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The Fastest Ways to Fund Your Business
Quick Business Loans For Businesses With At Least 100k In Revenueby Garrett Brennan | Updated November 7th, 2016
Unprecedented competition in the lending market makes now a great time for small companies to get quick business loans with attractive terms. Traditional banks have been notoriously cautious when it comes to lending to small businesses. After the financial crisis that started in 2008, big banks pulled back from small business lending even further. To fill the void, alternative lenders stepped in to help fund small business growth. In a market thriving with unprecedented financing options for small businesses, traditional bank lenders have had to step up their offerings to remain competitive. Now, businesses mave a variety of different funding options, ranging from Small Business Administartion loans to a merchant cash advance.
Whether you decide that working with a traditional bank or an alternative lender is right for your business, there are a number of good options out there if you need funding fast.
Small Business Administration Loans
Small Business Administration (SBA) loans are business loans issued by a bank and backed by the United States SBA. Since many banks think lending to small businesses is not worth the risk, the government created these loans to encourage banks to take a chance on small companies in the interest of economic development. Since they are backed by the SBA, the lender is guaranteed payback even if the borrower defaults.
SBA loans are attractive to many borrowers who have been unable to get a traditional bank loan. The application process can be lengthy and tedious, requiring extensive documentation, including a business plan, personal and business financial statements, and past tax returns. Businesses with a history of using credit responsibly and a solid strategy for financial growth will usually be approved.
The SBA loan application process can typically take more than 60 days. But in the current market climate, some lenders are able to process SBA loans within a month.
Term loans allow your business to borrow a fixed sum of money to be paid back over a specified period. Short-term loans are often used to fund activities with a quick return on investment, like purchasing inventory or hiring seasonal employees, so they usually require that the borrowed money be paid back within 3 months to a year. Alternatively, long-term loans are used to finance larger projects that can take longer to make a return, such as renovating a building or acquiring updated manufacturing equipment. As such, borrowers are allowed to repay long-term business loans over a duration of 1 to 5 years.
Banks have been offering term loans for ages, but alternative lenders have streamlined the application process and made it simple for businesses to comparison shop for offers online. This competition means better deals on quick business loans for small businesses, including those that might not have met the traditional criteria for lending in the past. Additionally, online lenders can fund loans in a matter of days, a process that's previously taken much longer. So, more business can get the money they need with a rapid turnaround.
Merchant Cash Advances
Merchant cash advances (MCAs) are loans available to businesses that accept credit card payments. Borrowers receive a sum upfront and lenders are repaid by taking a portion of the borrower's daily credit receipts until the loan is paid off.
A merchant cash advance is a great way for businesses that might not have the best credit history or any valuable assets to use as collateral to obtain the money they need to finance growth. MCAs are very quick to fund and feature a simple application process. Additionally, they can be particularly helpful for businesses that experience a seasonal ebb and flow, since MCAs take a percentage of the business' credit card receipts as payment, not a set amount. Just be aware that MCAs do involve fees for the borrower, which can vary depending on the lender.
With so many loan options and a variety of lenders to choose from, it's more important than ever to do your research and comparison shop. There are online services that can help match you with a loan and lender that best meets the needs of your business. Now, you can connect with the money you need faster than ever before!