Maintaining cash flow, managing employees, and covering bills can make running a small business challenging. Time can often be of the essence when you need to pay for these costs, making a fast business loan appealing.
Traditional loans may require extensive documentation, such as a business plan, years of bank statements, and proof of collateral to get funding. And in some cases, approval and accessing funds can take weeks or more.
A fast business loan, on the other hand, can sometimes be funded within 24 to 48 hours with less documentation than traditional business loans require.
Keep reading to learn more on fast business loans, including what they are, the different types of fast business loans, and how to find one.
Key Points
• Fast business loans offer rapid approval, often within 24 to 48 hours, making them ideal for urgent financial needs.
• These loans are typically provided by online lenders with streamlined applications, reducing paperwork and processing time.
• Fast loans may come with higher interest rates compared to traditional bank loans due to the convenience and speed of disbursement.
• Many fast business loans are short-term, designed for immediate needs like cash flow gaps or emergency expenses.
• Types of fast business loans include SBA Express loans, business lines of credit, equipment financing, and merchant cash advances.
What Is a Fast Business Loan?
A fast business loan is a small business financing option designed to provide quick access to funds, often within 24 to 48 hours. While these loans offer quick approval and turnaround, this convenience may come with tradeoffs, such as higher interest rates and service fees.
Types of Fast Business Loans
How fast you can get your funds and the costs involved will depend on which type of small business loan you opt for. Here are some fast business loan options you may want to consider.
SBA Express Loans
The U.S. Small Business Administration (SBA) offers a variety of loan programs catering to different business types and funding needs. Although some SBA loans may involve a longer application process, if you’re after quick-funding business loans, the SBA Express program could be a solution. Eligible businesses may request up to $500,000 and receive approval from the SBA in as little as 36 hours after applying.
SBA Express loans are issued by a network of SBA-approved lenders. The SBA guarantees to fund up to 50% of the loan in the event that the borrower defaults. This reduces risk to the lender and allows them to offer more flexible qualification criteria.
Business Lines of Credit
Having cash on hand can be important for covering both day-to-day operations and emergency expenses. Instead of applying for financing whenever costs arise, a business line of credit allows you to access cash (up to an approved limit) whenever you need it.
Once approved by a lender, you are allocated a maximum credit line and can withdraw funds up to that threshold to pay your bills, purchase inventory, or fill in gaps for working capital. You only pay interest on the amount you borrow and, once you repay those funds, they are available to borrow again.
Equipment Financing
Equipment is integral to many businesses’ operations, whether it’s concrete mixers for a construction business or computers for an accounting firm. However, purchasing machinery and other vital equipment is often too costly for businesses to pay for out-of-pocket.
If this is your situation, equipment financing may be a route to consider. This type of small business loan may charge less interest than conventional options, since the equipment itself is typically used as a form of collateral. Repayment terms are determined by the individual lender but usually span a few years.
Getting an equipment loan is typically a faster process than obtaining traditional funding, though it can vary by lender.
Recommended: What Is Business Collateral?
Short-Term Loans
A loan’s term is the amount of time it will take for the borrower to pay the loan off completely by making regular payments. For short-term business loans, this duration can range from a few months to up to 18 months.
Short-term business loans are often a faster route to cash than long-term financing options. Since the repayment terms are shorter, lenders usually view short-term business loans as less risky, making their requirements less stringent.
Easier qualification helps speed up the process so that businesses can act quickly to maintain cash flow, buy inventory, and address other unexpected costs.
Invoice Financing
Delays in payments from customers and clients can lead to cash flow issues. Those, in turn, can delay you when you need to act on investment and growth opportunities. Instead of standing by, many businesses can borrow against outstanding invoices owed to them through a practice called invoice financing.
With invoice financing, the lender loans you a large percentage of the face value of your unpaid invoices. As your customers settle their debts, you receive the rest of the invoice amount, minus the lender’s fees.
This quick funding option is typically better suited to businesses that sell wholesale or let customers buy goods or services on credit. Otherwise, they may not have enough invoices on hand to finance.
Merchant Cash Advance
A merchant cash advance (MCA) can be a solution for a business that needs capital immediately to cover cash flow shortages or short-term expenses. With an MCA, a financing company gives you an upfront sum of cash that you repay using a percentage of your debit and credit card sales, plus a fee. Often the way the financing is structured is that MCA provider automatically deducts a daily (or weekly) percentage of your debit and credit card sales until the advance is repaid in full.
This quick access to cash generally comes at high cost. MCA companies charge a factor rate plus fees. When the factor rate and fees are converted into an annual percentage rate (APR) and compared to other business financing options, MCAs tend to cost considerably more.
Recommended: Emergency Business Loans
Exploring Fast Business Loans
Fast business loans provide a convenient solution for businesses needing quick access to funds. While they offer rapid approval and flexible credit requirements, they often come with higher interest rates and shorter repayment terms. Careful consideration of costs and benefits is essential before opting for this financing option.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
What is the fastest way to get a business loan?
The fastest way to get a business loan is through online lenders or alternative financing platforms. These lenders often offer streamlined applications and quick approval processes, sometimes within 24 to 48 hours. Options like business lines of credit, merchant cash advances, or SBA Express loans also provide faster access to funds.
Can I get a loan for a new business?
Yes, you can get a loan for a new business. Options include SBA loans, business credit cards, online lenders, and microloans. However, lenders often require a strong business plan, good personal credit, and sometimes collateral, as new businesses lack established revenue and financial history.
Do I need a good credit score to get a fast business loan?
Yes, a good credit score increases your chances of getting a fast business loan, as lenders use credit scores to assess risk. Many online lenders offer quick loans but may charge higher interest rates for lower credit scores. Strong credit helps secure better terms and faster approval.
Photo credit: iStock/gorodenkoff
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