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Updated on Wednesday, December 12, 2018
Whether an important piece of equipment breaks down or you need to stock up on seasonal inventory, a fast business loan may be the way to go. Every day you wait to receive the necessary funds to successfully operate your business, your company can lose money.
Fortunately, there are online lenders that understand that time equals money, and, as a result, will expedite their applications. Funds are then released in a timely manner, sometimes even within 24 hours.
What kind of loan meets your needs?
The first step in your search for a quick business loan is to determine which type of loan is best. Many online lenders offer the following types:
- Short-term loans. Short-term loans typically have repayment terms of up to 12 months. This is a good option if you’re looking for a lump sum with a reliable repayment schedule. With a short-term loan, you can increase your marketing efforts, update your computer systems and even purchase additional inventory.
- Short-term lines of credit. Also commonly referred to as an open-end credit, a short-term line of credit gives the borrower access to a set amount of funds that are pre-determined by the lender. The borrower may then withdraw cash from the line of credit as needed, instead of simply taking out one lump sum, as with a short-term loan. This type of funding works well for companies that need to make payroll or cover their quarterly taxes, but don’t have the immediate operating income on hand to meet the expense.
- Equipment financing. Equipment financing allows you to free up your working capital by providing the funds needed to purchase or lease equipment that is essential to the running of your business. Almost any type of equipment is included in this type of loan, whether it’s used or brand-new.
- Invoice factoring. Invoice factoring allows you to sell your invoices to a lender in exchange for immediate cash. This is an excellent option if your business is made up of customers who pay invoices at a later date, such as the clothing industry. The lender will look at the customer’s ability to repay, since they are the ones responsible for paying the bill. This is the opposite of more traditional loans, which would require your company to have a good credit history in order to qualify for funds.
- Merchant cash advance. A merchant cash advance gives business owners the opportunity to obtain an advance on their future earnings, typically their credit card sales. You pay the money back through a percentage of all new sales. You may want to consider this option if you need to replace inventory that is in high demand, or you want some short-term capital to renovate your storefront. Be warned: These types of “loans” can be very expensive.
How to qualify for the loan of your choice
Once you know which loan works best for your business, you need to make sure you qualify before you submit an application. Each lender has its own requirements, but here are a few of the common qualifications:
- Credit score. Companies like OnDeck Capital list a minimum credit score of 500 as part of their qualifications, while BlueVine requires a personal credit score of 530 for invoice factoring and 600 for a business line of credit. Others, such as Kabbage and National Funding, don’t have a specific minimum credit score.
- How long you’ve been in business. Expect lenders to take a look at how long you’ve been in business. The required length of time ranges from six months to two years, with one year being the most common.
- Amount of annual sales. In order to determine if your company can pay back a business loan, the lender will need to review your annual sales. OnDeck Capital and National Funding both have a $100,000 annual sales requirement, while Kabbage only requires half that amount. Rapid Finance breaks down its qualifications to $5,000 in sales per month, which comes to $60,000 a year.
- Bank statements. Bank statements are another commonly requested item. Make sure you gather your company’s three most recent bank statements before you begin your application.
- Additional documents. While not as common, some organizations, like Rapid Finance, require applicants to present additional documents. These include a government-issued photo ID, a voided check from your bank account and your last three credit card processing statements (for merchant cash advances).
- Industries served. Although companies like OnDeck Capital serve more than 700 industries, you can’t get a quick business loan if your industry isn’t on the list of industries served. Typically excluded industries include religious organizations, adult entertainment industries, boarding houses, fortune telling businesses, firearm vendors and drug dispensaries.
5 of the best business vendors offering quick loans
BlueVine offers both invoice factoring and lines of credit, and provides quick approvals with funds being disbursed to applicants within hours. Those who opt for a bank wire at a fee of $15 will receive their money the same day, while ACH transfers are available the next day for free.
The company funds between $5,000 and $250,000 to businesses that meet its qualification standards. It will look at your personal and business credit history and your company’s current cash flow, and also consider how likely your customers are to pay their bills.Business owners will need a credit score of 600 and above to qualify for a business line of credit and a credit score of 530 and above to qualify for an invoice factoring option. Businesses can also receive a higher credit limit if they are willing to connect their accounting software with their BlueVine account.
Kabbage cares more about your business performance than it does your credit score. Its main qualifications include being in business at least a year with $4,200 in monthly sales. Applicants can apply for as little as $500 or as much as $250,000 in short-term loans or invoice factoring. Instead of an APR, Kabbage charges companies a monthly fee of one-sixth of the total loan amount on six-month loans, one-twelfth of the loan amount on 12-month loans, as well as an additional undisclosed monthly fee.
The best part about using Kabbage is how quickly it makes funds available after approval. Customers who use their PayPal accounts will receive their money within minutes, while borrowers who wish to have their money deposited into a checking account will get the cash within three business days. If you take advantage of the Kabbage Card to access the funds in your line of credit, you can also use the card to make purchases anywhere Visa is accepted.
OnDeck Capital offers two loan types: short-term loans and lines of credit. With the short-term loans, borrowers can apply for as much as $250,000 at a simple interest rate as low as 9% with an origination fee between 2.50% - 4.00% for a first loan, 1.25 to 3% for a second loan and 0 to 3% on a third loan. Terms range from three to 12 months.
Should you prefer a line of credit, you’ll have the option of borrowing up to $100,000 at an APR as low as 13.99%. There’s a $20 monthly maintenance fee and repayments are automatically deducted from your business bank account on a weekly basis. To qualify, you’ll need to have been in business at least one year with annual sales of $100,000. You’ll also need to be a majority owner with a personal credit score of 600 or higher. Once you’re approved, you can get your funds in as little as one business day.
National Funding allows customers to apply by phone or online and receive a decision within minutes. Funding is then made available within 24 hours. The company offers both small business loans of $5,000 to $500,000 for those who wish to grow their businesses, as well as equipment financing and leasing of up to $150,000 for those who need new equipment to keep business running smoothly.
Merchant cash advances of up to $250,000 are also an option. This type of financing doesn’t require any collateral or have any hidden fees or costs. National Funding even approves merchant cash advances on the same day you apply. Although the company has an astounding 60 percent approval rate, you’ll still need to meet its qualifications. These include being in business for one year, providing three months of bank statements and showing annual sales of $100,000 or more.
Fora Financial keeps things simple with a one-page application that only requires uploading a few bank statements. Approvals are made within 24 hours with funds being transferred just 72 hours after that. Borrowers can choose between a small business loan or the merchant cash advance, both of which are available in amounts up to $500,000.
As an added incentive to make additional payments on your loan, the company offers a prepayment discount of up to 10 cents on the dollar. Fora Financial also offers the following financial products to meet the needs of your company: businesses lines of credit, SBA loans, equipment loans, inventory loans and bridge financing.
The bottom line
If your business needs money fast, you’ll still want to take the time to research each lender and their available offers to get the best deal. Consider the length of time to funding, the APR and the daily, weekly or monthly repayment amount. If you can afford the loan, it might be exactly what you need to take your business to the next level.