Same Day Business Loans: How to Get Financing Today
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Sooner or later, your business may run into a situation when cash on hand simply isn’t enough to meet a pressing demand or take advantage of an act-fast opportunity. When that happens, it’s good to know there are options that allow you to borrow money quickly — sometimes as soon as the day you apply.
Where to find a same-day business loan
The biggest challenge to same-day business loans may be figuring out which option is best for your business. In other words, the best time to start thinking about quick-cash options is when you don’t really need them.
IF YOUR BUSINESS MAKES MORE THAN $200K IN ANNUAL REVENUE AND HAS BEEN IN BUSINESS FOR 1+ YEARS, YOU CAN QUALIFY FOR A competitive BUSINESS LOAN THROUGH LENDINGTREE AND GET FUNDED IN AS FAST AS 24 HOURS.
Alternative or online business lenders are almost always the main source for very fast cash. Most banks and credit unions take weeks and up to two months to approve a loan. However, some alternative lenders can underwrite and approve your loan within one business day.
The structure and costs of same-day business loans vary, but they typically share the following qualities:
- They have higher interest rates than traditional loans
- They have short repayment terms
- They are often approved for borrowers with lower credit scores (frequently as low as 600 or 620) than would be required for bank loans (usually a minimum score of 680)
- They require less documentation and paperwork than a traditional loan
- They can be approved and funded very quickly
How much could you borrow?
Types of same-day business loans
Here’s a look at some of the most common same-day business loans and quick-cash financing options for businesses.
Short-term business loans have a couple of significant advantages over traditional long-term loans: they’re quicker and easier to get.
You can apply for short-term loans (most commonly available from online lenders) and receive funds in as little as 48 hours. They also require much less proof of business viability (or personal creditworthiness) and can provide loan amounts ranging from $2,500 to $250,000. The repayment period is much shorter (usually three to 18 months), interest rates are typically higher and payments are often made daily or weekly.
Lines of credit
A business line of credit has the advantage of being a bird in the hand. If you have one, it’s there when you need it and, unlike term loans, you only repay the amounts you have drawn. Flexibility is its greatest selling point.
A line of credit isn’t always easy to qualify for, however, especially for very new startups. Traditional lenders often require several years of business history before approval and larger lines of credit may require collateral. Online lenders tend to have less-strict requirements, although that can result in lower credit limits and higher interest rates.
Just because you haven’t already established a line of credit doesn’t necessarily mean they can’t be useful in an emergency. Approval can come as soon as one day for those who qualify.
Merchant cash advances
One of the most expensive ways – if not the most expensive way – to acquire fast cash is through a merchant cash advance. Merchant cash advances are not a loan, but a lump sum advanced to your business based on future credit card sales.
One of the major differences between a cash advance and a loan is that repayment is based on a factor rate as a form of interest. Factor rates can be converted to APR interest rates for the sake of comparison, an enlightening figure when considered with the length of time before full repayment is due. The converted APR may seem reasonable if you have a one-year loan term, but much less so if you only have two or three months.
Invoice financing is a much less expensive option than a merchant cash advance, which monetizes your company’s unpaid invoices. Companies can either sell their unpaid invoices to a factoring company for a percentage of upfront cash (leaving the factoring company responsible for collecting invoices), or use the invoices as collateral to get an advance.
The bottom line
It’s important to have funding in place before you need it. Maybe you have an expensive piece of machinery that breaks down and is holding up production or you have the chance to pick up some inventory at a huge discount. The best uses for these types of small business loans are working capital, purchasing inventory, buying equipment, refinancing or acquiring another business.
As with any loan, just be sure you really need the money and you can afford to pay it back. That’s especially important with same-day business loans, which come with a heftier cost.