Our goal at Lending Valley is to provide all small business owners access to the best loans possible for their business. You can rest assured we will get you the best rates in the market!
Emergency business loans in other words same day business loans are that backup you never expect your business to need—until it does. Maybe you’ve hit an unprecedented slump in sales. Maybe you need cash on hand to take advantage of a business opportunity that is looking you in the eye. Right. Now.
So where do we get the liquid cash required to successfully ride out these situations?
We’ve got a few ideas, and we’ll break them down for you right here. We’re also going to explore how different emergency lending options work, so you can make the right choice for your situation.
And since the keyword here is probably emergency—we’re going to do it fast.
If a fast injection of capital is on the cards, you’ve got 4 main options:
Bonus: the one emergency business loan you should probably avoid.
When you don’t have enough cash on hand, invoice financing companies pay for your outstanding invoices.
Generally, they advance you a percentage (usually around 80%) of your unpaid invoice amounts. Once your clients pay you, you get the withheld percentage less lending fees. Simple. Fast, too. The time from when you submit a completed application until the time the cash hits your account is normally between 2 and 7 days.
But this type of emergency business loan can be costly. At its most fundamental, you lessen your future earnings in exchange for immediate capital.
Your cash flow has temporarily reduced to a dribble because clients haven’t paid you yet. Of course, you need to have unpaid invoices on hand to use this type of financial service.
You can get your application started right here. Dig deeper into the pros and cons, see a list of the documentation you’ll need, and get some fast facts and figures to help you determine if your business is a good match for invoice financing. Receive a maximum advance of up to 100% of the invoice value, with a factor fee of between 8-30%. Turnaround time for a successful application can be as low as 24 hours.
When we talk about short-term same day loans, we mean loans where the repayment terms are within 12 months, and the application process is usually online. If your application is successful, capital usually hits your account within 1 – 3 days.
Short-term loans are likely to require you to go through a lender other than your bank. Alternative lenders aren’t subject to the same strict regulation as your bank, so they aren’t as limited in their administrative requirements. Paperwork, basically—they don’t need you to do as much of it.
They don’t usually charge an interest rate, due to the accelerated repayment terms. They charge a flat fee worked out on the amount you borrow. If you’re borrowing $10,000, for example, and their fee is 20% —not unheard of—your total to repay is $12,000. Repayment intervals can be daily or weekly, and are always by direct debit from your business bank account.
You need a fast injection of capital—a big event just rolled into town and you need to boost inventory or staffing levels to capitalize. A short-term business loan is a quick, streamlined solution to a temporary cash flow emergency.
Get more information and kick start your loan application process here. Loan amounts range from $2,500 – $250,000 as a lump sum cash injection, with payment terms from 3 – 18 months. With interest rates starting at 10%, and funds in your business account in as little as 24 hours, a short term business loan could be a few clicks away.
When it comes to sourcing an emergency business loan, everyone crosses a traditional loan off their list. The lending process is too long. This is where alternative lenders—specifically online alternative lenders—step in.
If a short-term loan can get your business back in the black lightning-fast (usually within 72 hours), the catch is that your business has to repay the loan fast, too. A medium-term loan doesn’t pay out quite as quick, but the repayment terms are more manageable. Having said that, some lenders have been known to activate funding within 48 hours.
The beauty of a medium-term business loan is that its rates tend to be lower than some of the other emergency business loan options. A medium-term emergency business loan aligns more closely with a standard loan structure, and is a good option for businesses with a track record of strong financial performance.
You run an established business with a solid financial history, and have a strong personal credit score.
This is the best place to get a head start on your medium-term emergency loan application process. Learn more about it, explore the pros and cons, and get to know the approval process. Loan amounts range from $25,000 – $500,000 over a 1 – 5 year term. Interest rates can vary, and you could have fresh capital in your business as soon as 2 days from now.
An SBA Disaster loan gives eligible businesses the working capital they need to repair their business after a certified emergency. An SBA Disaster loan can be used to repair buildings, replace company vehicles and equipment, restock lost inventory after a disaster. The eligibility requirements for this type of emergency business loan are strict, but the terms are generous and it is highly recommended that you take the time to apply.
Your business is recovering after being destroyed by a natural disaster. Your business must be located in a certified disaster area for your application to be considered.
The U.S. Small Business Administration administers the SBA Disaster loan. Learn more about it here.
And now one to consider (but probably avoid)…
A merchant cash advance (MCA) gives you a lump sum cash infusion in exchange for a percentage of your daily credit card sales. Technically, it’s not a loan. It’s the sale of your future income.
MCAs have a fixed fee—if this were 30% you’d repay $13,000 on a $10,000 loan. MCAs offer the same ease of application, simplified eligibility terms, and fast turnaround times. The difference is that your repayments are based on a percentage of your daily credit/debit-card sales. The MCA agent collects this percentage until they’ve recovered your loan amount and fixed fee. If your sales are slow, it will take you longer to settle the loan.
None of this on its own would raise a red flag.
But MCAs are the most expensive way to borrow money.
Let’s say your credit card sales are strong. The dollar amount the MCA company takes will be higher, and your loan will be paid of faster. There is no benefit to this for you—you’ve already been charged a fixed fee, regardless of how long it takes to repay your loan. Your cash flow, however, will be impacted by the reduced income from credit card sales in the short term. Effectively, taking on an MCA is likely to create a long-term cash flow issue to ease a short-term one.
Keeping as an absolute last resort.
You can learn more about the MCA process here, including the loan range and estimated wait time until funds hit your business account.
Now that we’ve explored your emergency business loan options, hopefully you’ve got a clear idea of which path you want to explore if you want the business loans the same day or the next day. Before you submit an application, there’s just one more piece of advice we’d like to offer:
Get all your ducks in a row.
Here’s how you do that:
This is always the first step, and probably something you’ve already done. It’s important to get it clear, and spending a little time on it now will save you from getting caught up in the application process later.
Many lenders and loan types have a set loan range. Knowing how much cash you need will help you rule out any lenders who don’t loan that amount, before you waste time on an application. Never more so than in an emergency, you can’t afford to burn time unnecessarily.
This is probably another step you’ve already completed. The longer you have before this emergency becomes mission-critical, the more funding options could be open to you.
Don’t take on more than you can afford. Work out an ideal monthly payment scenario, a worst case monthly repayment scenario, and how much you can afford to pay in interest.
First, run some comparisons between the different emergency business loans that fit your situation, and different lenders within each.
Set your priorities according to which of these lenders can offer the most ideal repayment terms for your business situation.
The key is to research all your options.
Research, research, research. There are countless emergency business lenders out there, but the quick capital infusion needs to work for the future of your business—not just provide a Band-Aid for today.
Second, understand what type of emergency business loan you qualify for.
Is your credit score strong?
Has your business established a history?
Has it established a good financial record?
If so, you may find yourself well positioned to apply for a medium-term loan. If you are a new startup, or have a lower credit score, you may only qualify for short-term loans. But don’t be discouraged. Knowing where you stand from the outset will prepare you with a more realistic idea of what to expect as you move through the application process.
Pro tip: One of the easiest ways to get clear on your repayment abilities is by calculating your debt service coverage ratio: Cash flow / Loan payment = Debt service coverage ratio.
Your debt service coverage ratio (DSCR) is factored in by lenders, alongside your eligibility and the current economic climate. Ideally, you’d like it to be around 1.15, but many lenders will still accept a DSCR of 1.5.
Prepare all the documentation you’re likely to need. Have your figures in front of you. If your business emergency needs a cash infusion yesterday, you need to get that application completed accurately and quickly. Although unlikely, some lenders may request more information after you’ve submitted your application. If that’s the case, get it to them fast.
There are some basics that it pays to have prepared in advance. These can include:
Depending on the type of emergency business loan you apply for, you may also need to provide details of your:
Typically, online lenders can connect you with a greater variety of funding options. You will also gain access to lower rates. The crucial point, though, is that using online lenders saves time. You can submit applications to multiple lenders, and you don’t have to wait for an appointment time. When time is of the essence, online marketplaces beat a bricks-and-mortar bank.
We know you’re in a rush and need the business loan the same day. And being short of working capital when you’re trying to grow your business is disheartening. But try and slow down for 2 seconds, because this part is important:
Take the time to find a strong lender. Do your homework to ensure that this quick fix is the best option for your business.
With our access to online lending and hundreds of options at our fingertips, it’s easier than ever to get fast funding. You can do this. The trick is to consider emergency business loans that boost your business, not slow it down.
