Small businesses often require capital. That's the lifeblood of any business. A business' cash flow is key because of its success. Fast business capital can help to save your company from falling behind your competition or from shutting your doors permanently.
Unfortunately, there aren't many options for small businesses to turn to for fast business capital. Seeing a bank may be the first and possibly smartest step as a financial loan will probably supply the least expensive option with the best terms. But this doesn't fulfill your business' requirement for obtaining “fast” capital.
Banks are historically slow in providing capital. Actually, they are able to take around 60 – 90 days only for an agreement. This is due to banks process where they've multiple officials and employees review your application. And despite that time, you could be declined. Banks approve less then 28% of all business loan applications. Imaging gathering all of the necessary paperwork (which banks need a lot of) simply to be declined.
But suppose you go through all barriers with the application process, wait months, get approved-then what? Then, you might want to wait another 2 – 30 days to really obtain the cash.
Alternative Lenders For Fast Working Capital
The choices for small businesses are restricted. Friends and family will most likely not be an option while you probably use these to get your business started in the to begin with. Again, banks take way too long but what if you are not “bankable?” Meaning, you have only been open for few years or your credit is detrimental enough, or you are considered a “high risk” industry.
The option that is left for fast business capital is the alternative business lending sector. This sector is made up of private alternative lenders, non-banks, which specialize in financing “non-bankable” businesses. You will get funding in under a week. These alternative lenders are very well versed with dealing with high risk companies that banks won't give loan to. They've established a lightning fast process of underwriting that's not determined by your credit score, enabling small businesses to secure capital fast.
But with this convenience can come a cost and you ought to tread lightly and do your homework. Alternative lenders could be expensive, depending on the funding option.
Fast Business Capital Options
Assuming you won't want to wait over 8 weeks to secure funding for the business, there are many funding options that alternative lenders offer. The speed to receive funding for every type varies. As does the requirements and terms for each.
Working Capital Advance:
The fastest option and the easiest to try to get is really a Working Capital Advance. The price of borrowing will be 15-45% which is for any relatively short term; 2-18 months in most cases. This quick funding choice is not considered a loan, instead it is an advance in your future receivables.
Many small businesses follow this path due to multiple reasons for example:
- Have a bad credit score score
- Have been around a short time
- Need to solve an instantaneous problem
- Make an order that returns a lot more revenue than what the capital cost
Although the price for any Capital Advance is high, it is a viable choice when used correctly and definitely alleviates the problem of not being able to get a bank loan.
Business Line of Credit:
Getting approved and funded with a business line of credit is another quick funding option. You may be able to receive funding within Twenty four hours after approval. A business line of credit carries more stringent requirements compared to the capital advance. As such this type of funding is a touch more difficult to receive.
Equipment Financing:
If you are in need of fast business capital for an equipment purchase, this may be for you. The funding for your equipment purchase usually takes about 1 week.
The equipment you finance is then used as collateral, as such we help you to get approval compared to a bank. If you had been to default around the loan, the gear could be seized and sold to recoup any loses.
Short Term Loan:
A short term personal loan is one of the closest options that mirror a traditional bank loan. It has an APR and it is paid monthly, usually having a Two to five year term. This type of loan will require a credit rating of at least 640 and you will have to be running a business at least 2 years to be eligible.
SBA Loan:
SBA loans typically take the longest out of all the alternative lending options, usually 4 weeks, maybe even longer. It takes slightly longer and it has stringent requirements since the loan is partially guaranteed through the government. It includes a longer term, up to 10-years and a better APR.
Can Alternative Lenders Provide Fast Business Capital That Fast?
If your meaning of fast is 2-10 days then your answer is yes!
If you obtain an approval decision, that takes 2-24 hours, you are available to speak to the lender, and may supply the documentation required for fast business capital – application, newest A few months of business bank statements (more may be required with respect to the funding option) – you'll be able to get capital quickly.
What usually holds up the process is you, the business owner. Be prepared with the necessary documentation (which is a smaller amount than a bank would require) and you can receive fast business capital within days or even weeks. Again this depends on the type of funding you are searching for and therefore are qualified for.
Fast business capital is ideal to improve income, buy inventory, hire new people, expand, secure a new lease, buy supplies, make payroll, etc.