan, the higher the APR.
You may also pay an origination fee of 1% to 6% of the loan amount. That fee will be subtracted from how much you can borrow.
Personal loans are typically approved in as little as 24 hours and funded in as few as four days, so while they aren’t the fastest option on this list, you could still apply for a loan Monday and receive the proceeds by Friday.
What’s more, personal loans have minimal fees and a relatively easy application process compared to small business loans.
You won’t have to provide profit and loss statements, business tax returns, or a business plan, and it won’t matter how long your business has been in operation.
Instead, you’ll need to provide your driver’s license, bank statements, pay stubs and/or W-2 forms, personal credit score, and personal tax returns.
But beware: You’ll be comingling your business and personal finances, which can get tricky down the line.
What will happen to your household finances and your personal credit score if your business can’t repay the loan?
The lender will hold you personally liable for repayment, which could lead to worst-case scenarios such as draining your own savings, declaring personal bankruptcy, and tanking your personal credit for years to come.
Tread carefully with personal loans for business, but do keep them in mind.
Not-So-Fast Business Loans to Avoid
We’re not gonna lie, getting a business loan won’t always be as quick and easy, especially if you apply directly through each lender one at a time.
The options below are to be avoided – they’re not considered to be fast business loans, perhaps due to a lengthy application process, slow verification, or a waiting period before borrowers can access the funds.
Traditional Term Loans Will Take Longer
If your business needs to expand or purchase expensive equipment, a business term loan can provide the financing you need.
You can borrow up to $1 million depending on your company’s needs and financial condition and secure funding for your small business in as little as 48 hours.
These loans typically have terms of 1 to 5 years and interest rates of 7% to 30% annually.
The application process can be lengthy, but a major advantage of these loans is that they have few usage restrictions.
Term loans are available through banks, credit unions, and alternative lenders, and payments may be due weekly or monthly.
The payments may be easier to afford than the payments on a short-term loan since you’re spreading them out over a longer period.
Some term loans come with a variable interest rate rather than a fixed one, which means you’ll need to understand how the lender calculates the variable rate, how much your payment could fluctuate, and how often if market interest rates change.
Your business may qualify for a term loan even if it isn’t yet profitable as long as it has other markers of financial strength.
Acquisition Loans Don’t Happen Overnight
Buying a business probably isn’t the first thing you think of when you imagine your company needing money fast, but sometimes an opportunity to expand or buy out a partner or competitor comes up that you weren’t anticipating.
A business acquisition loan can make help you seize that opportunity by providing funding of up to $5 millionin as little as 48 hours.
Interest rates can be as low as 3%, and loan terms can be as long as 25 years.
The application process can be lengthy, however, so if you want to get financing quickly, you’ll need to have all the information lenders require ready to go.
You’re most likely to secure business acquisition funding quickly if the target has strong cash flow, profitability, little to no debt, and a good credit score.
You’ll also have to prove that the target business is a wise investment.
The biggest drawback with an acquisition loan are that you may need collateral and a down payment of up to 50%.
If you’re acquiring a business, the seller will sometimes offer financing, which can be quicker and easier to secure than bank financing since you don’t have to prove that the business you want to buy is a good purchase.
Seller financing also offers some reassurance that the business’s current owner expects it to continue to be profitable.
Most SBA Loans Are Not Quick
A Small Business Administration (SBA) loan can be a great way for your business to secure financing if it’s having trouble getting approved.
This loan’s government backing encourages lenders to take risks on marginal borrowers that would otherwise be turned away.
SBA loans can be for amounts as high as $5 million, with interest rates of 6% to 13% and repayment terms as long as 25 years.
However, there’s nothing fast about most SBA loans.
It can take 30 days or longer to obtain financing this way. Both the application and approval processes are lengthy.
Only consider an SBA loan when you don’t need the money in a hurry.
There is one exception to though:
The SBA Express Program Guarantees Quick Business Loans
Or at the very least, you’ll get a response to your application within 36 hours.
SBA Express loans are available for up to $350,000.
Your loan could have a fixed or variable interest rate capped at 6.5% over the prime rate for loans of $50,000 or less (and 4.5% for loans of more than $50,000.)
Some Small Business Credit Cards Are Faster Than Others
Want a credit card to cover a short-term cash crunch?
Even if you get instant approval, you’ll probably be waiting for 7–10 business days to receive your new business credit card in the mail.
And if the bank decides to manually review your application, you’ll be waiting even longer — and you may not even get approved after all that waiting.
However, if you already have a card with plenty of available credit, it will give you instant access to money.
Your best choice for emergency purposes is a card with no annual fee, a low ongoing APR, and a high credit limit.
Just be aware that if you need cash, you’ll pay hefty cash advance fees.
And if you use more than 30% of your credit limit, a high credit utilization ratio may drag down your credit score, making it harder to get the best financing in the future.
While a credit card can provide money quickly, its relatively high interest rates and open-ended repayment schedule can send your business into a debt spiral if you don’t commit to paying far more than the minimum balance each month and retiring the debt quickly.
If you don’t already have a card on hand and must rely on a new one, some card issuers will provide a card number immediately after approval before you’ve received the physical card.
A few issuers offer rush delivery on new cards, for a fee.
Another tip: If you aren’t instantly approved, call the credit card company immediately and offer to provide whatever information they need to give you a quick decision.
Fast Business Loans In A Nutshell
Funding a small business can be challenging — not just in the beginning, but anytime something unexpected occurs.
When it does, fast business loans can be a smart alternative to raiding your personal savings or liquidating a retirement account, which may compromise your long-term financial security.
Paying interest on a loan for a few months or even a few years may be a better solution, especially if you have good credit and receive a low interest rate.
Quick business loans can provide extra cash to pay employees while ramping up for a busy season, help finance day-to-day operations, or make it possible to scale up and take your business to the next level when presented with a large order.
Getting a quick business loan can also help when you need to make a major purchase such as updating your company’s computer systems.
In other words, fast business loans aren’t just for emergencies.
But if you find yourself needing one, you can relax a bit knowing that you can browse your options and compare lenders here any time.See Loan Options