Types of fast business loans

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Published on October 21, 2024 | 5 min read

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Key takeaways

Fast business loans offer rapid funding, often in one to three business days
Business lines of credit, business credit cards and merchant cash advances can be considered types of fast business loans
Fast business loans are common offerings from online banks and alternative lenders

One of the main draws of fast business loans is that they offer rapid funding, often delivering funds within one to three days compared to the weeks or months of most traditional business loans. Small business owners facing time-sensitive opportunities or unexpected expenses may find these loans convenient, but knowing the different types of fast business loans and which option is best for your financial situation is the key to reaping the full benefits.

We’ll explore the types of fast small business loans, the pros and cons, where to get them and the eligibility requirements to help you determine which quick loan is best for your small business.

Types of fast small business loans

Types of fast business loans	Description	Best for
Term loans	Provides one lump sum upfront, followed by regular payments according to the set repayment schedule.	Operational needs Inventory Specific purchases or projects
Business lines of credit	Offers flexible access to a line of credit, allowing multiple draws up to the credit limit, with interest paid only on your outstanding balance.	Emergency funds Operational needs Short-term financing Unplanned expenses
Business credit cards	Provides access to cash and the ability to make purchases as needed, with no interest if you don’t carry a balance. May offer perks and rewards.	Short-term financing Emergencies Cash shortfalls Unplanned expenses
Equipment financing	Loans used for the purchase of business equipment and machinery.	Equipment purchases
SBA Express loans	Government-backed loans offering flexible qualification requirements and high loan amounts and capped interest rates.	Cash shortfalls Seasonal borrowing Large, one-time purchases or projects Equipment
SBA disaster loans	Government-backed loans offered to businesses operating in declared disaster areas.	Disaster recovery
Merchant cash advances	Borrowing based on a percentage of credit card sales and repaid through a percentage of future sales.	Emergencies Seasonal expenses Cash gaps
Invoice financing/factoring	Borrowing based on a percentage of your company’s unpaid invoices.	Seasonal expenses Working cash flow

What can fast approval business loans be used for?

Fast business loans are versatile, catering to various needs.

Emergencies: When emergencies happen, like fixing a broken company car or replacing spoiled inventory, these loans help cover them quickly.
Cash shortfalls: If a profitable business faces a temporary shortage of cash, these loans can fill the gap for paying bills, employees or suppliers.
Seasonal borrowing: During slow seasons, these loans can help cover operational expenses and keep things running smoothly.
Unplanned expenses: Surprise bills may pop up, but fast loans provide a way to pay for those expenses over time.
Disaster recovery: In the event of natural disasters, special loans are available that offer quick funds to help rebuild and get back on track.
Time-sensitive opportunities: When exciting opportunities come up, like purchasing a new location, a sale on equipment or discounted marketing services, fast loans give businesses the cash they need to take advantage of these offers.

Pros and cons of fast business loans

While these loans may seem like the perfect solution, consider both the pros and cons of fast business loans before applying.

Pros

Speedy approval and funding: Funding time for fast business loans varies by lender, but many streamline the application process, meaning faster approval and funding, with funds often available as soon as the next business day.
Accessible financing: Borrowers with less-than-perfect credit will find fast business loans have lenient qualification criteria. Lenders often make these loans accessible to borrowers with a minimum credit score of 600, and some go as low as 500.
Flexible use: Depending on the type of fast business loan you choose, for example, business credit cards or lines of credit, you can make multiple fund withdrawals, as needed, rather than receiving one lump sum.

Cons

Expensive: The cost of a fast business loan is high due to steep interest rates and fees. Lenders charge higher fees to offset the risk of making fast loan approvals and lending to borrowers with less-than-pristine qualifications.
Low loan limits: Borrowers may find themselves restricted by the loan amounts available, potentially limiting their ability to cover significant business expenses.
Shorter terms: The short repayment period of two years or less often requires frequent payments, including daily or weekly, which can make it difficult to manage cash flow.

If, after weighing the pros and cons, a fast business loan doesn’t seem like the best funding option, there are alternatives available.

Where to get a fast business loan

Your options for a fast approval business loan include online banks and financial technology companies. They move quickly when it comes to approving and funding your business loan, often beating traditional banks and credit unions, which can take weeks to months to approve funding. If you need cash in your business account as soon as possible, these types of lenders make sense but be prepared to pay more for their speedy service, as fast business loans usually cost more than those from traditional lenders.

No two lenders are alike, so it’s necessary to shop around and compare offerings from multiple lenders. Take the time to review interest rates, loan amounts, terms and fees. By exploring various options, you can make an informed decision and choose the best fast business loan to support your business endeavors.

Bottom line

With their swift funding and flexible eligibility criteria, quick loans serve as lifelines for small businesses facing urgent financial needs. While beneficial in times of need, steep borrowing costs and short repayment terms can make repayment difficult. Businesses seeking fast financing need to weigh their options thoughtfully before applying for a fast business loan to ensure it is the best fit for their specific needs and financial circumstances. Borrowers should consider the loan’s total cost and whether they can successfully manage the business loan within their business budget.

Frequently asked questions

A fast business loan provides rapid approval and funding, typically within one to three days, offering quick access to capital for small businesses.
The fastest way to get a business loan is to apply for one through online lenders or financial technology companies, which often offer quick approval and funding. Additionally, when applying, ensure the application is complete and accurate, and you have provided the necessary loan documentation to your lender to ensure the timely processing of your application.
The ease of getting approved for a loan is based on the borrower’s qualifications and the lender’s criteria. Due to its flexible lending requirements, fast business loans tend to lower eligibility requirements, helping borrowers with lower credit scores.