Quick Short-Term Loans: These Are Your Best Options
Rates and fees listed in this piece are accurate as of September 11, 2018.
Short-term loans are an excellent solution for businesses that need immediate financing. The money can be used to repair equipment, bridge gaps in cash flow, purchase additional inventory or fund a new startup. Depending on the lender, borrowers are offered terms ranging from three to 24 months. The money is then paid back at set intervals throughout the course of the loan. If your company needs the money fast, you’ll want to consider quick short-term business loans that put the cash in your hands within days instead of weeks.
How long business loans take to fund
There are three steps to funding when you apply for a short-term business loan.
- Apply. Before you apply, take a few minutes to check that your business qualifies for the loan. Each lender has its own requirements. For example, Kabbage requires companies to have been in business at least one year and have a minimum $50,000 annual revenue, while Bank of America lists being in business a minimum of two years with $100,000 in annual revenue as its two qualifications. Once you know your business fits the requirements, you can fill out the application. Online applications take the least amount of time to complete, followed by applications done over the phone. If you opt to obtain a small business loan with a traditional bank, you can also set up a time to fill out the forms in person. This could take days, depending on the availability of a loan officer.
- Accept an approval. Next, you’ll need to wait for a decision. Most online lenders, like National Funding offer same-day approvals. Traditional banks can take longer. Wells Fargo even states that some applications are sent to pending status for further review before a final decision is made.
- Await funding. The last step is the time it takes from accepting an approval to actually receiving the funds. This depends on the company, as well as the method of payment. Bank of America lists up to five business days as its norm. Kabbage, however, allows businesses to choose how they want to receive their payment. If you use PayPal, transactions can be completed in minutes versus the zero to three days it takes to process funds to a business checking account.
What to watch out for with quick-funded loans
Before you take out a quick-funded loan, it is important that you know the risks. These include:
- Bad credit. Short-term loans need to be repaid at a faster rate. If your business can’t make the scheduled payments on time, you risk damaging your company’s credit rating. OnDeck, for example, reports on your loan information once a month to Experian, Equifax and Paynet.
Loss of collateral. In addition to a drop in credit score, borrowers who can’t repay their loan in the short time period risk losing their collateral if the loan is secured. This can include anything from business assets to personal property.
Higher interest rates. Fora Financial points out that most short-term business loans come with higher interest rates than long-term loans. The higher the interest rate, the larger your repayment obligation is going to be.
- More frequent payments. Unlike long-term loans that typically have a monthly repayment schedule, short-term loans can require a weekly or even daily payment.
- Debt cycle. When quick short-term loans with high interest rates and frequent payments are used on a regular basis, the borrower can end up stuck in a debt cycle.
Best quick, short-term business loans
Check out the following lenders that fund short-term business loans in 48 hours or less.
OnDeck serves over 700 industries and has short-term loans that range between 3 and 36 months. The loan can be used to renovate an office space, hire seasonal workers or increase marketing efforts. Simple interest starts at 9% with a first loan origination fee of 2.50% - 4.00% of the loan amount. To qualify, you’ll need at have been in business at least a year making $100,000 or more in annual revenue and have one owner with a personal credit score of 500 or higher. Once approved, you’ll receive your funds in as little as one business day. You can then arrange to make daily or weekly repayments.
Credibly allows borrowers to receive their funds the same day as they are approved, and approval takes just 24 hours after completing the online form. The company’s working capital loan has terms ranging from 6 to 18 months with daily and weekly repayment options. Factor rates start at 1.15 and there’s a one-time origination fee of 0.00% - 2.50%. To qualify for this quick short-term loan, you’ll need to be in business at least six months, show $15,000 in monthly bank deposits and have a 500 or higher FICO score.
National Funding is known for its high approval rates and fast funding, which can occur in as few as 24 hours. A short-term working capital business loan of $5,000 to $500,000 is available and can be used to upgrade equipment, pay vendors or add inventory before the holidays. This working capital loan has terms between 3 and 60 months and allows business owners to choose between making daily or weekly automatic payments. The company doesn’t publicize its rates and fees, but it does state its qualifications. To obtain a loan, you’ll need to provide three months of bank statements, show you’ve been in business for at least one year and prove you’re making $100,000 in annual sales.
Forward Financing keeps things simple with a 10-minute application, one-hour approval and same-day funding. Businesses can borrow as little as $5,000 or as much as $300,000 with repayment terms ranging from four to 12 months. The company is flexible on how you use the funds, which means you can take the money and open a new office or put the cash into advertising. It is important to be aware that the loan’s factor rates average between 1.15 and 1.5 and there is a hefty $300 to $3,000 processing fee. To apply you’ll need to provide the owner’s name and Social Security number, the business’s name and tax ID and the business’s most recent bank statements.
Kabbage funds approved loans within minutes when businesses opt to use PayPal. Loans deposited into a business checking account will receive their funds within three business days. Borrowers are eligible for a $2,000 to $250,000 line of credit that acts as a loan. Kabbage reports that every draw on the approved funds is turned into either a 6– or 18-month short-term installment loan, which is issued by Celtic Bank. Companies can use the money for just about anything, including hiring additional employees or paying operating costs. Kabbage loans are unique in that they do not assign an APR to the loan. Instead, they charge a monthly fee. This fee includes 1/6 of the total loan amount on 6-month loans, 1/12 of the loan amount on 12-month loans and an additional undisclosed monthly fee. Repayments are made automatically each month with the option to contribute additional payments manually in between.
If you need cash in your account in as little as 24 hours, Reliant Funding may be the way to go. In fact, Reliant Funding approves 70 percent of its applications and it never requires a business to put up any collateral. To qualify, you can’t have any open bankruptcies and you’ll need to have owned the business for at least one year making a minimum of $100,000 in sales. Loans have 3 to 15-month repayment terms in amounts of $5,000 to $250,000. Reliant doesn’t currently disclose its interest rate or its origination fee.
Expansion Capital keeps paperwork requirements to a minimum and provides a quote within 24 hours of submitting an application. Upon acceptance, you can have between $5,000 and $500,000 deposited into your account in as little as two business days. 4 to 12-month terms are available with scheduled daily repayments until the loan is paid in full. This quick short-term loan carries a minimum 3.5% simple interest rate with an origination fee that is based off of the loan amount. To qualify for the loan, your company will need to have been in business six months or longer with at least $100,000 in annual sales. All owners will also be required to have a minimum credit score of 500.