Top 5 Quick Financing Options for Your Small Business

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Financing Options for Your Small Business

Small business owners often face unforeseen expenses that could put a dent in their cash flow. For instance, a piece of equipment might need immediate repairs, clients failed to pay their invoices on time, or general quick-cash needs. When emergency expenses catch you off-guard, check out quick financing options for your small business.

 Quick business loans are funding programs that are accessible to small business owners to address short-term needs. Running a business isn’t always rainbows and butterflies, and when your business is hit with financial storms, quick business loans can help keep your company afloat. 

Here are some of the most popular quick financing options for small businesses:

1. Invoice Factoring

Invoice factoring is an excellent option for business-to-business (B2B) clients or customers that process 30, 60, or 90-day unpaid invoices. You can use the outstanding invoices to secure immediate funding. Instead of waiting for your invoices to get paid, lending companies can purchase unpaid invoices at a discount. Lenders usually give you up to 95% of the total invoice value upfront, then forward the remaining percentage (minus a small fee) once your customers pay the invoices. Approval is almost instantaneous, and you can access the funds within 24 to 48 hours after approval. 

2. Merchant Cash Advance (MCA)

A merchant cash advance is a same-day funding option that can fulfill short-term financial needs. Technically, MCA isn’t a loan but an advance against your future debit or credit card sales. Lenders give you a lump sum based on your cash flow, and you’ll automatically repay the amount by tapping a percentage of your card sales. MCAs are super convenient, and you won’t need to remember to repay your loan on time. The frequency of payments is usually faster, while the repayment periods are shorter. 

The MCA’s convenience comes at a cost as it has some of the highest interest rates of all small business financing. But an MCA is particularly useful if you can’t get approved for other types of funding options. 

3. Business Line of Credit

A business line of credit is another quick financing solution for small businesses, especially if you already have one set up ahead of time. An active line of credit gives you access to funds whenever you need them. 

If you don’t have a business line of credit, it’s best to apply for one even before you need it. Once qualified, lenders will assign you a credit limit where you can withdraw funds as needed, whether it’s for an emergency expense or an unexpected business opportunity. Just make sure not to go over your borrowing limit!

Unlike other traditional forms of financing, you don’t have to repay the entire credit limit. Instead, you only have to repay the money you’ve withdrawn, plus interest. Your borrowing limit goes back up once you repay the loan plus, you have access to additional funds without applying for another loan. 

To qualify for a business line of credit, lenders may ask you to submit collateral and update your financials from time to time to maintain your credit line. Some lenders may charge annual fees, transaction fees, and account set-up fees to keep your line of credit open. 

4. Short-Term Business Loans

A short-term business loan is your classic term loan where lenders give you a lump sum. The only difference is that you’ll need to repay the money within three to 18 months. Once approved, you’ll be able to receive the funds within 24 to 48 hours. 

You can qualify for up to $2,500 to $250,000, depending on your creditworthiness and your business’s overall financial health. Loan amounts for short-term loans are relatively low compared to long-term loans due to the limited repayment period. 

5. Equipment Financing

Equipment financing is another quick business loan you can check out—construction, healthcare, transportation, and other industries that use pricey equipment benefit from equipment financing. Once qualified, you can receive the money you need for equipment purchases or leases in as little as 24 to 48 hours. 

However, lenders may need a down payment of 10% to 20% to qualify, depending on your creditworthiness and the type of equipment you’re looking to buy. In rare cases, some lenders can finance 100% of the equipment’s value, so you don’t have to put up a down payment. 

The average repayment term for equipment financing is usually five to seven years, but sometimes, it can be as long as the equipment’s estimated life span. The interest rates can range from 8% to 30% per year, and you don’t have to pledge collateral since the equipment secures the loan. 

What’s Next?

Now that you know your top five quick business loan options, it’s time to apply for one! Different lenders charge different terms and rates, so be sure to compare your options and choose the loan program that works for your business needs.

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