Instant Business Approvals & Funding
There are times when a business needs to immediate cash for their company and can’t afford to wait days, weeks or months for the funding process to complete. In those times a business will look for options that can fund their company immediately so that they can keep their operations running smoothly and efficiently. But the options available to get funded instantly aren’t plentiful by any means. With that having been said, there are options available to get both approved instantly, and get a loan instantaneously. In this article, we will look at the instant business lending options, as well as the benefits and drawbacks.
What Do Lenders Look for When Approving?
To get an instant business loan, you have to be looking for a specific type of financing, and uses for the financing. If you’re looking for business loans from a bank (both large and small) or from a credit union or community bank, there is no chance of getting funded instantaneously. Fact is, banks will require lots of documentation (business and personal tax returns, income statements, balance sheets, accounts receivable aging reports, personal financial statements, appraisals, debt schedules, etc.) and going through that documentation and underwriting the loan takes lots of man hours with takes weeks. If commercial real estate is involved with the business financing request, the process can take even longer. Banks are not used to taking much risk, therefore they will conduct extensive due diligence when going over the file to make sure the lender doesn’t expose themselves to increased and unnecessary risk. Therefore, nearly every business lender willing to provide instant business loans, or instantaneous approval is an alternative, non-bank lender. These alternative lenders tend to underwrite their loans much different than banks, relying more on technology and algorithms, than on human underwriting and analysis. For many alternative lenders, when an applicant submits their information through their online portal, the lender is able to provide approval responses within seconds.
Why Would a Company Need An Instant Business Loan?
While many companies tend to plan out their financing needs in advance, there are times when an unforeseen problem arises that requires access to fast business capital. When a business needs immediate financing to take care of an emergency, they don’t have time to go to their local bank or credit union, apply for instant business financing, and expect funds to be wired to their account immediately. No bank will offer a small business approvals and financing in the same day, let alone the same week. But waiting days and weeks just isn’t an option for business in need. Getting access to fast cash is crucial for many businesses to make sure their operations run smoothly. Some of the emergency uses of financing in which a company would need an instant business loan include:
- Payroll: if you find your business in a position where you may not be able to pay your employees in time, you may find yourself in need of instantaneous business financing. Not paying your employees can lead to employee attrition as well as hurt employee morale.
- Equipment: if you have a business that is dependent upon certain pieces of equipment or machinery, you can’t afford to conduct business if this crucial equipment breaks on you. Getting financing to fix the equipment, or outright replacing the equipment may require an instant business loan to make sure operations keep running.
- Opportunity: At some point in time your company may find itself with a chance to take advantage of an opportunity that may require capital to make happen. If you don’t have capital available at your fingertips, getting an instant business loan may be the difference between taking advantage of the opportunity, and missing an opportunity.
- Paying Vendors: Running a successful company requires exhibiting good business practices. Making sure your suppliers and vendors are paid on time is extremely important to keep partners of your business happy, as well as retaining credibility. Getting an immediate business loan could be the difference between a happy supplier, and a lost supplier.
How to Get Instantly Approved?
The approval process for each type of lender providing instant business loans or instant business approval varies, but one thing that will almost always be looked at is the business and the business owner’s credit history. While not all alternative instant business lenders require borrowers to have good credit, many do. So generally, an instant business loan approval process starts with standard questions asked, such as the business owner(s) names, social security number(s) of owner(s), address of owner(s), business name, business address, the company EIN number and phone number. Some lenders will ask about your personal financial history while many don’t. From there the approval process will then be driven by the type of loan being sought.
Types of Business Loans With Instant Approval
- Fast SBA Loans: Online SBA lenders are capable of using technology and readily-available business information to prequalify the business for a SBA 7(a) business loan. If you’re pre-qualified, the lenders will then reach-out to the business owner and request additional documents needed to underwrite the SBA 7(a) loan. The entire SBA loan process can then be completed within two weeks or less provided the borrower is responsive to the lender’s requests for additional documents and questions.
- Line of Credit: The beauty of the line of credit is that its readily available money available when business needs access to cash. While the initial approval process for a line of credit may take weeks or even months, once the business finally gets approved for the line of credit and the lender puts the LOC in place, the small business will be able to access funds when they need them, and only pay interest on the amount of funding that has been used.
- Mid Prime Loans: Alternative marketplace and fintech lenders use the most advanced underwriting software of any business lenders. By leveraging this software and algorithms, alternative mid prime lenders are able to provide instantaneous approvals for loans up to $500,000 with terms up to 5 years. While funding isn’t instantaneous, it does happen relatively quickly, with most marketplace business lenders providing financing anywhere from one to seven days depending upon situation.
- Invoice Factoring: If you have business-to-business clients or customers in which there are 30-90 day unpaid invoices, you could use those unpaid invoices to obtain instant business financing. Rather than wait around for those invoices to get paid, a factoring company may be willing to purchase those unpaid invoices from your small business at a discount to the factoring company. The funder will provide the small business with up to 94% of the invoice’s value, keep a fee for themselves, and then forward the remainder to the small business once the invoice is paid. The process for approval is instantaneous, with funding happening either the same day, or the next business day.
- Merchant Cash Advance: while many people confuse cash advances for loans, they are not. Cash advances are simply the sale of a small business future earnings and revenues that allows companies to get paid early. A cash advance lender will look at a small business’s bank account or merchant credit card processing statements, determine how much money the small business can comfortably pay back, and then purchase a portion of the small business’s future revenue where they collect repayments each business day (or in some occasions, a single weekly or monthly payment) until the cash advance and its interest are fully-repaid.
While only a small amount of business loans can be approved instantaneously, there are plenty of options to get your business funded instantly. But, almost all of those options provide financing that have higher rates, and shorter terms than more conventional forms of financing. So before making a rash decision, you should think through the costs and benefits of obtaining instant financing, and balance them with drawbacks. If you decide that an instant small business loan is right for you, be prepared for lenders to run your credit. If you have bad credit, getting an instant business loan will probably be very expensive. If you have good credit, the rates will be much more appealing. If you need help navigating the instant small business loan process, please feel free to reach-out to one of our financing specialists, and we’ll help you navigate the process so that you can get the best rates and terms for your business.