As a small business owner, you know that funding needs can crop up any time. During the holiday season, cash flow can quickly disappear. You may need to cover extra inventory, shipping costs, and promotional expenses. During the slower business cycles, you may need funds to cover payroll. Ofcourse, there are expenses associated with operating and growing a small business. Therefore, it’s important to know what your options are to get fast business loans or any loan with less-hassle for that matter.
How to Get a Loan from Traditional Lenders?
Before you learn how to secure fast cash for your small business, there are a few things you need to know. There are three key factors to consider when borrowing money from traditional lenders. And three stages in getting a small business loan.
3 Key Factors to Approving a Loan
- Credit History
- Interest Rates
Typically, the higher your credit score, lower the interest rate you get. That lead to better lending terms as well. Traditional lenders usually require some kind of collateral for high risk loans. Therefore, they usually require satisfactory credit history and additional documentation.
3 Stages in Getting a Small Business Loan
- Application Process
- Approval Time
- Funding Time
If you’re looking to secure quick cash, you want an easy application process, easy approval business loans, and fast business funding. Unfortunately, traditional lenders take up to 90 days to work through the application process, approval, and funding time. That’s too long for a company looking for quick cash for businesses.
Credit Scores Explained
One of the most common credit score rating is known as the FICO Scores (Fair Isaac Corporations). This is the rating score that most lenders use for credit approval. The rating scale is 300 to 850.
So, what does this mean in layman’s term?
- 300 – 579 means a poor rating.
- 580 – 669 means a fair credit rating.
- 670 – 739 means a good credit rating.
- 740 – 799 means a great good credit rating.
- 800 – 850 means you have an exceptional credit rating.
Credit Scores: Why They Matter
Credit scores matter since most lenders use them to determine whether they’ll approve your small business loan application. Lenders use it to assess risk and to determine how likely you’ll repay or default on a loan. Your credit score helps to determine the interest rate of the business loan you qualify for. Depending on the amount of the loan, this could be a difference between hundreds and thousands of dollars in savings.
What is the Easiest Business Loan to Get?
Common Types of Business Loans for Small Businesses
- Bank Term Loans: This is the type of loan that most people are familiar with. It’s a loan from a commercial bank. You need good credit rating to get bank term loans.
- Line of Credit: A line of credit is a financing option where you apply to a financial institution for a credit limit. The lender decides on the maximum that you can borrow. You can draw money from the line of credit. You pay interest on the funds you use. You need a good credit rating to secure a line of credit.
- Online Invoice Financing: Online Invoice Financing also known as Invoice Factoring is the practice of selling receivables due within 90 days. You sell at a discount, to a third party for immediate cash. This is not really a loan, but the advance of an invoice.
- Merchant Cash Advances: You get a cash advance from an outside lender. Advance is in exchange for a percentage of all your future credit or debit card sales. The qualifications aren’t as stringent as what you see with a loan or line of credit.
- Small Business Administration Loans: These are long-term small business loans specifically designed to be advantageous for SMEs. These loans help to foster small business development in the United States. You need good credit to qualify for these loans.
For more detailed information, read “Small Business Loans: Which Type is Right for Your Business?”
To answer the question, ‘what is the easiest business loan to get?’ depends on a few things. Review the types of business loans covered in the bulleted list above. And, in the article Small Business Loans: Which Type is Right for Your Business? Which one feels like the best one for your small business? Look at the three key factors to consider when borrowing money from traditional lenders. Then review the three stages in getting a small business loan. Do you qualify for the option you chose?
Frequently Asked Questions About Fast Business Loans
Can I Get a Business Loan with a 500 Credit Score?
If you have a credit score of 500, that means your credit rating is poor. The implication is that your loan application will get turned down from traditional financial institutions. You’ll likely have to pay a fee or deposit to get a small business loan approved. Your credit score is calculated when you request it.
Is it Easier to Get a Business Loan than a Personal Loan?
It can be easier. Most of the time when someone refers to getting a business loan, they’re referring to commercial loans from banks. But with advances in technology, there are now many fintech financiers. This makes the process of online small business loans more streamlined and faster. There are now options such as invoice factoring to help you get fast business funding.
What’s the Best Way to Get a Business Loan?
The answer is that it depends. Do you need fast business cash? If you do, then that limits your options. Traditional lenders can take up to three months to decide on a loan application. A fintech financier may be your best bet to get a loan quickly. And rather than a loan, have you considered invoice financing? Find out more here.
How Can I Get a Quick Business Loan?
These days the fastest way to get quick business loans is online. Fintech lenders have 5-10 minute applications with instant approval in most cases. Find out more on How to Get an Online Business Loan That’s Fast and Flexible.
Final Thoughts on Fast Business Loans
We’ve covered a lot of ground in this article. You have several things to ponder when thinking about getting quick small business loans. However, when you’re looking for an easy application process, fast approval and instant approval – the best option is to go with a fintech lender. And if your credit history is less than stellar, the best option may be invoice financing.