What is a Fast Business Loan and How Does It Work?

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Most business loans can take a week or longer to get approved and receive the funding for the loan. But that timeline might not work for you if you need cash now to cover a pressing cash flow need or take advantage of a time-sensitive opportunity.

Enter fast business loans. These loans can often provide the funding you need within a few business days. That said, it’s important to understand how it works and when it makes sense to get fast business funding before applying.

What is a fast business loan?

A fast business loan is a type of funding for business owners who want fast access to capital. Many fast business lenders can provide funding within 24 to 48 hours, much faster than the week or longer that most lenders take. Lenders may use technology to determine if you’re eligible, sometimes providing you with a loan decision in minutes. These loans also tend to offer quick online applications and minimal documentation requirements, helping you get through the application process quickly.

How does a fast business loan work?

You typically need to apply for fast business funding through an online lender specializing in quick applications as well as fast approvals and funding. The lender will usually advertise its quick approval process on its website. These lenders often have relaxed eligibility requirements and even offer fast business loans for business owners with bad credit.

Once approved, the lender will provide you with a loan agreement that you will want to read thoroughly. To offset the convenience of quick funding, the lender may charge higher interest rates and fees than other lenders. You will want to fully understand the loan costs that you’re responsible for before signing.

Then, once you sign the agreement, you’ll repay the loan with interest and fees over the specified term. Many fast small business loans will have short repayment terms, such as 24 months or less. These short terms mean that you will have higher monthly payments. You may also see higher interest rates than you’d find with other business loans.

Fast business loans may be worth the extra cost if you have an emergency or need to capitalize on an opportunity. But if cost is a factor, you’ll want to compare multiple loans for their interest rates, fees and terms required for the loan before you sign.

What are fast business loans used for?

Fast business funding can serve various purposes, including:

• Emergencies: A fast small business loan can help address an unexpected financial crisis, such as equipment breakdowns or inventory losses, to avoid business closure.
• Cash shortfalls: Covering temporary cash shortages ensures bills are paid on time and avoids disruptions or negative impacts on credit.
• Seasonal / short-term borrowing: Loans can support businesses with seasonal fluctuations, aiding during slower periods.
• Unplanned expenses: Fast business funding provides a buffer for unforeseen costs that may impact cash flow.
• Disaster recovery: Aid in quickly rebuilding a business after a disaster.
• Time-sensitive opportunities: Capitalize on growth opportunities quickly with access to immediate funds. For example, you may have an influx of product orders but not enough capital to buy inventory to fill the orders.
• Debt consolidation: Debt consolidation loans can help you streamline your debt repayments into one loan. It potentially lowers your loan costs if the new loan offers faster repayment or lower rates than the previous loans.

Are you eligible for a fast business loan?

Fast business lenders tend to have lenient eligibility requirements, which can work in your favor if you’re a startup or have bad credit. Requirements include:

• Credit score: Most fast small business loans accept fair personal credit of 600 or higher, though you can find loans accepting scores as low as 500.
• Time in business: Fast business lenders typically want to see at least six months in business. Some lenders require more, such as one to two years.
• Revenue: Lenders want to see ample revenue usually at least $100,000 to qualify for a loan. You can find fast business lenders like Fundbox accepting revenue as low as $30,000.
• Current debt: Lenders will consider your current debt load to determine if you have a healthy level of debt and can take on new debt. They may use your debt-to-income ratio or debt service coverage ratio to assess your debt load.

Where to get a fast business loan

You can find fast business funding typically from online lenders. In some cases, traditional banks will provide fast approvals if you have strong credit and finances or for certain types of loans. Some of the top small business lenders that offer fast funding include:

• OnDeck: OnDeck is one of the few lenders that offer same-day funding, which you can receive if you apply for the loan early during business days. Choose from its term loans up to $250,000 or lines of credit up to $100,000.
• SMB Compass: SMB Compass offers nine types of business loans, including standard options like lines of credit and alternative loans like bridge loans and purchase order financing.
• Fundible: Fundible offers fast business funding with high loan amounts of up to $10 million, same-day funding and some of the lowest criteria for eligibility on the market. You can qualify with a personal credit score as low as 450, according to a spokesperson.
• Fora Financial: This lender provides short-term loans of 24 months or less to borrowers with subprime credit. You can get up to $1.5 million in the form of a term loan, line of credit or cash advance in which you repay the loan out of a portion of your future sales.

Should you get a fast small business loan?

Fast business loans work well if you need funding in 24 hours to 48 hours for emergencies or another pressing reason. Since these loans typically come from online lenders, you’re more likely to be eligible for fast business funding even with subprime credit or little business experience.

But you’re also more likely to pay higher interest rates than a traditional business loan in exchange for the convenience of fast loan approval. You can also expect short terms, like 24 months or less, and an aggressive repayment schedule. For example, repayments could be on a daily or weekly basis.

Because of this, you’ll need to know how to manage a tight repayment schedule and high loan costs — and be sure that the benefits of getting a fast business loan are worth it. If you can wait a week or two for funding, you may be able to get a lower-cost loan from a lender that doesn’t fund business loans as quickly.

Bottom line

The best fast business loans can help your company overcome financial setbacks or expand operations. But before applying, carefully review the pros and cons of fast business funding to decide if it’s worthwhile or if you should explore other options.

If you decide to apply, use a business loan calculator to figure out how much of a business loan you can afford. Then, consider prequalifying with multiple lenders to see which one offers you the best interest rates and terms.

Frequently asked questions

• How fast can you get a business loan?

  Many fast small business loans can be in your business checking account in as little as 24 to 48 hours, as long as you’re approved.

• Can you get a fast business loan with bad credit?

  You can get a fast bad credit business loan. Many lenders are willing to work with business owners with personal credit scores of 600 and above. Some like Fundible are even willing to help people with even lower scores. Expect hefty borrowing costs, and collateral may be required to secure funding. You’ll also generally have limited funding options than you would with a higher credit score.

• What is the fastest SBA loan?

   The SBA Export Express and Express loans are known to have faster turnaround times compared to other SBA loans; however, the lender determines the processing and funding for these loans. You can also work with an SBA Preferred Lender to receive other SBA loans with faster funding timelines than the usual 30 to 90 days.