Table of Contents
- Can You Really Get “Instant” Business Loans?
- Fast Business Loan Options
- Applying for Fast Small Business Loans
When financing your small business, sometimes you don’t have the time to wait weeks for a bank to process your loan application.
Fast small business loans help you solve this headache. You can get affordable funding as fast as same day—and there are multiple options available to suit your needs.
The process is easy. You just need to know what choices you have, what you need to apply and how to get approved for the right terms.
Can You Really Get “Instant” Business Loans?
It’s difficult to imagine getting tens of thousands of dollars deposited into your bank account within hours. But with the emergence of the online lending marketplace, it’s possible to get a near-instant business loan.
Fast business loans come in many forms. You can secure large and small principal amounts, and some have unique structures that can appeal to businesses in certain industries and stages of growth.
The type of online loan you pursue will determine how fast you can gain access to the funds. Some products, like a merchant cash advance and short-term loan, feature a fast-tracked application and underwriting process. In certain circumstances, you can secure capital the same day you apply. Others, like business term loans, require more due diligence on the part of the online lender. But the process is still streamlined. Generally speaking, borrowers can expect to receive a lending decision within 24 to 48 hours with the funds deposited the following day.
Online lenders process applications and distribute funds much faster than traditional lending institutions. But how are they able to service quick business loans? For one, they’re not held to the same regulations that banks are. As a result, online lenders don’t have to check-off as many boxes and go through as much red tape when vetting an applicant. Second, online lenders require less paperwork. Some even offer no-doc business loans, drastically cutting down the time it takes for an applicant to complete an application and a lender to process it. Third, technology is interwoven into the fabric of the online lender business model. Applications are handled entirely online. Lenders can securely connect to applicant accounts and assess creditworthiness. And advanced computer algorithms take thousands of data points into account to make a sound lending decision within minutes.
How Can Online Lenders Work so Fast?
Online lenders process applications and distribute funds much faster than traditional lending institutions. But how are they able to service quick business loans?
For one, they’re not held to the same regulations that banks are. As a result, online lenders don’t have to check-off as many boxes and go through as much red tape when vetting an applicant.
Second, online lenders require less paperwork. Some even offer no-doc business loans, drastically cutting down the time it takes for an applicant to complete an application and a lender to process it.
Third, technology is interwoven into the fabric of the online lender business model. Applications are handled entirely online. Lenders can securely connect to applicant accounts and assess creditworthiness. And advanced computer algorithms take thousands of data points into account to make a sound lending decision within minutes.
How Do Speed and Convenience Affect Cost?
The tradeoff for this speed and convenience is higher rates and shorter terms. Because online lenders take less time to vet an applicant and work with a broader spectrum of small business owners, they take on more risk.
While a small business owner can secure a loan fast, they’ll be required to pay off the loan sooner and at a higher interest rate than they would through a traditional lender. Even if you have a solid business credit history, expect your interest rate to be at least 5% more than it would be for a bank loan.
Small business tip: If you have strong enough credit history and sales records to be approved for bank loans, make sure to weigh your options. Applying for one takes time, but if approved, it will save you in interest. Determine whether you need funding now, or if it’s worth waiting to get a bank loan.
Small business tip: If you have strong enough credit history and sales records to be approved for bank loans, make sure to weigh your options. Applying for one takes time, but if approved, it will save you in interest.
Determine whether you need funding now, or if it’s worth waiting to get a bank loan.
Fast Business Loan Options
If you’re looking for fast business financing, you have plenty of options. The right choice for you will depend on the amount you need, your creditworthiness and business profile.
Do You Qualify?
Online term loans are a direct alternative to bank loans. They offer high principal amounts and extended repayment terms, although both are capped lower than what you’d find with a big bank.
You can borrow up to $500,000 and pay it off between 1 and 5 years, depending on your creditworthiness.
Credit history will also determine your interest rate, which starts slightly over bank loans at 7%. Unlike banks, however, you can get these fast business loans in as little as 24 hours.
They’re great for any substantial business expense, including commercial real estate or launching a new product.
Do You Qualify?
If you need to borrow a large amount of money and need it quickly, short-term loans could be your best bet.
Short-term loans can get you up to $500,000 deposited into your bank account within hours. The larger amounts of funding are perfect for commercial real estate, equipment upgrades, hiring more employees and more. They can also be used to refinance existing debt or to get over cash flow delays caused by late-paying customers.
A standard short-term online loan will start at a 10% interest rate for qualified borrowers and terms generally fall within the 3- to 18-month range.
Business Lines of Credit
Do You Qualify?
If flexibility is what you need, a business line of credit is a great option. They allow borrowers to withdraw only as much funding as they need from a pre-approved credit limit, up to $500,000.
Interest is only paid on what you take out, and rates start at just 8%. This is much lower than what many high-limit business credit cards offer, which is a similar solution for revolving capital needs.
Think of a business line of credit as a loan you have on hold. If you have an emergency or have recurring cash flow needs, you have immediate access to funding. After you pay it back between 6-36 months, you can take out money the next time you need it. It’s like having an instant business loan at your fingertips.
Accounts Receivable Financing
Do You Qualify?
Accounts receivable (AR) financing, sometimes referred to as “invoice financing,” refers to the practice of selling unpaid invoices in exchange for an advance worth up to 80% of their value.
Small businesses with slow-paying customers know all too well how devastating late payments can be for managing one’s cash flow. AR financing can advance you up to 80% of those invoices. This fast business financing option can be deposited into your account in less than a day, and you’ll only pay fees until your customers make their payments.
Instead of paying an interest rate, these fees are calculated using a factor rate. Let’s take a look at an example of AR financing with 15,000 at a 1.03 monthly factor rate:
Invoice Amount: $15,000
Advance Amount: $12,000
The lender charges a monthly factor fee of 1.02 (2 percent of the total receivable value) until the invoice is paid in full.
Monthly Factoring Fee: $450/month
It takes the business owner’s customer 90 days (3 months) to repay the invoice.
Cost of Financing: $1,350
Rebate Owed to Business Owner: $1,650
In this example, $450 is deducted from the reserve each month an invoice goes unpaid. This can add up if your customers drag their feet, so make sure to consider this before applying for invoice financing.
Merchant Cash Advances
Do You Qualify?
While not a traditional loan, merchant cash advances (MCAs) provide a lump sum of cash (up to $500,000) that must be repaid over a term, with interest.
The key difference between a term loan and an MCA is that the latter does not have to be repaid by making monthly debt repayments. Instead, MCAs are gradually paid off via ACH payments or through a percentage of every debit or credit card transaction being sent to the lender.
Like AR financing, MCAs use factor rates to determine your cost of borrowing. Rates start at 1.14, and payments are drawn either daily or weekly until you pay off the original balance plus the lender’s fees.
MCAs are a great, fast business financing option if you need to cover emergencies or basic expenses, such as payroll, on short notice.
They’re also great for borrowers who don’t qualify for other quick business loans because of limited/ poor credit, lower revenues or a short time in operation. Often, an average personal credit score and solid business performance are all you need to acquire a merchant cash advance.
Do You Qualify?
Equipment financing is a great fast business loan option for businesses within industries that are reliant on having the latest, most dependable equipment to operate effectively.
If a vital piece of machinery breaks down or you need a new piece of equipment to grow your business, it can get you up to 100% of the value in as little as 2 days.
Interest rates start at just 8% and you can repay the loan over a longer term than many other quick business loan options.
The equipment itself is used to secure the loan, making it a solution for businesses that have little to no collateral available.
SBA Express Loans
Do You Qualify?
Think of SBA Express loans as a middle ground between bank loans and the fast small business loans from online lenders we’ve mentioned. You get a bit of the best of both worlds.
If you can wait about a month to get funding (which is still much quicker than most bank term loans) and can qualify, applying for an SBA loan is a great option to finance your business.
Interest rates are maxed out at 6.5% over the prime rate, making them much more affordable than other alternatives. The SBA does this to give an affordable option to small business owners who don’t qualify for bank loans.
They do this by guaranteeing a portion of the loan, in this case, up to 50%. This reduces the risk to lenders, opening up opportunities to businesses who otherwise wouldn’t have them. This does mean, however, that eligibility requirements are more strict than they are with alternative lenders.
Consider Express loans if you think their terms match your business’s funding needs.
Applying for Fast Small Business Loans
Offering quick, same-day business loans means online lenders must streamline the application process. This means less work for you, and less time worrying about when you can get the money you need.
Take Fast Capital 360’s process, for example. We work with many of the best online lenders, offering a marketplace where we can take your application and shop around for you to ensure you get the best deal. It’s simple, and the whole process only takes 4 steps.
Step 1: Answer a few basic questions to tell us about your business history and finances. Step 2: Tell us about you so we can determine your eligibility. Step 3: Connect your bank account so we can verify financial information. Step 4: Get your money deposited directly into your bank account, sometimes within hours.
Step 1: Answer a few basic questions to tell us about your business history and finances.
Step 2: Tell us about you so we can determine your eligibility.
Step 3: Connect your bank account so we can verify financial information.
Step 4: Get your money deposited directly into your bank account, sometimes within hours.
Since you need your money fast, make sure to have everything you need on hand before applying. This ensures you don’t have to go back and forth putting documents together, cutting into time that could be spent approving your application.
Having the following available will help you complete the application and finalize the funding process if you receive an approval:
- Proof of ID and address
- Last 4 months of bank statements
- Tax returns
- Voided check
- Balance sheet, income and P&L statement (required for Term and SBA loans)
Depending on the strength of your application, you could have your funding within hours.