Quick business loan options when you need financing fast

The unpredictable nature of running a business means that a fresh injection of funds can sometimes be needed at very short notice.

Jeff Salway Published on 21 July 2021.
Quick business loan options when you need financing fast

There are numerous reasons why a business may need to secure new finance sooner rather than later, from having to plug a gap in cashflow or cover unexpected outgoings to recruiting staff or being able to take advantage of short-term opportunities.

The main sources of business finance can be time-consuming to apply for and there’s no guarantee of your application being approved.

What is a quick business loan?

As it stands, it can take several days for loan applications with the main banks and building societies to reach approval, particularly where the credit record isn’t great or it’s a secured loan where the collateral needs to be valued.

A quick business loan is one where the (usually online) application process can take just a few minutes and a decision is made within minutes or hours, rather than days.

What types of quick business loans are available?

The main form of quick business loan is a short-term loan with a fixed repayment period, with the amounts repaid in fixed, regular instalments.

The loans tend to range from around £5,000 to £250,000.

Another form of quick business loan is a merchant cash advance. This is where the repayment is a pre-agreed percentage of future customer card transactions.

» COMPARE: Merchant cash advances

As with quick business loans, these are usually approved within 24 hours or so and they rarely require security, credit checks or business plans.

These are typically available only to businesses that have been running for at least a year and most will only advance cash to firms with monthly average card sales of around £5,000 or more.

If you need capital to cover unpaid invoices, you might want to explore the world of invoice financing.

What are the pros and cons of quick business loans?

Quick business loans do what they say on the tin - they provide almost instant access to capital.

The obvious benefit of merchant cash advances is that they offer flexibility, with repayments often linked to monthly debit and credit card sales.

The downside is that both quick loans and merchant cash advances can be significantly more expensive over time than traditional loans.

The former tend to come with higher interest charges to compensate for the faster payment, while the pre-agreed rates on cash advances can make them very expensive.

Lenders will usually charge more for borrowers with poor credit records, to reflect the greater risk they are taking on.

Quick business loans are also short-term finance options only – most will have terms of a year and some will stretch to two years, but very rarely are they longer than that.

It’s worth noting that merchant cash advances aren’t regulated, meaning you have little recourse to complaints processes or compensation should things go wrong. There is also a heightened risk of defaulting on the loan if future transaction levels fall short of your projections.

» MORE: How to get a business loan with a bad credit rating

What other business finance could I consider?

If you’re looking to borrow a relatively small amount for a short period of time it can be worth exploring options including bank overdrafts and credit cards.

Another possible avenue is a revolving credit facility, where you set a total funding limit with the lender and you withdraw and repay as and when you need the capital.

You may also be able to secure capital quickly through peer-to-peer lenders. These are online platforms connecting businesses that want to borrow money with those that want to lend it, with lenders receiving returns in the form of the interest paid by borrowers.

But don’t overlook traditional business loans, even if they’re not advertised as having quick turnaround times. If you have a good credit record and don’t need to provide security, small business loans from mainstream lenders can sometimes be approved quickly.

» MORE: Alternative business funding

Image source: Getty Images

About the author:

Jeff is a freelance journalist who writes across finance & business. He was the personal finance editor at The Scotsman & Scotland on Sunday & a member of the Financial Services Consumer Panel. Read more

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