Running a small business means putting out fires and jumping on opportunities. Sometimes those emergencies mean you need an infusion of cash—yesterday.
If you need a business loan fast, here are five options that can put cash in your bank account within days, if not hours.
Business Cash Advances
Time to fund: Minutes to one week
If your business accepts credit cards and has healthy sales, you may qualify for an advance against future anticipated receipts. You’ll get funds very quickly—in as little as an hour. The advance will be repaid from withdrawals from future sales, with payments usually coming off the top of your sales on a daily basis.
But this convenience may come with a price. The cost, when calculated as an Annual Percentage Rate (APR), will often be 70 – 300% or higher. If you can leverage those funds to make more money, it may make sense, but be careful you don’t get yourself into a situation where your cash flow is compromised.
If you accept PayPal, use Square or are an Amazon merchant, those companies may offer you an advance directly at a more affordable cost.
Similar to business cash advances, cash flow loans analyze your bank statements and advance funds based on activity in your bank account. Interest rates are often lower than business cash advances but may be more expensive than other options.
Tip: Costs can be confusing, so use a business loan calculator to understand how much you’re really paying.
Time to fund: 2 days to 3 weeks
A term loan is a loan with a fixed repayment period. It often has a fixed interest rate as well. These loans are attractive because payments are predictable and interest rates are generally good as well. You may be able to get a term loan loan through your bank or credit union or online lenders.
Typically your business must be at least two years old to get one of these loans, and you will generally need a personal credit score of 650, though a few lenders may allow lower scores. A personal guarantee is often required as well.
Tip: Sometimes these loans are personal loans you can use for business purposes, and may be reported on your personal credit reports. If this is a concern, ask the lender before you apply.
Business Credit Cards
Time to fund: decision in minutes, card mailed within 2 weeks
Many entrepreneurs think of business credit cards as a convenient way to pay for purchases, but not necessarily as a way to access a line of credit. Don’t overlook them. If you already have a credit card, you can access your funds immediately. Interest rates on business credit card purchases average around 15%, so it’s not the cheapest way to pay for something over time, but it can be much lower than other fast funding options.
Keep in mind that if you use your business credit card to get a cash advance the interest rate may be high — 21% or more is common. A balance transfer is often a cheaper option than a cash advance. Balance transfer rates may be as low as 0%, though there will probably be a fee of 1 – 5% charged immediately. If your issuer offers you a balance transfer, you should be able to have those funds deposited into your bank account.
Tip: Consider using a business credit card instead of a personal credit card to separate business and personal purchases, and to help protect your personal credit from the balances you carry on your business cards. (This chart explains how major card issuers report business credit cards to the consumer credit bureaus.)
Time to fund: one hour to days
If one of your clients owes you money, you may be able to use a third party to get paid faster. We’re not talking here about your deadbeat client that just isn’t paying you, but a client that has good business credit but just takes its time paying invoices. (Large corporate clients and Fortune 500 companies often fall into this category.)
You’ll get a portion of the invoice up front, and the rest— minus the factoring fee— when the invoice is paid. There may not be a personal credit check, and if there is, the requirement will usually be low.
Tip: Check whether the financing is made on a “recourse” or “nonrecourse” basis. If the latter, you could have to repay the advance if the client doesn’t pay.
Time to fund: 2 days – weeks
If you need financing to purchase equipment, you can consider equipment leasing. When the lease ends you will have the option of purchasing the equipment you leased. If you own equipment outright, you may be able to get cash by using a “sale and leaseback” transaction where you sell the equipment back to the lessor and then lease it back.
Tip: Compare leasing options from the vendor or equipment manufacturer with alternative lenders to find the best deal.
This article was originally written on May 19, 2017 and updated on October 21, 2020.
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