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Updated on Thursday, March 28, 2019
When you have an immediate business expense but not enough cash to cover it, you most likely want access to financing as soon as possible. Fortunately, many alternative lenders offer same-day business loans for entrepreneurs in a pinch.
Traditional banks and credit unions can take weeks or months to approve a business loan application. If your expenses can’t wait that long, you can apply online for a business loan from an alternative lender and be approved in a few hours. But it may cost you — the tradeoff for speed with an online lender may be higher rates than those you could find at a traditional bank.
Keep reading to find out more about same-day business loans and where you can find fast funding when you need it.
Types of same-day business loans
Business owners can find same-day financing in several forms. Here are a few products that you can expect to see from alternative online lenders.
Business owners can take out short-term loans to cover emergency expenses and pay back the balance within three to 18 months. Applications for short-term loans usually require minimal paperwork, which speeds up the approval process. You may be required to offer collateral or submit tax returns and balance sheets to be approved.
- Your personal credit score may not be a deciding factor, as some lenders consider bad-credit applicants.
- You would be able to make immediate changes without reaching into business funds.
- Higher interest rates than long-term loans
- Quick payment schedule — daily, weekly or monthly — may be difficult for your business to handle.
Business line of credit
A line of credit allows business owners to withdraw funds from a set amount on an as-needed basis. You would only need to pay back what you actually borrow, and the full amount would become available again after the debt is paid back.
- Although interest rates could be high if you have less than perfect credit, interest would only apply to the amount you withdraw from your credit line, unlike a loan’s lump sum.
- Collateral or a personal guarantee could be required to secure a business line of credit, but once you open your line, you would have access to funding whenever you need it.
- Lenders may charge a maintenance fee to keep the line open even if you haven’t drawn on the account.
- In addition to a set payment schedule, which could be as frequent as daily, the lender may suddenly require you to pay the balance in full.
Business credit card
Like a business line of credit, a business credit card would allow you to cover expenses as they come up. Business credit cards are often a popular option for owners of startup businesses, as well as those who cannot secure other types of financing. The short-term loans and lines of credit we mention early may be off limits to startups.
- It may help you build your credit profile.
- You have the potential to earn perks such as reward points.
- Higher interest rates than other types of loans.
- To avoid accumulating large debt, you should use a business credit card for expenses that you can pay off in one year.
Merchant cash advance
Merchant cash advances are different than traditional loans but are among the fastest business financing products available. A merchant cash advance provider would purchase a portion of your future receivables, such as credit card sales, in exchange for a lump sum of money. The cash advance provider would then take a percentage of your daily sales until the full advance is paid back. You would make a larger payment on days when your sales are high.
- Merchant cash advances do not require a personal guarantee or collateral.
- No fixed repayment schedule.
- You could see cash in your account in a matter of hours, but interest may be high.
- Although there is no fixed repayment schedule, the provider typically takes a percentage of your daily sales. That could have an impact on your daily cash flow and may be reason enough to be wary of a merchant cash advance.
- High cost — costs can climb because merchant cash advances, unlike small business loans, are not regulated in the same way.
Invoice financing, also called accounts receivable financing, allows business owners to borrow money against invoices. An invoice financing company would collect on your outstanding invoices, taking a percentage of each invoice plus a fee, in exchange for immediate funding.
Invoice factoring is slightly different but still lets you use invoices as collateral for financing. A factoring company would purchase your invoices, then collect payments from your customers before paying you the remaining balance. You may lose your ability to interact with customers if you choose invoice factoring, whereas invoice financing may allow you to continue collecting payments yourself.
- Low credit requirements: Because your invoices count as collateral for this type of financing, lenders may be less concerned with your credit score.
- Flexibility: Depending on your agreement, you may be able to submit as many or as few invoices as you wish.
- Like other types of financing on this list, costs may be high and if customers are late paying their invoices, it could lead to even higher fees.
- Customers may be confused if a third party is collecting on invoices rather than you, the business owner.
Where to find same-day business loans
Many online business lenders advertise fast time to funding. We chose five online lenders where you could find immediate financing. Our selection was based on the following criteria:
- Fast turnaround: The lenders advertise same-day approval and funding within 24 hours.
- Reputation: Lender credibility influenced our determination.
- Low requirements for time in business. Lenders require borrowers to be in business for one year or less.
National Funding offers small business loans from $5,000 to $500,000 to qualifying business owners. After applying, you could receive funding in as little as 24 hours. National Funding does not require collateral or a down payment from applicants, and there’s no obligation to accept a loan offer. You could use a loan from National Funding to pay bills, maintain working capital, purchase inventory or cover other day to day expenses. National Funding requires just one year in business and $100,000 in annual sales.
OnDeck provides short-term and long-term business loans up to $250,000 with repayment terms spanning 3 to 12 months, as well as lines of credit up to $100,000. If approved, you could receive funding within 24 hours. OnDeck requires applicants to have one year in business, $100,000 in gross annual revenue and a personal credit score of at least 600. Your loan amount and interest rate would depend on your business performance and your personal or business credit profile. To pay back your loan, you would need to make fixed daily or weekly payments that OnDeck would automatically deduct from your business bank account.
Kabbage offers lines of credit up to $250,000 for eligible business owners. If you need a smaller amount of cash right away, Kabbage could approve a line of credit up to $200,000 in minutes. Kabbage asks for at least one year in business and either $50,000 in annual revenue or $4,200 in monthly revenue in the last three months. 6– or 18-month repayment terms are available for a line of credit. You would need to pay back either one-sixth or one-twelfth of your total amount each month, depending on your terms, plus a monthly fee ranging from 1.5% to 10% of your principal, which would be based on your business performance.
Reliant Funding provides small business loans and merchant cash advances between $5,000 and $250,000 with repayment terms spanning six to 12 months. Many Reliant Funding customers are approved in a few hours and receive funding within the next 24 hours. To qualify, you need at least one year in business and at least $100,000 in annual sales, or about $10,000 per month. Reliant Funding would review your credit score, but it would not be the deciding factor. Reliant Funding also does not require collateral or a personal guarantee for most borrowers. Once approved, you can use financing from Reliant Funding to cover any business expense.
Everest Business Funding
Everest Business Funding offers merchant cash advances from $5,000 to $1,000,000, issuing funding to qualifying business owners within 24 hours. You can use a merchant cash advance from Everest Business Funding to buy equipment, cover payroll or hire more employees, among other expenses. Everest Business Funding requires just three months in business, $5,000 in monthly revenue and a personal credit score of at least 500. To collect repayment, Everest Business Funding would take a percentage of your daily credit card transactions. Be sure you can afford fluctuating daily payments before committing to this financing product.
The bottom line
Sometimes, you may not be able to put off certain business expenses. When you need money to cover an immediate cost, consider same-day financing options from alternative online lenders. In most cases, you could be approved in a matter of hours and see funds in your bank account in one day.
Though you may be in a rush to receive funding, make sure you fully understand the product you’ve chosen. Many fast financing options also have rapid repayment terms, which the lender may automatically collect from your daily sales or business bank account. Read the fine print of your loan agreement before signing.
If you receive an offer from a lender that you feel comfortable working with, as well as interest rates and repayment terms that work for your business, you could receive money right away to cover business expenses. Same-day business loans can help you prevent an unexpected expense from derailing your operation.