Is your business undergoing unforeseen circumstances or are you looking to invest in its future growth?
If you need quick access to business funding to seize these business opportunities, then you might consider applying for fast business loans.
Below is a quick guide for what business owners need to know about them — from what they are to how to apply.
What Are Fast Business Loans?
A fast business loan is a kind of business loan that has a faster application process, assessment and payout of funds. Depending on the lender this whole process could take a few hours to a few days to complete.
This is thanks to a streamlined online application and a fast approval process.
It’s normally offered by online or alternative lenders and typically offers more flexible lending criteria, making it convenient too. Not to mention, there are multiple loan options available.
With fast business loans you get a chance of getting access to funds quicker and easier compared to traditional business loans.
What Are the Different Types of Fast Business Loans?
Businesses have changing financial needs. As such, lenders offer multiple fast business loan options to better cater to their clients.
Below are a few kinds of fast loans that Australian businesses can access:
Fast Secured Business Loans
A secured business loan requires you to give assets as collateral in exchange for financing.
Some assets you can use are the following:
- Real estate
How much you can receive in secured loans depends largely on the value of your collateral, your business’s financial position and credit history.
But be aware that if you don’t repay the money on time, you can default on the collateral. This means the lender will have rights over the asset.
If they sell it and the amount is still not enough to cover what you owe them, you’ll still have to pay the remaining balance.
Business Lines of Credit
A business line is similar to a credit card.
This gives you a certain amount of funds that you can draw from. However, you only pay interest on the funds you draw.
You can keep using the line as long as you keep making timely repayments and don’t exceed your limit.
Bad Credit Business Loans
For small businesses still trying to build credit or long-standing businesses with a bad credit history, bad credit business loans are a potential option.
Lenders assess other criteria to determine if you are eligible for a business loan. However, you can usually expect a higher interest rate.
Merchant Cash Advances (MCA)
With MCAs, you get an upfront lump sum that you’ll have to repay using a part of your debit and credit card sales.
MCAs should be a last resort since they can hurt your cash flow. Another downside to this is that they tend to have higher rates.
How to Apply for Fast Business Loans
The best loan you can get for your business depends on what you need to finance.
But below is a general step-by-step loan application process you can expect regardless of the type of loan you need:
Step 1. Ready Your Requirements
Because of flexible lending criteria, not all providers ask for the exact same requirements.
But it’s a good idea to prepare the following documents for a quick application so you’re ready regardless of what they ask for:
- Basic business information
- Business launch paperwork
- Business licences
- Credit history
- Company tax returns
- Bank statements
- Profit and loss statements
- Online software information
- Loan history
Step 2. Research and Compare Lenders
Look for a lender that can provide finance for your needs, has relatively reasonable repayment options, and offers competitive interest rates.
Also, consider if you need a secured or unsecured business loan. Unsecured business loans will usually have higher rates.
You can even look for platforms that connect you to lenders that let you undergo obligation-free pre-approval.
Watch out for lenders that are pushing you to go through their loan application process without allowing you to research more.
Step 3. Apply for the Loan
Once you’ve found a lender, it’s time to apply. For a quick approval process, many lenders let you apply online.
Read the contract very carefully, and don’t be afraid to ask for any clarifications before accepting it.
After that, you can wait for the funds to arrive within the next few days.
Step 4. Repay the Loan Amount
Whether you’ve availed of a secured or unsecured business loan, you should repay it according to the terms you agreed to.
This can last for a few weeks — or shorter if you availed of a short-term business loan. A small business loan also tends to have short repayment times.
When Should You Consider Getting Fast Business Loans?
In general, fast business loans can be a good option for any business that needs funds quickly while maintaining its cash flow.
Aside from contingencies, below are some specific situations where your business finance might need a quick boost:
New Company Expenses
If you need working capital for new business needs, a fast loan can help you seize new business opportunities effectively. Moreover, unsecured loans won’t demand collateral.
Time-Sensitive Business Opportunities
Some deals can’t wait. An agency offering you a limited-time bulk sale might turn to other small business owners if you don’t answer by the fast-approaching deadline.
Unsecured business loans let you receive funds quickly without exchanging physical assets as collateral.
Other Quick-Cash Needs
You might need quick funds for business-related needs during a seasonal slump. This can be to cover one-off expenses, payroll, and continuing marketing campaigns.
Unsecured business loans can finance your needs without risking collateral.
Frequently Asked Questions
A small business loan can do wonders for a business’s future. Below are some questions to help you decide if you need one.
Can I Repay My Business Loan Early?
It depends on the lender. Make sure you choose one that offers no early repayment fees for repaying the loan early. So, if you think you can go above and earlier than your monthly repayments, you won’t have to worry about being penalised.
How Much Can I Borrow With a Fast Business Loan?
Depending on the lender, secured and unsecured business loans can usually range from $5,000 to $2,000,000.
Fast business loans can be a valid option to help small businesses grow quicker and/or maintain their cash flow.
If you need a quick cash injection, then you can consider a fast business loan.
If you don’t want to risk collateral, you can opt for an unsecured loan — although it usually comes with higher rates.
Some of the main benefits of this are that it’s hassle-free, doesn’t require extensive documentation, and has more flexible eligibility criteria.