Taking out a loan is what most business owners do in order to get funding for their enterprise.
How to Get a Quick Business Loan
There are many different ways to get a loan, and there are also plenty of institutions that you can approach to apply for one. But loan options vary widely when it comes to terms of repayment, interest rates, and so on. Even the processing speed depends on the kind of loan you are getting.
Some Reasons for Taking out a Business Loan
There are a number of possible reasons why a business owner might want to take out a loan. Some of them don’t have available funds on hand, which is why a loan is needed. Others do have the finances but are probably reserving it for some other purpose. In any case, here are some of the common uses for business loans, and the best types of loans to use in each situation.
Starting a Business
A large portion of business loans is used to start a new business. Most new entrepreneurs have bright ideas and ambitious plans but do not have the funds at hand to act on these plans. They also don’t have the business experience to qualify for traditional business loans. Personal business loans and business credit cards that do not have a lot of requirements are the best ones to use for this purpose.
Growing a business involves a lot of spending. You will have to acquire new real estate, put up a new building, hire new people, purchase new equipment, and so on. SBA loans are very useful for this purpose as they are designed specifically to help small businesses in various operations.
Take Advantage of Limited Time Offers
If you are offered a huge discount on a product or service that is very valuable to your business but don’t have the funds to spend on it at the moment, a loan can come to the rescue.
Cover Emergency Expenses
There might be times that you find yourself short on cash and you won’t have enough to make payroll or handle an unexpected equipment failure. For these emergencies, you might want to get a business line of credit. The flexibility of this type of business loan makes it an excellent safety net for your business.
Build Business Credit
If you are a new business owner and are planning on taking out a bigger loan in the future for major expansion, you can start getting smaller business loans now in order to build your credit history. If you always pay off these small loans on time, you will gradually improve your credit rating. Additionally, you can establish a good relationship with a trusted lender, which will prove to be useful for business later on.
How to Get a Business Loan Quickly
Different types of business loans take varying amounts of time to be processed. With some, you can have the funds transferred to your account within a couple of days. For others, it can take up to several weeks. If your need is urgent, as is usually the case for business loans, you need to know how to get a business loan quickly, and the following tips can help a lot.
Figure out the Type of Loan You Need
One of the most important tips on how to get a business loan quickly is to know exactly what kind of loan you need before you go out approaching lenders. Do your research so that you can figure out the best funding solution for your situation.
For starters, you will want to determine whether you need a term loan or a line of credit. While these types can both be helpful in funding a business, they work in entirely different ways. You will also have to consider repayment terms and interest rates, and choose whether you want a secured or unsecured loan. It can get confusing at first but if you work with experts like our team here at Booster Financial, the entire process will be a breeze.
Consider Alternative Lenders
Traditional lending companies like banks have very stringent requirements when it comes to lending money. They will have to verify all your financial details such as your credit score, business longevity, and so on. All the checking takes time and prolongs the application process. And if you have a less than stellar record, there’s a good chance that your application can get rejected.
Alternative lenders, on the other hand, have more lenient requirements. They also have a much faster approval and funding process. This is why they are the ultimate choice of business owners when the need for funding is quite urgent.
Keep Your Business Accounts Online
Technology has come a long way for many business processes. These days, you can store all your transactions and financial reports digitally. This is not only a huge convenience in running the business but it also lets you apply for loans faster and with less hassle.
With digital financial records, you can submit the needed reports to a potential lender with just a click of a button. Consequently, this means they can look over your documents and give you a decision on your loan much sooner. Additionally, having an organized online system for keeping business records will make it easier to update your records. This gives the lender a clearer vision of the performance of your business.
Prepare the Necessary Documents in Advance
Most lenders require pretty much the same kinds of documents so it would be a good idea to prepare these ahead of time rather than waiting for them to ask for them. First, you need to present a clear business plan that explains where and how you are planning to use the loan.
You also need to show your business records for up to two years prior to the date of application. If you have digital records of these, you can simply send them to the lender. Otherwise, you need to print them all out and put them in clearly labeled folders. This should include reports on business profits and losses, as well as tax returns.
Recommended Types of Business Loans for Quick Funding
We have already established that non-traditional lenders are the better option to explore for pressing business needs. But there are many kinds of non-traditional lenders and not all of them might be able to be a suitable choice. You need to examine each of them carefully so that you make the right decision on which one to apply for. Here are some of the most common ones you can consider.
Medium-Term Online Loans
These loans are excellent alternatives to SBA loans, if your business meets SBA requirements, that is. With a medium-term online loan, you can borrow up to $500,000 with a repayment period of 2 to 5 years. Interest rates vary from about 7% to 30%. They will check for credit scores but they are not looking for a high rating. Lenders can make your funds available within a few days.
Short-Term Online Loans
Compared to medium-term online loans, the loan amount with this type is lower and the interest rate is slightly higher. However, you don’t need to have an existing business or show excellent business performance to qualify. These loans can be for startups, and you can get the funds in just one day.
Business Lines of Credit
This is another quick funding option that can be accessible within a day. The biggest advantage that you can get from business lines of credit is the flexibility that it offers. You can use it whenever you want and just repay the amount that you have used. It can also be used for a wide variety of business purposes.
If your business funds are tied up in a lot of outstanding invoices, this type of business loan might be a good one to consider. You can get the money almost instantly, and you can borrow as much as the amount on your invoices. Invoice financing can tide you over while your clients have not yet paid their invoices.
This type of business loan is quite specific and can only be used for equipment purchases. Whether you are planning to get a new piece of equipment or upgrade an old one that you already have, equipment financing can help a lot. Processing and approval take about two days and the repayment period can be as long as 6 years.
Merchant Cash Advance
This is a catchall type of business loan that practically any business can apply for. MCA lenders do not really care much about how your business is performing or what your credit score is. You can get approval even with a credit score of just 550.
FAQs on How to Get a Business Loan Quickly
Is it better to borrow from a bank or from a non-traditional lender?
Bank loans come with the advantage of more security and lower interest, but if your priority is the speed of application and funding, non-traditional lenders are the better choice. Overall, you need to consider all the pros and cons of each type of loan so that you can make the best decision for your business.
What is the fastest amount of time that I can get a business loan?
Many alternative lenders can provide you with the funds you need within 24 hours of your application. They can approve you within hours and shortly afterward, the money can already be transferred to your bank account.
Can I get a business loan quickly even with a low credit score?
Yes, there are plenty of lenders that will not really mind a low credit score. Some of these types of loans you can apply for are a merchant cash advance, invoice financing, or business line of credit.
What is the typical minimum credit score needed to get a business loan?
For a traditional business loan, you will need to have a credit score of at least 680 in order to qualify. But for non-bank loans, you can get approval even if you have a credit score of just 600. Merchant cash advance lenders even give approval for borrowers with as low as 550 credit score.
What is the drawback to getting quick business loans?
Quick business loans obviously have the advantage of fast processing when it comes to both approval and funding. But yes, there is the drawback of having to pay higher interest on your borrowed funds. It is therefore very important to weigh your options carefully before you commit to any kind of business loan.
What are the usual reasons for getting a quick business loan?
Pressing needs are the most common reason why business owners decide to apply for quick business loans. This includes having insufficient cash flow to cover day-to-day needs, a sudden and unexpected need for equipment repair or replacement, or other similar emergency needs.
What is the fastest way to get a business loan?
On average, merchant cash advances have the fastest approval and funding time. Not only that, but they are also the easiest to avail because of the very lenient requirements. However, all this speed and convenience comes at a cost in the form of higher rates of payment.
It can be a bit tricky trying to figure out how to get a business loan quickly, especially if you have never done it before. Here at Booster Financial, we can lay out all the options for you and help you choose the best one for your particular situation. Each loan has its own pros and cons. In order to pick the right loan and make it work for your business, you need advice and support from trusted financial experts, and that is exactly what we do. Call us today for a free consultation and find out how we can help open new growth opportunities for your business.
Understand Your Options
Find out more about the different finance opportunities available in your area and get funded today!