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As a small business owner, you likely already realize the challenges of getting a same-day business loan, especially if you own a new business or startup. In fact, youâre probably familiar with how difficult it is to get any business financing. So seeking loan approval with a 24-hour turnaround might seem out of the question. But getting instant funding for your business is actually fairly straightforward.
Why a Same-Day Business Loan?
Small business owners often wait weeks or months to learn if theyâve met the eligibility requirements for a traditional small business loan through a bank or a Small Business Administration lender.
But small businesses sometimes need fast funding. Emergencies happen, or a once-in-a-lifetime business opportunity could come along that necessitates immediate funding. A vital piece of expensive equipment you need to operate your business could break. Or you might have the opportunity to get merchandise at a discounted rate. Then again, you might have a chance to buy a prime piece of real estate that many business owners have on their radar. Another potential scenario is the rare chance to buy a competitor out.
There are a thousand reasons you might need fast business financing. Thatâs usually when the idea of a same-day business loan initially comes to mind.
Are Same-Day Business Loans a Good Idea?
Youâll usually want to evaluate a same-day business loan from some of the same perspectives as you would traditional loans.
First, youâll need to determine how much financing you need for your business. Then, youâll want to know where your FICO credit score stands so you can understand what to expect in terms of interest rates and the business loan options available to you. Finally, youâll want to compare lenders who offer same-day business loans.
You will usually need to seek fast funding with an alternative loan provider instead of a traditional lender. Alternative lenders are usually online lenders that specialize in same-day business loans.
But itâs essential to find the best same-day business loan for your needs and evaluate each online lender to get the best deal for your business.
Online lenders sometimes have higher interest rates, to begin with. Depending on the type of loan, you might also have to pay your loan back sooner than with other types of loans.
But sometimes a same-day business loan makes sense to keep your business moving and growing so it can reach its full potential.
Pros and cons of same-day business loans
Itâs important to understand the benefits and disadvantages of getting a same-day business loan. Doing so will prevent you from making a poor business decision and help you choose the right loan for your company.
Same-day business loan pros
- Expediency without all of the road bumps. Online and alternative lenders offer you access to the business financing you need more quickly than traditional lenders, often within 24 hours. Fast funding is something they do every day. Their application processes are more simplified, so there are fewer surprises that can stall your business plans. Whether you have an emergency or an opportunity that affords your business a competitive advantage, same-day financing can get money in your hands quickerâwhen you need it.
- More lenient underwriting and credit requirements. The underwriting guidelines through traditional lenders usually require stellar credit. Moreover, traditional lenders often require established business credit, whereas same-day business loan providers are laxer and often look at only your personal credit score. Even then, their minimum credit score requirements are usually lower than traditional lenders. Banks and the SBA will also require extensive documentation. That is part of the reason a standard business loan can take so long. Traditional lenders also require that you have more time in business than an alternative lender does, and they typically also require higher minimum revenue. Online lenders usually wonât ask for exhaustive documentation, and their requirements are more flexible regarding how long youâve been operating your business and what your credit history reveals. This is particularly helpful if you are a newer business that hasnât been operating for a long time. If your credit isnât all it could be, itâs still likely that an online lender has a business loan that can meet your needs quickly.
- Many financing options. Fast business loans come in many forms. Online lenders offer financial packages ranging from short-term loans to lines of credit and more. Each potentially offers fast funding with a tailor-made solution to meet your business needs.
Same-day business loan cons
- A same-day business loan may cost more. This is especially true if you lack some of the borrower requirements or if you fall lower on the credit score The type of loan you get can also influence how much a same-day business loan will cost you. Some fast business funding has higher interest rates and additional fees. Added to the complexity is that same-day business loan costs will vary from lender to lender. This brings us toâ¦
- Youâll need to be more careful when choosing a same-day lender. Fly-by-night alternative lenders pop up every day on the internet. Some are scams, while others charge so much interest and fees that it may not make getting a same-day loan worth it. But there are better same-day lenders with the financing options you need. For instance, Biz2Credit has been a provider of fast funding for small business owners for 15 years. Theyâre one of the few online veteran lenders you can trust to get you the best rate possible for your fast business loan. They also offer better terms than many other online lenders. It pays to research and choose the best lender for your needs.
- Same-day business loans are often shorter-term loans. So the loan might cost you more, and you may have a shorter time to repay the loan. Ultimately, you want the loan to benefit your business rather than result in enormous debt youâre unable to pay back, so make sure you have a clear understanding of your finances and what the loan will be able to help you achieve.
Types of Same Day Business Financing
There are many types of small business financing that can provide you with same-day funding.
Short-term loans are the most like traditional financing. With a short-term loan, you borrow a specific loan amount, receive it up front, and repay it with interest in regular installments. Of note, some business loans have variable payments, and youâll have less time to pay the loan back too: some only give you 18 months to pay back the loan.
Many types of businesses use equipment that is instrumental to their operations. If the equipment breaks down, sometimes it becomes necessary to get a business loan to replace it. Because the equipment purchased with loan funds is used as collateral to secure the loan, these types of loans often have similar terms to other secured loans, and online lenders are more likely to expedite the loan process.
Working capital loans
Every business needs a continuous flow of working capital to sustain financial health. A good rule of thumb is to have twice the amount of cash needed to cover your business expenses for a year. But sometimes businesses come up short, particularly newer businesses, seasonal businesses, or businesses going through a rough patch. In those cases, it may be beneficial to seek a working capital loan to meet those obligations and maintain a good relationship with your vendors and suppliers, customers, and employees.
Business line of credit
A business line of credit extends a credit ceiling from which you can withdraw funds. Some lines of credit are attached to a business credit card, but today, an increasing number of small business owners are able to get a business line of credit through an online lender. The advantage is that you have access to cash when your business needs it, and you only have to pay interest on the amount you withdraw. When you make a payment on the credit line, it resets like a credit card does.
Merchant cash advance (MCA)
A merchant cash advance provides a lump sum of money and allows you to repay it with a portion of your card transactions. You can often receive the funds within hours on the same day you apply for the MCA. The funds are then repaid by deducting a portion of your small businessâs future credit and debit card receipts. The downside is that interest rates for MCAs are often higher than traditional small business loans. But the credit score requirements are lower than with other types of loans, usually in the 500s. While traditional lenders might consider 500 to be a poor credit score, itâs often enough to secure MCA funding with an alternative lender.
Sometimes a business runs short of capital because its customers arenât paying their bills on time. Invoice factoring helps to bridge this gap by advancing a percentage of your businessâs outstanding invoices. This can help you avoid a disruption of your businessâs working capital. Once your customers pay your businessâs invoices, you can keep the remaining percentage, minus any fees the lender charges.
For example, you might find a lender who will advance you 80% of your businessâs outstanding invoices. When a customer finally pays you, 80% will go to the lender, and 20% minus any fees owed will go to your business.
Invoice factoring is a loan solution often used by business owners with little or bad credit because your credit score isnât taken into consideration when applying for an advance on your outstanding receipts and invoices.
What is the Process for Getting a Same-day Business Loan?
As with any business financing, understanding how the process works when applying for a same-day business loan can help improve your odds of receiving fast funding.
Evaluate your businessâs needs.
Consider whether you really need money now or if itâs possible to wait a little bit to receive your loan funds. The reason for doing this is that there could be lower-cost funding options, such as an SBA Express loan, that might work for your business needs if you donât need funding the same day. While SBA loans can take months, an SBA Express loan can sometimes offer you approval within 36 hours. But truthfully, itâs rare to receive approval that fast for an SBA Express loan and it usually only occurs when youâve been in business a long time and have stellar credit.
Know where your credit stands.
You always want to have an idea of what your credit score is when you own a business. Knowing what your credit profile will look like to a business lender also helps you to understand your funding options better as you evaluate where youâll apply for your business loan. Some lenders have stricter requirements than others, and some lenders will only loan money to business owners that meet their minimum credit score criteria. Knowing the lender guidelines regarding credit will help you avoid wasting time with a lender who might not approve your loan.
Follow lender guidelines and instructions.
Once you know which lender you want to use for your financing, follow their instructions carefully when filling out your loan application so that there is no delay in processing. While a lender might offer a same-day business loan, errors and mistakes on your part can delay the application process. One benefit of going with an alternative lender is having the convenience of filling out an online application.
Each lender has its own underwriting guidelines. One might only want your businessâs latest bank statements, while another might require a yearâs worth. Some loan providers might require other things too, such as your businessâs credit card statements, tax returns, profit and loss statements, balance sheets, cash flow statements, and more.
Other lender requirements might include a minimum annual or monthly revenue for your business or a minimum amount of time youâve been in business.
Itâs also important to understand that nearly all lenders, whether traditional lending institutions or online loan providers, sometimes require a personal guarantee when issuing a loan. A personal guarantee means that you promise to pay off your business loan regardless of whether or not your business is successful. Otherwise, a lender can pursue your personal assets if you fail to pay back the debt.
A same-day business loan is quite doable in todayâs business climate. Sometimes itâs necessary to get fast funding so your business can continue to thrive.
Itâs always a good idea to follow a lenderâs checklist to speed up your application and increase your chances of approval.
But overall, some online business lenders like Biz2Credit have a much more streamlined process and lenient underwriting requirements for business loans than traditional lenders do.
Just ask Danny Star of Website Depot. Danny reached out to Biz2Credit when he wanted to grow his business. He wanted to avoid the paperwork hassle and lengthy wait time he would get with a traditional lender. Biz2Credit was able to swiftly offer him a working capital loan to put his business plans into action.
Danny was pleased with Biz2Creditâs simple application process, friendly funding specialists, and favorable loan terms. He was also excited that Biz2Credit didnât require a credit check. He recommends that any business owner needing access to fast funding contact Biz2Credit. He credits their team for the amazing growth his business has experienced in such a short time.