6 Loan Options for Business Owners Who Need Money FAST
You don’t have to be a business owner to know the importance of having sufficient working capital.
10:04 26 February 2020
Quick access to working capital is crucial for small businesses. In fact, a lack of funding can break a small business. Without enough working capital, you wouldn’t be able to keep up with demand, afford daily expenses, and more.
Unfortunately, small business owners may find it challenging to apply for business loans from banks. It’s no secret that banks are very strict when it comes to approving loans. Even if you do qualify for a bank loan, it will take weeks or months before you can receive funding.
If you need cash in a pinch, bank loans may not be a good option. Alternative lending companies offer fast business loans specifically for business owners in need of fast cash. Here are six types of fast business loans for various business needs:
1. Bridge Loans
As the name suggests, bridge loans are best used for bridging cash flow gaps and addressing immediate business needs. You can use the funds to pay for unforeseen expenses, leverage unexpected business opportunities, and more. Businesses from various industries such as construction, restaurants, medical, hotels, etc. can all benefit from a bridge loan. The funds from a bridge loan can be transferred into your account within 24 to 48 hours.
2. Business Lines of Credit
If flexibility is what you’re looking for, you might want to check out business lines of credit. This type of financing solution works just like a credit card. So if you’ve used one before, then you already have an idea of how a business line of credit works.
Once your lender approves your application, they will assign you a predetermined credit limit and you can withdraw money as needed. In other words, you can withdraw money whenever you like as long as you don’t exceed your limit. Unlike traditional business loans, you don’t have to repay the entire credit limit. You only have to pay back the money you’ve withdrawn plus the interest.
3. Equipment Financing
Buying new equipment for your business can be expensive. Even if you have the money to purchase a pricey equipment upfront, it wouldn’t make sense to tie a huge chunk of working capital to a piece of equipment. This is where equipment financing comes in. Equipment financing is specifically created for business owners looking to purchase equipment, machinery, and even vehicles and furniture. The equipment you’re looking to purchase serves as collateral for the loan.
4. Business Term Loan
A business term loan is the most common type of loan. This financing program often has long repayment terms, often within two to five years. It also has low monthly payments, which is better for cash flow management. Once you’re approved of a business term loan, you’ll receive funding within three to five days. Make sure you have a strong business trade, as well as a good personal and business credit rating and positive cash flow.
5. Invoice Financing
Invoice financing provides you with working capital upfront in exchange for your pending invoices. In other words, you’re selling your outstanding invoices to third party companies. The funding company generally pays you 80% or 90% of the total invoice value upfront. They’ll give you the remaining 10% to 20% once your customers pay their dues, minus a small transaction fee.
6. Merchant Cash Advance (MCA)
If you still can’t qualify for any of the loans mentioned above, check out merchant cash advances. With a merchant cash advance, you’ll also receive a lump sum of cash upfront. You can repay the loan by withholding a percentage every time a customer purchases using a credit card. Unlike a traditional loan, you don’t have to repay the loan in fixed monthly payments. However, a merchant cash advance is usually more expensive which is why entrepreneurs consider MCA as a financing option of last resort. but true to being a fast business loan, you’ll receive the funds within 24 to 48 hours.