Cash flow problems are a common and dangerous threat for many small business owners. But even if they’re able to maintain a reliable cash flow, it is still not always sufficient enough to put all their plans into action. In most cases, they would need some form of financing to cover unexpected expenses or help expand their business.
Banks are the traditional provider of business loans. But while they’re a good option to keep loan costs down, it can take months to get your money, plus they usually won’t lend to small businesses.
If your small business is in a financial shortfall and needs financing as soon as possible, here are some fast loan options that are worth considering.
Business Cash Advance Loans
Business cash advance loans are an advance on your business’s future sales. You’ll have to pay back that advance at a specified percentage of your daily future revenue along with origination fees. There is no set term of repayment, which means that your payments continue until you paid the fixed payback in full.
However, the total repayment amount may go anywhere from 9% to 47% more than the funded amount. Typically, you’ll be approved based on the following factors:
- Length of time in business
- Consistency of revenue
- Seasonality of the business
Invoice Financing
This type of financing is asset-based. But instead of providing any asset to secure funding, the invoices of your business will serve as collateral. Instead of waiting for your customers to pay for their invoices in full, you can borrow against those uncollected receivables. Typically, an invoice financing provider allows you to advance up to 85% of the value of your invoices. When your invoices are paid, you’ll receive the remaining 15%.
Unlike traditional business loans, you don’t have to deal with a long application process with invoice financing. You can get approval and the fund you need in a matter of days. Your invoices determine whether you’ll qualify for this financing. But depending on the lender, you might be required to provide the following:
- The invoices you want to finance
- Voided business check
- Previous business bank statements
- A copy of your driver’s license
Business Lines of Credit
A business line of credit is a revolving loan that allows you to borrow a set amount of money, ranging from $1,000 to $250,000. Once you’ve reached your credit limit, you can repay what you’ve used up to make the funds available again. Typically, you can pay back the line of credit at any time without any early repayment fees.
Most business lines of credit are also unsecured, meaning you don’t need collateral to qualify. So, it can come in handy any time your business experiences a cash flow problem or temporary dip in sales.
Equipment Loans
Purchasing equipment is one of the factors that can put a strain on your business’s cash flow. If you have to obtain, upgrade or replace some equipment necessary for your business to operate, equipment loans can be the perfect solution. It’s a form of business financing that you can use to purchase business-related equipment.
When you obtain an equipment loan, you’ll have to make regular payments, comprising the interest and principal over a specified period. The equipment you purchased will serve as security or collateral for the loan. In case of a default, it will be used to secure the balance of the outstanding loan amount along with any additional costs.
Online Installment Loans
Online installment loans are another option you can tap for your business. You can borrow a predetermined amount, which you’ll have to pay back in installments over a pre-agreed period. The term of the loan is typically within 12 months to 60 months or more. But the loan term, the loan amount, and interest rate may depend on the lender. That’s why it’s always best to shop around different lenders.
SBA Microloan Program
The Small Business Administration (SBA) offers a microloan program to small businesses. Through this program, you can borrow up to $50,000 with repayment terms until six years. The loan can be used to rebuild, repair or improve your small business. However, you might be required to undergo training as part of the application process or condition of approval.
Find The Right Loan For Your Business
There’s no one-size-fits-all financial solution for every business since each has different needs and goals. Remember that your choice of financing can have a significant impact on how your business will operate. That’s why you must find a loan that will support your business’s financial situation and vision.