Compare fast business loans for SMEs

Business is unpredictable and when you need to rapidly boost your cash flow, the last thing you need is to be waiting around for a big slow bank to do its thing.

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Nucleus Cash Flow Finance

Help your business grow with Nucleus Cash Flow Finance

If your business has been trading for at least 3 years, Nucleus Cash Flow Finance can provide the additional funds for your SME needs.

  • Borrow from £25,000 to £150,000
  • Once accepted, funds are issued the same day
  • No early repayment fee
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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.

How long should a business loan take?

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.

Which types of loans should I look at to get a quick business loan?

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).

How do same-day online business loans work?

Here’s what a typical journey towards an instant business loan looks like:

  • You apply online. You’ll be asked to provide information about you and your business, including some kind of financial statement (such as VAT returns or company accounts).
  • The lender runs its checks. Expect an identity check and a credit check at the very least.
  • Decision. The lender lets you know whether your application has been accepted and what rates it can offer. Many business lenders won’t advertise any rate in advance, because it all depends on your business’ circumstances, but even if they do, don’t forget those are only “representative” rates and not everyone will get them. If your business’ credit score isn’t great, you’re likely to be offered a higher rate.
  • The lender calls you. Most business loans require a phone call to define the details.
  • You get the funds. If everything goes as planned, you’ll get the funds within a few hours from the phone call. The whole process shouldn’t take more than a few days.

Tips to speed up the process

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:

  • Check the lender’s eligibility criteria. The FAQs section of the lender you’re considering is your best friend before applying. It’ll tell you how much it typically lends and to whom, so make sure your application is coherent with those criteria or, if you have different needs, move on to another lender.
  • Have all your documents ready. Also check which documents you’re required to provide and have them all ready. The more complete your application is, the quicker the decision is likely to be.
  • Consider a broker. A loan-matching service will be able to present you with a pool of possible lenders, making it easier to compare options. However, you need to be aware brokers usually can’t get you in touch with all lenders out there, only with those they have a partnership with.

Typical scenario

Stella owns a motorbike repair and restoration shop. One day, she hears someone is selling an old, rare Harley Davidson for £10,000. If she can buy it and repair it, she’ll be able to sell it back for 10 times the price. However, money’s a bit thin this month and she wasn’t expecting this extra expense, so she decides to look for a short-term loan.

  • Her business typically makes around £12,000 a month, so she decides to borrow £10,000 for 12 months. That should give her plenty of time to restore the motorbike and make it good as new, then find a collector who wants to buy it.
  • She needs to move fast or one of her competitors will get it. A traditional lender won’t get her the funds on time, so she applies with an alternative digital lender instead.
  • She is offered a 25% annual rate, so she’ll have to pay £12,500 back (in 12 monthly payments that will be around £1,050 each). This way, she can spread the cost. The repayments will impact her business’ profit for a while, but they’re still affordable.
  • She buys the bike, restores it and sells it back within nine months. As her lender doesn’t charge any fees for early repayments, she can pay the loan back three months early and save some money on interest.

How to compare quick business loans

There are different factors you can look at to pick your lender. Try to establish in advance which is important for you:

  • Eligibility criteria. Can you get a loan with this lender at all? Some lenders only work with businesses that have a certain annual revenue, or that have been operating for a certain period of time.
  • Speed. Many lenders will disclose how long it usually takes them to come to a decision, if they don’t, you may want to try a different lender that has speed as a top priority.
  • Rates. Obviously, the lower the better.
  • Fees. Does the lender charge any extra fees on top of the interest rate?
  • Overall cost. Rates and APRs can sometimes be a bit confusing, so it may be helpful to also look at how much the loan is going to cost you in absolute terms.
  • Early repayments. That’s especially important if, like our Stella in the upper box, you may get a return on your investment that would allow you to pay back the loan early. Can you do that? Will there be a fee to pay?

Alternatives to fast business loans

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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