In this article:
- What is an Instant Approval Loan?
- What are the benefits of an instant approval loan?
- How do I qualify for an instant approval loan?
- How do I get the best rates on an instant approval loan?
Many small businesses end up in situations where they need a quick infusion of funds to keep their company going, or they need to take advantage of an opportunity and donât have time to wait for a traditional approval process to be completed. In these situations, small business owners need to know how to get the funds they need quickly, without the hassle of a long and drawn-out loan application process usually required by traditional lenders. Here’s everything you need to know about instant approval loans for small businesses.
There Are Many Reasons Your Business May Need a Loan Quickly
There are several reasons you might need fast business loans to cover your business financing needs.
Youâre waiting on customer payments. You may be waiting on customer payments on outstanding invoices. If they are late in paying, you might need cash for a short period of time before you get payment from your customers on your accounts receivable. An instant loan can help you weather periods of uneven cash flow.
You need to purchase equipment. Your existing equipment might break and need to be replaced quickly, and you donât have time to apply for loans with longer application processes. You may not have time to apply for standard equipment loans.
You have other funding gaps. You can use instant approval loans to refinance existing debt, pay operational expenses, or increase your working capital.
What Is an Instant Approval Loan?
An instant approval loan is a type of financing that allows you to get funding quickly, often within 24 hours. These loans are typically approved based on your business’s revenue and ability to repay the loan rather than your credit score. Most lenders will have their own repayment terms, interest rates, and eligibility requirements, so it’s important to compare your financing options before deciding on a loan.
What Are the Benefits of an Instant Approval Loan?
There are several benefits that come with getting an instant approval loan, including:
Quick funding. The biggest benefit of an instant approval loan is that you can get funding fast. In many cases, you can get approved and receive the funds from your loan within a business day.
No collateral. Instant approval loans typically don’t require collateral, which means you won’t have to put up business or personal assets to secure the loan.
No minimum credit score. Because instant approval loans are approved based on your business’s revenue and ability to repay the loan, you don’t need a minimum credit score to qualify.
Flexible repayment terms. Instant approval loans often come with flexible repayment terms, which can make it easier to repay the loan without putting too much strain on your business’s finances.
What Are the Drawbacks of an Instant Approval Loan?
There are a few potential drawbacks to taking out an instant approval loan, including:
Higher interest rates. Because instant approval loans are considered to be high-risk, they often come with higher interest rates than traditional bank loans.
Short repayment terms. Instant approval loans also usually have shorter repayment terms than traditional bank loans, which means you’ll need to repay the loan more quickly.
Limited funds. Instant approval loans typically come with smaller loan amounts than traditional bank loans, so they may not be able to cover all of your funding needs. You might be able to tap more of your equity or get a higher loan amount if you go through a more thorough underwriting process.
How Do I Qualify for an Instant Approval Loan?
There are a few things you’ll need to qualify for an instant approval loan, including:
Minimum monthly revenue. Most instant approval loans require that your business bring in a minimum amount of revenue each month. This requirement is generally between $5,000 and $10,000 (or annual revenue of $60,000 – $120,000). Businesses with higher revenue will qualify for larger loan amounts.
A strong credit history. While not all instant approval loans require a strong credit history, it’s still important to have good credit to qualify for the best rates and terms.
A solid business plan. When you apply for an instant approval loan, you’ll typically need to provide a business plan outlining how you’ll use the funds from the loan. This helps lenders determine whether or not you’re a good candidate for a loan.
An established business. Most instant approval loans are only available to businesses that have been in operation for at least a year. This requirement helps lenders ensure that you have a solid track record of success.
An explanation of the need for the funds. Although instant loan lenders do not monitor the actual use of the funds, they will often ask for an explanation of why you need the loan.
How Do I Apply for an Instant Approval Loan?
Applying for an instant approval loan is typically a fairly simple process. Most loan programs will allow you to apply online in just a few minutes through their online application process.
When you’re ready to apply, you’ll need to provide some basic information about your business, including your revenue, expenses, and credit history. You’ll also need to provide a business plan outlining how you’ll use the loan funds. Some lenders will receive bank statements from your business bank account.
Once you’ve submitted your application, the lender will review your information and make a decision on whether or not to approve your loan. If you’re approved, you’ll typically receive the funds from your loan within 24-48 hours.
How To Increase Your Chances of Approval
Applying for a small business loan can be a daunting task, especially if you don’t have the best credit. However, there are a few things you can do to increase your chances of getting approved for quick business loans.
Check your credit score and report. This is one of the first things lenders will look at when considering you for a loan. Make sure there are no errors on your credit report that could drag down your score.
Have a strong business plan. Itâs not enough to have a few lines jotted down on a piece of paper that you call a âbusiness plan.â Lenders want to see that you have a well-thought-out plan for how you’ll use the loan funds. Be prepared to answer questions about your business goals, financial projections, and repayment plans.
Choose the right type of loan. There are many different types of small business loans available. Choose one that best suits your needs and offers the most favorable terms.
Shop around. Don’t just go with the first lender you find. Compare rates, terms, and conditions from several lenders to ensure you’re getting the best deal. Alternative lenders (outside of traditional financial institutions such as banks or credit unions) are more likely to offer instant business loans. Having several loan options to compare will increase your chances of getting the best rate.
By following these tips, you can increase your chances of getting approved for a small business loan.
What Are Some Alternatives to Instant Approval Loans?
In addition to getting a fast decision on a business loan, you may also want to consider these additional types of business funding:
Merchant cash advances. A merchant cash advance is an instant approval financing option that’s based on a projection of your business’s future sales. With this type of financing, borrowers receive a lump sum of cash that they can use for any purpose. You’ll then repay the loan with a portion of your future credit card sales. These types of loans typically carry very high-interest rates.
Invoice Factoring. Invoice factoring is similar to a merchant cash advance, except that the cash you receive is based on actual sales, rather than a projection of future sales.
Credit Cards. Business credit cards carry higher limits than personal credit cards and allow for cash advances against your credit limit.
Business lines of credit. A business line of credit is a type of financing that gives you access to a set amount of funds that you can use as needed, similar to a maximum balance on a credit card. You’ll only be required to repay the funds that you actually borrow, making this type of financing very flexible. Your payment amount will vary each month based on the outstanding balance, and the payments are typically interest only for a certain period of time.
Which Instant Approval Loan Is Right for Me?
The best type of instant approval loan for your business is the one that will meet your specific needs and financial situation.
Typically, online lenders like Biz2Credit are the best place to look for fast financing, and if you reach out to their specialists they will be able to rapidly assess your needs and help you find the right loan for your business.
While SBA loans may have the most favorable terms, they have the longest approval times, so for fast funding, they are likely not the right option.
Alternatively, if you canât find a loan that is right for you, a merchant cash advance, invoice factoring, business line of credit, or business credit card may be helpful.
How Do I Get the Best Rates on an Instant Approval Loan?
There are a few things you can do to get the best rates on an instant approval loan, including:
Shop around. The best way to get the best rates on an instant approval loan is to compare offers from multiple lenders. This will help you find the lender with the lowest rates and best terms for your needs.
Check your credit score. Your credit score is one of the biggest factors that lenders consider when determining loan rates. If your credit score is low, you may not qualify for the best rates on an instant approval loan.
Have a solid business plan. When you apply for an instant approval loan, you’ll typically need to provide a business plan outlining how you’ll use the funds from the loan. This helps lenders determine whether or not you’re a good candidate for a loan. Having a solid business plan can help you get better rates on your loan.
What Slows Downs the Loan Process?
There are a few things that can slow down the loan process, including:
Applying for too many loans. If you apply for multiple loans, it can take longer for business lenders to process your applications. This is because each lender will likely pull your credit report, which can show up as inquiries on your report.
Not having all of the required documentation. When you apply for a loan, you’ll typically need to provide a variety of documents, such as tax returns, financial statements, bank statements, and business plans. If you don’t have all of the required documentation, it can slow down the loan process.
Applying for a loan with bad credit. If you have bad credit, you may not qualify for an instant approval loan. This is because lenders typically require a minimum personal credit score or business credit score for these types of loans.
Applying for a loan without collateral. If you don’t have any collateral to offer, you may not qualify for an instant approval loan. This is because lenders typically require collateral for these types of loans. Loans without collateral requirements will carry higher interest rates.
If youâre looking for fast approval on a small business loan, youâve come to the right place. Biz2Credit can approve your application in as little as 24 hours. Not sure what kind of financing you should choose? Biz2Credit can help with that too. The only thing you need to do is gather your supporting documents and get in touch so we can help you with your business needs.
If youâd like to read more about how a loan can help you with short-term cash flow needs, read about how Manu Rampal used business financing to weather the pandemic.