LockieCurrie/GettyImages; Illustration by Hunter Newton/Bankrate
Key takeaways
- Fast business loans are a type of financing for business owners who want quick access to capital
- Fast small business loans can be unsecured or secured, and some lenders may require you to sign a personal guarantee
- Fast business loans are typically offered by online lenders, but there are other options such as SBA Express loans
Business loans come in many different forms. Some are easier to access than others, and both loan amounts and funding times vary by loan product.
If you’re a small-business owner who needs cash now, a fast business loan could be ideal. That said, it’s important to understand how it works and when it makes sense to get a small business loan before applying.
What is a fast business loan?
A fast business loan is a type of funding for business owners who want fast access to capital. Like any business loan, fast loans can be a lump sum of cash or a line of credit that you can draw from repeatedly. But instead of having to wait weeks, these loans offer quick online applications, minimal documentation requirements and approvals that can happen in minutes and funding that is in your account within one to three business days.
How does a fast business loan work?
You typically need to apply for a fast business loan through an online lender specializing in quick applications as well as fast approvals and funding. These lenders often have relaxed eligibility requirements and even offer fast business loans for business owners with bad credit.
Fast business loans can be unsecured or secured. If you aren’t eligible for an unsecured loan, you will have to provide an asset or assets, also known as business collateral. This can make it easier to get approved for a loan with better rates and terms, but your asset could be seized if you fall behind on the financing payments.
Some lenders also require you to sign a personal guarantee, which means you agree to accept personal liability for the debt if your company can’t make payments. This is a common practice, even for businesses registered as limited liability companies (LLCs).
What are fast business loans used for?
Fast business loans can serve various purposes. Here are seven ways you can use a fast business loan:
- Emergencies: A fast business loan can help address an unexpected financial crisis, such as equipment breakdowns or inventory losses, to avoid business closure.
- Cash shortfalls: Covering temporary cash shortages ensures bills are paid on time and avoids disruptions or negative impacts on credit.
- Seasonal / short-term borrowing: Loans can support businesses with seasonal fluctuations, aiding during slower periods.
- Unplanned expenses: Fast business funding provides a buffer for unforeseen costs that may impact cash flow.
- Disaster recovery: Aid in quickly rebuilding a business after a disaster.
- Time-sensitive opportunities: Capitalize on growth opportunities quickly with access to immediate funds. For example, you may have an influx of product orders but not enough capital to buy inventory to fill the orders.
- Debt consolidation: Debt consolidation loans can help you streamline your debt repayments into one loan. It potentially lowers your loan costs if the new loan offers faster repayment or lower rates than the previous loans.
Are you eligible for a fast business loan?
Each lender has its own set of eligibility requirements for fast business funding. Some lenders, like traditional banks and credit unions, typically want to see that your business has been around for at least two years and has sizable revenue of $250,000 and above. But it’s possible to find loans that only require six months’ time in business and an annual revenue of around $100,000.
You may be able to get a business loan with a personal credit score of 500, but it depends on the lender and the type of business loan. Most loans typically require fair credit and above.
Where to get a fast business loan
Online lenders are known for their fast funding times compared to traditional banks and credit unions. Here’s a look at a few of the top small business lenders that offer fast business loans, usually funding within 24 to 48 hours:
- OnDeck: OnDeck offers term loans up to $250,000 and business lines of credit up to $100,000 to fair credit borrowers. You can even get funding within the same day if you apply for the loan early during a business day.
- SMB Compass: SMB Compass offers nine types of business loans, including standard options like lines of credit and alternative loans like bridge loans and purchase order financing.
- Fundible: Fundible offers fast business funding business loans with high loan amounts of up to $6 million, same-day funding and some of the lowest criteria for eligibility on the market. You can qualify with a personal credit score as low as 500, according to a spokesperson.
- Fora Financial: This lender provides short-term loans of 18 months or less to borrowers with subprime credit. You can get up to $1.5 million in the form of a term loan or cash advance in which you repay the loan out of a portion of your future sales.
If you’d prefer to explore other options, consider an SBA Express loan, which typically comes with more favorable interest rates and repayment terms. Unlike other SBA loans, SBA Express loans are known for their swift response times, thanks to lenders making all decisions directly. Unfortunately, closing the loan and receiving funding can still take 30 days or longer.
Bankrate insight
To avoid having to take out a small business loan to cover short-term needs, consider keeping a business credit card on hand. If you can pay your balance in full each month, you can avoid interest charges. Business credit cards also typically have useful features like discounts on business-related purchases, free employee cards and rewards programs.
Should you get a fast business loan?
Fast business loans work well if you need funding in 24 hours or less for emergencies or another pressing reason. Since these loans typically come from online lenders, you’re more likely to be eligible for fast business funding even with subprime credit or little business experience. Online lenders tend to be more lenient with business qualifications than other lenders.
But you’re also more likely to pay higher interest rates than a traditional business loan in exchange for the convenience of fast loan approval. You can also expect short terms, like 24 months or less, and an aggressive repayment schedule. For example, repayments could be on a daily or weekly basis.
Because of this, you’ll need to know how to manage a tight repayment schedule and high loan costs — and be sure that the benefits of getting a fast business loan are worth it. If you can wait a week or two for funding, you may be able to get a lower-cost loan from a lender that doesn’t fund business loans as quickly.
Bottom line
The best fast business loans can help your company overcome financial setbacks or expand operations. But before applying, carefully review the pros and cons of fast business funding to decide if it’s worthwhile or if you should explore other options.
If you decide to apply, use a business loan calculator to figure out how much of a business loan you can afford.
