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Maybe your equipment decided to break this week after years of faithful service or a business partner has a great proposition and has made you an offer you can’t refuse. For whatever reason, your business needs support and needs it soon.
This guide looks at where you can find it and what’s the best strategy to go around the problem.
Unfortunately, with traditional banks it can take weeks. It depends on the loan type, what your business does, your credit score and on how much you need to borrow, so it’s really difficult to give an unambiguous answer, but if you’re in a hurry, they’ll probably be unable to help.
Things are different with digital-only lenders. They make a point of offering quick and simple application processes and of letting you know whether you’ve been accepted or not as soon as possible. They often use “alternative” methods to speed up your application and look not only at your credit record, but also use algorithms, smart tech and Open Banking to get a fuller picture of your business finances.
In most cases, they’ll be able to give you a decision within 24 hours, regardless of your credit score. The downside is, in most cases, they’ll be more expensive and offer you higher rates than those you can get with a traditional bank.
Digital lenders that offer same-day decisions normally do unsecured business loans. Securing a loan takes time, because the lender has to check how much your asset is actually worth, so if you need a fast business loan it is probably not your best bet.
The most typical solution is a short-term loan, with which you can usually borrow up to 1 month worth of revenue for up to 24 months.
Alternatives that can also be arranged quite quickly online include invoice financing (where you borrow against your business’ unpaid invoices) and merchant cash advances (where repayments are made in the form of a percentage of your business’ card takings).
Here’s what a typical journey towards an instant business loan looks like:
Online application processes tend to be relatively straightforward, but there are a couple of things you need to watch out for in order to make sure you don’t waste any time and get a fast business loan:
There are different factors you can look at to pick your lender. Try to establish in advance which is important for you:
A business loan is suitable for exceptional circumstances – when you need money because, say, an outstanding opportunity presents itself, or something goes wrong unexpectedly. If your cash flow is irregular and you need more-constant support, you may want to consider other options.
A business credit card, for example, will allow you to borrow the exact amount you need month by month. If you pay the sum back within the billing cycle, you won’t have to pay any interest at all, so it may turn out cheaper than a short-term loan. Some credit card providers also offer quick and hassle-free application processes and you may be able to get the card in a few days.
A business line of credit also works similarly. You typically won’t have an interest-free period, but it’s more flexible than a loan and you’re likely to be offered a higher credit limit than with a credit card.
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