5 Types of Instant Business Loans for Small Businesses

Cash flow issues can happen to anyone, regardless of the industry you’re in and the size of your business. Unfortunately, small businesses are more susceptible to cash shortages than larger companies. This can be a major problem if you need to pay your suppliers or address immediate expenses. If you’re in a cash crunch and you need access to quick funding, consider applying for instant business loans.

The perfect instant business loan for your company depends on numerous factors: your business goals, repayment terms, interest rates, and lender requirements. Here are five different types of instant business you can choose from:

1.    Invoice Factoring

If your company processes invoices that can be paid within 30, 60, or 90 days, you can use those invoices to acquire instant funding through invoice factoring. Instead of waiting for 30 to 90 days to get paid, invoice financing allows you to sell those pending invoices to factoring companies (sometimes called factor) at a discount. Factors will give you 80% to 90% of the total invoice value upfront. Once your customers pay up, the factoring company will send you the remaining percentage minus a small transaction fee. The process of factoring your invoices doesn’t take long and you’ll be able to receive the funds within 24 to 48 hours.

2.    Short-Term Loans

As the name suggests, short-term loans are intended to fund short-term business needs. A short-term loan is structured like a traditional loan. The only difference is you’ll need to repay the loan within days or weeks, usually over three to 18 months. This type of loan is ideal for business owners who are looking for a flexible financial product to manage cash flow, handle unforeseen expenses, or seize a business opportunity.

3.    Business Line of Credit

Many business owners prefer a business line of credit because of its flexibility. A business line of credit works like a credit card where lenders assign you a predetermined credit limit which you can withdraw funds from as needed. You can use the money to get more working capital, make payroll, or manage seasonal cash flow gaps.

Unlike terms loans, you don’t have to repay the entire credit limit assigned to you. You only have to pay back the amount you’ve withdrawn, plus the interest. Since a business line of credit is revolving, the amount you can borrow goes back up when you repay your credit limit.

4.    Equipment Financing

Equipment financing comes in handy if you need to purchase pricey equipment and machinery. This type of financing works best on pricey equipment but you can also use it to purchase laptops, computers, and furniture and fixtures. Once approved of equipment financing, lenders can fund your equipment purchase within 24 to 48 hours.

More often than not, you won’t have to pledge any business or personal assets since the equipment you’re looking to buy serves as collateral for the loan. Some lenders may ask you to make a down payment of 10% to 20%, while others can fund 100% of the equipment value.

5.    Merchant Cash Advance

A merchant cash advance (MCA) is technically not a loan, but an advance against your future card transactions. Lenders give you a lump sum and they will automatically deduct a percentage off credit card purchases. Qualifying for a merchant cash advance is easy but lenders typically require a specific number of card transactions to qualify. Unlike other loans where you have to pay interest rates, an MCA charges 1.14% to 1.20% with every transaction.

Business owners prefer MCA because your payments fluctuate with your sales volume. This means you don’t have to pay a fixed amount every month. In addition, you don’t have to repay the loan if your business goes under since an MCA is not a loan. Although an MCA can be expensive, it’s still a great option for companies in crisis.

However, lenders may still ask for merchant processing statements and other financial statements to determine the terms of your MCA. Keep in mind that a merchant cash advance can be expensive, so proceed with caution.

Apply for Instant Business Loans for Small Businesses Today!

If you think applying for instant funding is close to impossible, think again. SMB Compass offers instant business loans for businesses in need of immediate funding. Talk to one of our financial advisors today to determine which loan is the best for your business. Simply call us today at (888) 893-8922 or email us at info@smbcompass.com to know more.