5 Instant Business Loans for Small Business Owners

Starting a business and being your own boss can be fulfilling. At the same time, it could also be overwhelming, especially when you’re facing unforeseen expenses. Small businesses facing cash flow issues often need to gain access to a small business loan with instant approval to address any unanticipated expenses. It could be a sudden increase in demand, recovering from a disaster, or replacing broken equipment. 

Instant business loans can be your lifeline in keeping your company’s doors open amidst difficult financial situations. As the name implies, instant business loans are financing solutions small to medium-sized enterprises (SMEs) can use to address time-sensitive expenses.

If you’re looking for a business loan with instant approval to solve pressing business matters, here are five options you can consider:

Equipment Loan

Small businesses that use equipment to streamline business operations need equipment financing to obtain machines and other tools without hurting their cash flow. Businesses such as restaurants, construction companies, manufacturing, and transportation are the most common candidate for equipment financing.

Unlike other types of business financing, this type of funding is specifically for buying equipment. With one, companies won’t have to worry about shelling out a large amount which can hurt their cash flow. The money from equipment financing will help them obtain the equipment so that they won’t put additional strain on their cash flow. 

The loan itself is tied up on the equipment purchased, so if the business owners default on payments, the financing company can seize the asset to pay for the loan balance.

Invoice Financing

Companies with unique payment terms usually have to wait for 60 to 90 days before their customers pay their invoices. Within that 60 to 90-day window, the business could experience cash flow gaps, making it harder for them to meet their financial obligations. Invoice financing, however, can help SMEs bridge their cash flow gaps. 

Invoice financing provides business owners with access to immediate cash and uses it towards any business use. It could be inventory, day-to-day expenses, expansion, and more. 

Here’s how invoice financing works. First, the business sells its invoices to financing companies in exchange for a lump sum of cash upfront (usually 70 to 95% of the invoices’ total value). Businesses can also choose whether they want to sell their entire ledger or only a portion of it. The financing company then takes over the invoices, including the payment chasing and collection. 

Once the customer pays the invoices, the lenders will deduct the advanced cash plus the transaction fees and return the remaining balance to the business. 

Merchant Cash Advance (MCA)

For SMEs that conduct credit card sales, one type of business funding solution can come particularly handy: merchant cash advance (MCA). Businesses such as beauty salons, retail, and spas can benefit most from merchant cash advances. 

A merchant cash advance is an advance against the business’s future credit and debit transactions. Basically, the financing company will advance cash to the borrowing business. The business then repays the advanced money by giving a predetermined percentage of their future credit card transactions until they pay off the cash advance. Depending on the agreement, the financing company can collect payments daily or weekly. 

Although MCA can be the perfect financing solution, it’s also worth noting that it could come with expensive fees. Some lenders can charge a factor rate of 20% to 40%. This means that if you take out $10,000 and the lenders charge a factor rate of 30%, you’ll have to repay an amount of $13,000. 

Business Line of Credit

According to FedSmallBUsiness.org, over 40% of businesses applied for a business line of credit in 2019. Business lines of credit are among the most sought-after financing options for companies that need spending flexibility and quick access to cash whenever needed. With this financing option, lenders will open a credit line from which they can withdraw money whenever needed. 

Having enough capital on hand is extremely helpful, especially if you need to address a pressing business need. The funds you get from the credit line can be put towards any business expenses, including inventory, equipment, payroll, supplies, or renovations. 

Business lines of credit are also a great way to give your credit score a boost. Since it’s a revolving credit, you can borrow cash from it and only repay for what you owe. Repayments made on time can reflect positively on your credit report, thus increasing your credit score. The higher your credit score is, the better your chances are of qualifying for comprehensive business loans in the future. 

Short-Term Loans

Short-term loans are a subtype of term loans. As the name suggests, short-term loans are financing paid within a shorter period of time – usually 3 to 18 months. It provides business owners with a lump sum of cash upfront, which they can repay within the agreed time frame. Since the payment period is shorter, businesses may have to make repayments more frequently than long-term loans. 

Because of the nature of short-term loans, lenders may charge a higher interest rate for them compared to traditional loans. However, the flexibility of use and fast approval for this type of loan could make the high-interest rate a worthy investment for small business owners. The funding from short-term business loans can be put towards any business initiative – equipment, inventory, expansion, or marketing projects.

Small Business Loans with Instant Approval

While traditional lenders may be the ideal sources of financing for small business owners, it isn’t the most viable choice for addressing pressing business needs. Fortunately, alternative lenders offer small business loans with instant approval. Most of them let you apply for a loan online and could fund your business within 24 to 48 hours.  

If you’re looking for the best instant loan for your business, the ones mentioned above are among the best types to consider. Before that, be sure that you know the needs of your company. This will help make it easier for you to decide which loan option would best suit your business best and help you in managing your business’ cash flow successfully. 

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