Fast Business Financing
As a small business owner, having sufficient cash-flow is always crucial. Having access to affordable capital is great when you can afford the wait. Sometimes a situation arises that causes the need for a fast business to help with company operations, or to take advantage of an opportunity (buy inventory, purchase property, upgrade equipment or appliances, marketing, staffing, refinance a business loan, etc.). If you have an opportunity for a quick turnaround on your investment, time can be of the essence. In years past, the business funding process was long, extensive, drawn-out and tedious.
These days the business financing options and overall funding process is much easier, streamlined, and sped-up. A business loan that may have taken months before, may now take weeks, if not days thanks to new financial technology. Part of the reason for the faster funding is because new alternative lender leverage this FinTech technology to use algorithms to approve financing while requiring less documentation than traditional business lenders of old. By making the commercial loan process faster among alternative lenders, even conventional have make the funding process quicker.
Below we will look at the various quick business financing options available to small and mid-sized businesses who have a limited amount of time to secure financing to take advantage of an opportunity.
Fast business and commercial lending options include:
- Buy Inventory
- Increase cash flow
- Purchase/lease equipment
- Pay vendors
- Purchase supplies
- Tax payment
- Hire employees
- Payroll
- Advertising
- Mortgage/lease payment
- Marketing
- Working capital
Oftentimes in the past with fast business financing, there is a trade-off in securing a business loan quickly because you’d end up with rates and terms that weren’t always optimum. By agreeing to forego a lot of the due diligence, the lender would factor risk into the rate, leading to rates and fees that could be quite expensive. Thankfully, with the increase in online business lending competition, fast business funding doesn’t necessarily mean exorbitant rates and short terms.
Let’s look at some of the fast commercial loan options available:
| Rates | Terms | Funding | ||
|---|---|---|---|---|
| Fast Bank Loans | 6-10% | 3-20 years | 14-30 days | |
| Fast SBA Loans | 6-10% | 3-25 years | 10-30 days | |
| Fast Line of Credit | 5-15% | 1 – 3 years | 7-30 days | |
| Fast Alternative Loan | 6-25% | 1-5 years | 5-7 days | |
| Fast Cash Advance | 1.16-1.55 | 3-24 months | 1-3 days | |
| Invoice Financing | 1-2% weekly | 1 – 90 days | 1-3 days |
1. Fast Merchant Cash Advance
While a merchant cash advance may be the most expensive of the business financing products it is, by far, the fastest funding of all the types of business loans. A merchant cash advance is the sale of future bank and credit card transactions in return for immediate financing. While traditional financing may takes weeks, if not months, a merchant or business cash advance can fund within a week, if not days. Rather than requiring extensive business and personal financial documentation like banks, traditional and SBA lenders, the best merchant cash advance companies can approve your company with minimal documentation required. On top of that, since a merchant cash advance is secured by your company’s bank deposits, minimal (or poor) credit is acceptable to get approved for financing.
As mentioned, there are trade-offs, including higher interest rates and more expensive fees than most other business loans. A merchant cash advance lender may require a company that receives funding to payback up to 150% of the original loan amount.
- Merchant Cash Advance Maximum: $2,000,000
- Merchant Cash Advance Credit Requirement: None
Cash Advance approval process
How the funding process of a business cash advance works:
1. Application
Complete and sign a basic credit application (including all who own 20% of more equity in the company).
2. Provide 6 months bank statements
The business cash advance lender will require 6 months of the most recent bank statements from the company’s main operating account.
3. Receive an offer from the cash advance lender
The lender will then provide an offer with the funding amount, payback amount, rates and fees. If the borrower agrees to the terms, the lender will then supply a contract to complete, sign and return.
4. Get funded
Before funding, the lender will ask for you to verify your business bank account, along with provide a photo ID and a copy of a voided check. Once those are supplied, the lender will then wire the merchant cash advance proceeds to your account.
2. Fast Invoice Financing
One way to acquire commercial financing fast, is to sell use your unpaid invoices as collateral to receive alternative business financing. With invoice financing (or at times called “invoice factoring” a small business agrees to sell their unpaid 30, 60 or 90 day unpaid invoices to a lender, and in return the lender will then provide the business with up to 95% of the invoice’s total value. In return for providing the financing, the factoring company will then charge and additional fee. Each week that the invoice remains unpaid, the factoring company will charge additional fees. Once the invoice is fully-paid, the factoring company will then forward the remaining invoice balance to the borrower.
Invoice finance approval process
1. Supply invoice to factoring company
Once the 30-90 day invoice is provided to the factoring company, the lender will then decide the appropriate amount to forward to the borrowing company.
2. Receive offer from invoice factoring company
The factoring company will then provide the borrowing company with an offer. Included in the offer is the funding amount and fees associated with the transaction.
3. Get financed
After an offer is agreed upon, the factoring company will then fund the borrower.
3. Fast Non Traditional Loans
Lack the credit necessary to attain SBA financing? Lack the financial documents required by the SBA’s business loan checklist? Maybe mid prime alternative financing may be a good fit for your business. A recent Federal Reserve small business credit survey shows two-thirds of all small businesses were unable to secure all the financing they applied for. With bank approving as few as 25% of loans to small businesses, a mid prime alternative loan can provide a business with fast financing without much paperwork. With just an application, bank statements, and YTD financials, a mid-prime lender can pre-approve a small business for up to $500,000 in financing within hours, with total funding completed within 5-10 days. But, with speed comes higher rates, and less favorable terms than bank loans or SBA loans, along with higher fees, making this type of fast lending more expensive than traditional financing.
- Fast Alternative Max Loan Amount: $2,000,000
- Fast Alternative Loan Rates: 9-20%
- Credit Score Requirement: 580+
Fast Alternative Loan Approval Process:
1. Complete credit and provide bank statements
A lender will run an initial credit check to see if you and your company meet the basic credit requirements. They will then ask for bank statements to review cash flow.
2. Offer is provided by alternative lender
If approved, the lender will then offer an initial offer for the borrower to review.
3. Contracts
When a lender has received the contracts with additional documents, they will then review and decide whether to move-on to final funding.
4. Funding
Once the additional documents are collected, reviewed and confirmed, the alternative lender will then fund.
4. Fast SBA Loans
SBA loans have a reputation for having a long, hard, tedious process and, for the most part, that can be the case — but not always. While SBA lenders have a well-deserved reputation for having a drawn-out process, that isn’t always the case with SBA lenders these days. While there is a common perception that SBA Loans take many months to complete (and they can) there are plenty of business and commercial lenders that have created fantastic platforms that can quickly fund SBA loans. Using the SBA Express loan program (part of the greater SBA 7(a) program) SBA lenders are able to get a final decision from the SBA within 36 hours after submitting, and total funding for SBA Express loans can be accomplished in as fast as 10 business days.
- Maximum Fast SBA Loan Amount: $350,000
- SBA Small Loan Advantage Program Rates: 6-8%
- SBA Small Loan Advantage Program Terms: Up To 10 Years
- Credit score requirement: 600+
SBA working capital approval process
1. Complete and provide SBA loan documentws
The SBA lender will usually start the qualification process by reviewing tax returns (3 years), income statements & balance sheets (3 years + year-to-date), debt schedule and personal financial statement.
2. Term sheet issued by lender
The lender will then issue a term sheet that state structure of the SBA financing facility.
3. Underwriting and Due Diligence
After execution of term sheet and due diligence fees are paid, the lender will then underwrite the loan. This usually requires additional business financial documents be provided
4. Commitment Letter
Once a commitment letter is issued and executed, the lender will then submit the package to the SBA for final approval
5. Get funded
When the SBA completes its review and signs-off on the SBA enhancement, the SBA lender will then conduct and closing the loan is funded.
5. Fast Bank Loans
In the past, bank loans were usually anything but fast. And, for the most part, things haven’t changed for many traditional lenders. But that’s not always the case these days, as even traditional lenders are now capable of underwriting traditional loans quickly. Even faster than obtaining a term loan is the speed of funding of lines of credit. And once a line of credit is approved and the facility put in place, the business will have readily available access to financing quickly, without having to seek an approval from the lender or bank.
Fast Bank Loan Approval Process:
1. Submit credit application and financials.
The lender will need to review 3 years of taxes, financials, a debt schedule and A/R & A/P aging schedules.
2. Term sheet
When the lender is done with their initial review, they will then issue a term sheet outlining the structure and fees of the facility.
3. Bank Underwrites the Loan
After execution of term sheet and payment of any due diligence fees, the underwriters will then conduct full due diligence and structure the loan
4. Commitment letter
Once the lender has completed due diligence and underwriting, a commitment letter is issued.
5. Get funded
Once the banks financing documents are issued and executed, the lender will then fund the loan.
