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4 Types of Quick Business Loans for Immediate Funding

05 September 2019 | 0 comments | Posted by Matt Smith in Money Talks

Types of business loans

Does your company need quick business loans? Not everyone needs fast funding, but it can be very beneficial for business owners who are in a cash crunch. If you don’t have time to wait for months to fund your operations, quick business loans can be processed within 24 to 48 hours.

There are different types of quick business loans, and you can choose one depending on your needs and goals. Here are the top four quick business loans you can choose from.

1. Short-term loans

If you need working capital ASAP, you might want to consider a short-term business loan. However, you must ensure that you can repay it within 3 to 18 months, depending on the terms of the loan. Alternative lenders can fund your business in as little as 48 hours. Keep in mind that a short-term business loan can be more expensive than long-term loans. And since the repayment period is shorter, the borrowing limit will not be as high as long-term loans.

Short-term loans are best for financing unexpected expenses. It’s also viable for business owners looking to seize profitable business opportunities. For example, you can use the funds from the loan to purchase much-needed equipment, make seasonal sales push on peak seasons, or purchase inventory to fulfil client orders.

Even though the interest rates are higher than traditional loans, the extra revenue can offset the cost you’ve paid for the loan.

2. Equipment financing

If you’re applying for a loan to purchase equipment, equipment financing provides you with fast cash to buy much-needed equipment to run your company. Equipment financing is best used for large equipment purchases. The loan generally covers the following: furniture, fixtures, vehicles, machinery, etc.

Equipment financing is a type of loan that provides you with a lump sum so you can buy or lease equipment. You generally don’t have to put up collateral for an equipment financing because the hardware you’re looking to purchase secures the loan.

With term loans, lenders highly consider your bank statements, credit score, and business history to determine the terms of the loan. But with equipment financing, lenders mainly rely on the value of the equipment you’re going to purchase.

3. Merchant cash advance

If a majority of your transactions is done through credit/debit cards, you may qualify for a merchant cash advance. A merchant cash advance (MCA) enables you to obtain a cash advance against your future sales.

Lenders will give you a lump sum within 24 hours, and instead of a fixed repayment term and interest rates. The payment will be automatically deducted from your daily card transactions. The deductions will continue until the balance is paid in full.

A merchant cash advance is technically not a loan, but rather a cash advance against your credit card sales. The advantage of an MCA loan is that the payments depend on your transactions. If you’re having a slow month, you won’t have to go out of your way to repay the loan.

However, you may still need to provide bank statements and credit card statement so lenders can determine how much money you can advance. Your credit may be examined, as well. It’s important to remember that this convenience comes at a price. The APR of a merchant advance can be expensive compared to other types of loans.

4. Invoice financing

If your company has pending invoices, invoice financing is a great way to access fast cash by leveraging those invoices. Slow-paying customers can cause cash flow problems which can be detrimental to your business. Without enough cash flow, you won’t be able to fulfil orders and pay for expenses. With invoice financing, you don’t have to wait for your customers to increase your working capital.

Invoice financing, or also referred to as accounts receivable financing, is an excellent solution for cash flow problems due to late-paying customers. With invoice financing, you can sell your pending invoices to third party companies (called Factors) at a discount.

The invoices serve as collateral for the loan, similar to equipment financing. Factoring companies will then give you money upfront – up to 90% of the total invoice value. Once your customers pay, the factor will provide you with the remaining percentage, minus transaction fees.

Quick business loans to finance immediate expenses

As you run your company, there will be times when you need immediate access to funding. Applying for fast business loans is an excellent alternative than purging your business and personal savings on unexpected expenses.

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Recommended reading

If you enjoyed this post and have time to spare why not check out these related posts and dive deeper down the rabbit hole that is financing your business

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