Looking for a loan to close cash flow gaps or meet other business needs? Today’s financial institutions aren’t the same banks your grandparents used to use. The lending industry has evolved with the development of the internet and the ability for borrowers to apply using online applications. Loan underwriting has also evolved, with many lenders using advanced algorithms to qualify potential borrowers automatically within minutes — if not seconds.
As a result, access to small business loans has expanded and the time between application and funding continues to shrink. It’s no longer uncommon to get a decision within minutes and funding within a few business days. Read on to learn more about small business loans with fast approval processes, including:
- The definition of quick business loans
- How fast businesses can get small business loans
- What you need to qualify for a small business loan
- If you can get a small business loan with bad credit
- Where to find small business loans
- Quick business loans vs SBA loans
What are quick business loans?
A fast small business loan is a type of loan with a quick turnaround on approval and funding. It typically involves an online application that takes a few minutes, approval decisions within 24 hours, and funding within a few business days.
For example, at Biz2Credit, you can apply online within four minutes, get a decision by the next day, and get funded in as little as one business day. When looking for a lender with a fast approval process, be sure to look for those three key components:
- Quick online application.
- Quick approval decision.
- Funding in less than a week.
In most cases, you’ll find fast business loans from online lenders, also known as alternative lenders. Traditional lenders tend to have longer processes for qualifying and loan disbursement.
Once a fast business loan is in your account, it works like other loan types. You’ll have an interest rate and a repayment period, so will make monthly payments until it’s repaid in full.
How fast can a small business get a business loan?
As a small business owner in need of capital, you could potentially have a small business loan deposited into your account within the same week. While you will need to meet the lender’s qualification requirements, if approved, tech-savvy lenders could have the money sent to your bank account within a few business days. This can be helpful for those in emergency situations where time is of the essence to keep your business running as usual.
What do you need to qualify for a fast small business loan?
To qualify for a fast small business loan, you will need to meet the lender’s eligibility requirements. While no two lenders will have the same criteria, many will analyze similar factors. Some of the common requirements include:
- Annual revenue and profit: Business and personal tax returns for two years, profit and loss statements, and/or bank statements will often be required to show two years’ worth of your business’s financial performance.
- Owner’s personal credit score: In many cases, a business owner’s credit score is a major factor in the approval or denial of a business loan. You’ll typically need to have a minimum credit score of at least 580 but the higher the better.
- Time in business: Many lenders will require that your business has been active for a minimum amount of time. Often, two years but sometimes one.
- Debt Service Coverage Ratio (DSCR): DSCR is found by dividing your net operating income by your total debt service. Lenders will often check your DSCR to understand how much free cash you have to repay your loan after paying for your other debt obligations. Scores lower than 1 mean you don’t have enough to repay your loan from your business.
Each lender will have its criteria so it’s a good idea to do a little bit of research. Look into their eligibility requirements to ensure you’re applying with a company that’s a good fit. Some cater more to borrowers with well-established businesses and good-to-excellent credit scores while others specialize in newer businesses with less-than-perfect credit history. Don’t get discouraged if you are denied on your first application as each lender is different.
What credit score do you need to get a fast small business loan?
In most cases, you will need at least fair-rated creditworthiness to get approved for a fast business loan. According to the FICO score ranges, scores between 580 and 669 are fair. However, you may still get denied in that range or may get undesirable terms such as higher interest rates, higher fees, shorter repayment terms, or a lower loan amount.
Being so, it’s best to get your credit score into the best shape possible before applying. A “good” score falls between 670 and 739, while a “very good” score is between 740 and 799. Actions that can boost your score include:
- Paying down any credit card balances you have to lower your credit utilization ratio (the balance/the credit limit).
- Consistently pay all your existing personal and business credit cards on time.
- Boost your score by adding on accounts you regularly pay like your utilities and cable.
- Don’t apply for new credit lines often (e.g. don’t let just anyone run your credit). Too many inquiries will hurt your score.
- Don’t close credit accounts if you don’t need to. The length of your credit accounts is a factor, and longer is better.
- Ensure that all the information on your report is correct. Missed payments or other derogatory marks that aren’t accurate will hurt your score.
- Check to see if any information has reached its maximum time on your credit report. After seven years, information should drop off.
If you don’t regularly monitor your credit reports, you can check them for free once per year at annualcreditreport.com.
Where can you find fast small business loans?
Many business lenders are modernizing their application processes to serve more borrowers more efficiently. However, alternative lenders like Biz2Credit are standing out amongst the rest.
But what are alternative lenders, exactly? They are typically private, online-based companies that operate like the lending arm of a bank or credit union. They often offer a range of financial products such as lines of credit, term loans, merchant cash advances, equipment financing, invoice financing, and working capital loans.
However, where alternative lenders differ from traditional banks is how they do business. Banks and credit unions often require you to come into a branch or speak to a representative over the phone at some point in the loan application process. Further, it’s typically difficult to get approved for a loan product and can take weeks to get the funds.
Alternative lenders pride themselves on being much easier to work with, offering more flexible eligibility requirements, algorithms that underwrite loan applicants, software to scan business financials and sync with financial accounts, and completely online application processes. Overall, they streamline the borrowing process, making it faster and easier to get funding.
With speed and convenience being their main attractions, alternative lenders are leading the way when it comes to fast business loans. At Biz2Credit, you can apply for a loan between $25k and $6m within a few minutes and get funded in as little as one day.
Fast small business loan vs. SBA loans
You may have heard talk about loans from the U.S. Small Business Administration (SBA) and wondered if they could help you. While they do have many benefits, speed is not often one of them. Here’s a closer look at both options and how to decide which one is right for you.
SBA loans are loans that are facilitated by approved lenders and backed by an SBA guaranty. That means if you default on an SBA loan, the lender won’t completely lose out. The SBA will reimburse them for a percentage of the debt. As a result, the lender takes on less risk by lending to you which translates into lower interest rates, better repayment terms, and higher loan amounts. Further, interest rates are capped to help keep the loans affordable.
If your business is having trouble getting approved for other types of business loans, an SBA loan may be the best solution. It’s also helpful that resource centers are available across the country to offer support.
The downsides? SBA loans have a very slow approval process. The application alone can take months to complete. You must get approved with an SBA-approved lender first, and then it must be sent for approval to the SBA. Additionally, you’ll need to have a FICO score of at least 680 and may have to make a down payment or provide collateral.
Fast small business loans
Fast small business loans are a better fit when you are limited on time. You can get a quick answer to whether you’ll get funds or not. However, there is no party guaranteeing your loan which means you’ll have to meet the lender’s eligibility requirements. There are also no interest rate caps so you could face higher costs if you’re seen as a risky buyer.
The good news is you can explore this option without much effort. With Biz2Credit, you can apply online from the comfort of home and get an answer the same day. If you find you can’t qualify, or can’t get the rates you can afford, then you may want to explore other routes like SBA loans.
Pros and cons of fast small business financing
Is a fast small business loan right for you? Here are some pros and cons to consider.
- Apply online in minutes, saving you time.
- Get a quick decision so you’re not left wondering.
- Get funding within days and in as little as one day.
- Gain the ability to get capital quickly when you need it, and take action as needed for your business.
- With easy access to capital, you may be tempted to borrow when you don’t really need it causing additional expenses for your business.
- To get approved, you will need to meet eligibility requirements pertaining primarily to your revenue, time in business, and credit. If you don’t qualify, you won’t get approved.
- If you don’t have good credit but still qualify, you may face higher interest and less attractive terms.
- They often require a personal guarantee.
Get qualified for a fast small business loan in minutes
Does a business loan with fast funding sound like the right solution for your small business? Find out if you qualify in just a few minutes without hurting your credit score. At Biz2Credit, you can get a lump sum term loan upfront to help you make the moves you need to make. Then, you can repay it over time on a schedule that works for you.