Nowhere is the saying “you need money to make money” more true than in the crowded, competitive, fast-moving world of small business. As you seek to establish and grow your enterprise, access to capital (or the lack thereof) will be one of your biggest hurdles.
For small business owners facing expenses that just can’t wait, traditional approaches—SBA loans from banks, for example—can be burdensome, inconvenient, and ultimately disappointing. On the other hand, while the APR for a bank loan is usually around 6 or 7%, the APR for an online loan can climb above 30%!
It’s a simple fact that the faster you need a loan, the more you’re going to pay for it. That doesn’t necessarily mean you’re going to regret it, though—if it grows your business, keeps you afloat at a crucial stage of development, and ultimately carries you forward, the cost will have been more than worth it. Let’s take a closer look at a few lenders and see what they have to offer by way of fast business loans.
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Kabbage isn’t a “business loan” product, rather they are offer a business line of credit. They are worth mentioning here because business owners can receive funds from Kabbage the same day they apply.
Minimum requirements: At least 1 year in business, with a minimum of $50,000 in annual business revenue
Time for approval and funding: Kabbage’s online application process usually takes around 7 minutes to complete, and you can get funds the same day.
Required paperwork: Along with basic information—business address, tax ID, credit scores, and SSN—Kabbage looks at the online systems used by your business. It takes data about your business from online systems like Amazon, PayPal, QuickBooks, Etsy, etc., in order to evaluate your creditworthiness.
How much can you borrow: $2K to $100K. Kabbage will give you a maximum credit limit that you can borrow against, always keeping in mind that you only need to draw on the credit line as needed, without ever having to use the full amount. You only pay interest on the funds you use.
How long can you borrow it: either 6 or 12 months, with payments automatically deducted from your bank account on a monthly basis.
APRS and fees: The APR for Kabbage loans ranges from 30% to 100%. Most of these fees are charged in the first two months, although you can save money by paying the loan off early.
Personal guarantee and collateral: While Kabbage doesn’t require a personal guarantee, it does place a lien on your general business assets for loans over $20K. Your business assets can be seized if you don’t repay the loan, but your personal assets can’t.
OnDeck’s short-term business loan product exists as a way for business owners to quickly take advantage of opportunities or handle obstacles that they encounter. Unlike OnDeck’s merchant cash advance, an OnDeck short-term small business loan reports payment history to business credit bureaus, thus helping you build your business credit.
Minimum requirements: A personal credit score of 500 or higher, at least 1 year in business, with a minimum of $100,000 in annual business revenue
Time for approval and funding: OnDeck’s loan application process takes approximately 10 minutes. By applying online or over the phone, you can receive funding as quickly as within 1 business day after you’re approved. Being prepared—providing thorough information and having any necessary documents ready to go beforehand—can help speed up the process.
Required paperwork: Business tax ID, bank statements for the last three months, the SSN of business owner(s), merchant and credit card processing statements for the last three months (if applicable)
How much can you borrow: $5k to $500k. You will typically qualify for a loan that is 10% to 15% of your business’s annual gross revenues.
How long can you borrow it: 3 to 36 months, with payment automatically deducted from your bank account on a daily or weekly basis.
APRs and Fees: OnDeck loans range from around 20% to 40% APR, and the APR on their cash flow loans can be up to 100% APR.
Personal guarantee and collateral: OnDeck requires a personal guarantee and places a lien on general business assets.
Other financing options
Finally, let’s take a quick look at a few more affordable options for fast business loans. While these approaches may not be as fast as going to new lenders like OnDeck or Kabbage, the extra effort might be worth it in the long run, given the amount of money you stand to save.
Credit cards don’t always seem an obvious choice for people looking for fast business loans, but if used right they can be a quick and easy source of business capital. If you have good credit, you might want to consider getting a business credit card or personal credit card to be used strictly for business expenses. The ideal way to use these cards is to pay the full balance every month. As you do so, you’ll keep that money available and build your business credit score at the same time. The average APR for a credit card is 16%, a significantly lower number than you’d get with Kabbage or OnDeck. And while it’s true that you’re limited to your credit line regarding what you can and can’t purchase, another advantage of credit cards is that many of them offer introductory 0% interest rates as well as rewards such as cash back with purchases, frequent flier miles, hotel stays, etc.
Do you have irregular cash flow because you’re often waiting for your customers to pay you for services or products you’ve provided? Invoice financing can be a good option for B2B businesses with long invoice cycles. Invoice financing allows you to get paid immediately rather than waiting for your customers to pay you. BlueVine is one such option B2B businesses may want to consider.
SBA 7(a) Express Loan
If your credit is solid, and you can wait a week or two for the loan, SmartBiz is specializing in issuing SBA loans in under 7 days. This only applies to SBA loans under $150K (larger loans still take 4 to 6 weeks on average). The nice thing about an SBA loan is that it will offer some of the lowest interest rates for which your business can qualify.
Family or Friends
No one likes doing this: it’s hard and feels embarrassing, with the potential for injured relationships down the road. But if you have someone you particularly trust, and who in turn has faith in you and in your small business, receiving a fast business loan this way is not a bad way to go.
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