How to apply for a fast business loan
Key takeaways
- Finding the best fast business loan involves figuring out how much loan you can afford and comparing loan types and lenders
- To apply for a fast business loan, you'll need to check the lender's requirements and gather the correct documentation
- Always double-check your application and documents before applying, as any errors could result in a delay in approval or denial
If you are looking to secure quick funding for your business, several options are available, including fast business loans. These loans provide streamlined online applications along with fast approvals and funding. You may even be able to receive funds in as little as a day.
Whether you’re a startup in need of working capital or an established business seeking equipment financing, applying for a fast business loan has similar steps, from assessing your business needs and selecting the right loan type to gathering the necessary documentation and submitting your application.
Fast business loans vary by lender and loan type. To help you find the right one for you, we’ll explain how to apply for a fast business loan.
1. Decide on the type of fast business loan
Fast business loans typically come from online lenders that specialize in offering quick decisions and funding. On the other hand, traditional loans from banks and credit unions can take days and weeks to get approved and receive funding. While fasting funding is generally guaranteed, you still want to choose the right fast business loan for your business.
Common types of fast business loans include:
| Type of loan | Description | Best for |
|---|---|---|
| Online term loans | These are lump sums of cash that are available through online lenders. You typically pay it back in equal monthly installments over a period of one to seven years. | Operational needs, inventory and specific purchases or projects. |
| SBA loans | These are backed by the U.S. Small Business Administration and come with affordable rates and terms. They are not the fastest loans around: Most SBA loans can take anywhere from 30 to 90 days to fund. That said, working with an SBA Preferred Lender or applying for an SBA Express loan could speed up the process. | Working capital |
| Lines of credit | You can withdraw funds from a revolving line of credit as needed during a preset draw period. Like a credit card, business lines of credit reset as you pay down the balance, and you only pay interest on the funds you use. | Emergency funds, operational needs or any other need for credit. |
| Merchant cash advances | Your credit card sales volume determines the loan amount, and you’ll pay a factor rate instead of interest. Merchant cash advances come with short terms and may have incredibly high interest rates, but may be ideal for credit-challenged small business owners. | Emergency or seasonal expenses and cash gaps. |
| Invoice factoring and financing | You can borrow against unpaid invoices through invoice factoring and financing. These may also come with steep factor rates but could be an option if you need funds and can’t wait for clients to pay their invoices. | Seasonal expenses and working cash flow. |
| Equipment financing | These loans can only be used to purchase business equipment like office supplies, heavy machinery and semi trucks. | Equipment purchases |
2. Figure out how much loan you can afford
Most lenders provide funding between 10 percent and 30 percent of your annual revenue. This limit helps ensure your company can manage the loan and doesn’t get overextended by the loan payments, which could cause you to default on a loan.
Before you get a fast business loan, make sure you can afford the monthly payments, which will also include fees and the interest rate. To help, use a business loan calculator to determine the cost of a fast business loan and how much you can afford.
Fast business loans often come with additional charges and fees. You’ll likely see administration fees, application fees, credit check fees, draw fees, late fees, origination fees and prepayment penalties with this type of financing.
3. Compare fast business loan lenders
The best fast business loans offer competitive interest rates, loan terms and minimal fees. A streamlined application process is also ideal, and the funding timeline should work for your company’s needs.
To find the right loan for your business, you’ll have to consider the lender and its eligibility guidelines. You’ll need to ensure your credit score, time in business and annual revenue match the lender’s requirements.
You should also consider whether to get a secured or unsecured fast business loan. A secured fast business loan typically comes with lower interest rates, higher borrowing limits and more lenient credit history because you use collateral to secure the loan, which the lender can seize if you fall behind on payments. An unsecured fast business loan doesn’t require collateral but may require a personal guarantee, better credit, and a higher interest rate with lower borrowing potential.
Small businesses can use fast business loans for various purposes, such as funding startup ventures, managing working capital or financing equipment purchases. Some of the best fast business lenders include:
- Fora Financial for bad credit
- OnDeck for short-term loans
- Credibly for repayment discounts
4. Gather required documents and information
When you apply for a fast business loan, you’ll need to provide information and documents. It helps to gather it all before applying to speed up the underwriting process. If you don’t have any of the requested material on hand, it will delay the process and keep you from getting the funds you need in the fastest time possible.
Here’s what you’ll generally need to apply for a fast business loan:
- Intended loan use
- Company name and fictitious name filing documents (if applicable)
- Federal employer identification number (FEIN) or business tax ID
- Business registration and license (if applicable)
- Articles of incorporation (if applicable)
- Most recent business bank account statements
- Most recent personal and business tax returns
- Balance sheet, profit and loss statement and financial projections
- List of accounts receivable and accounts payable
- List of current business debt (including other financial obligations)
- Commercial insurance policy documents
- Commercial lease agreement (if applicable)
- Payroll records
5. Apply for a fast business loan
Once you have a shortlist of lenders, get prequalified if possible. Some lenders offer an online tool that will let you view potential loan offers and rates without impacting your credit score.
The next step is to submit a formal application. If you don’t know how to apply for a fast business loan, a good place to start is the lender’s website. Since many fast business loan lenders are online, they typically require an online application. Be sure to complete all parts of the application and review your entries for errors that could result in an accidental denial. Also, upload the requested documents when you apply and monitor your email closely in case you need to provide more documentation to avoid processing delays.
If approved, read the entire loan agreement carefully, review the terms and ask the lender any questions you may have before signing on the dotted line. After that, you just need to wait for the funds to reach your account.
Bottom line
Fast business loans have their pros and cons, but they can be a good option for a variety of situations, particularly when business owners need immediate funds. However, take time to understand how to apply for a fast business loan and your options before moving forward. Also, evaluate several lenders to find those offering fast business loans or alternative funding opportunities that work best for your company.
Frequently asked questions
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Some lenders will approve you for a fast business loan with a credit score as low as 500. But the borrowing costs will likely be steep, and you’ll also need to meet the lender’s other eligibility guidelines, including the minimum time in business and annual revenue thresholds (if applicable).
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Fast business loans are typically offered by online lenders. You may find banks and credit unions providing small business loans with short funding times. Still, they may not be as lenient as alternative lenders.
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Most lenders prefer businesses that have been established for at least 12 to 24 months. That said, some online lenders offer funding options to companies that have been operating for at least six months or are just starting out.
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Yes. You may even have more lenders willing to lend to your LLC than if you were a sole proprietorship, especially if your small business is a start-up. You can also establish and build business credit more easily as an LLC, improving your chances of approval and getting more favorable lending terms. However, if the lender requires a personal guarantee, it can remove the personal asset protection LLC members typically enjoy. Applying as an LLC can also lengthen the application process if you have to wait for all partners to approve taking out a fast business loan.
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