Why you might need fast working capital
Finding out your business has an unexpected expense to pay can be stressful. Whether your business has the ability to access emergency funds or your business needs to seek out lending options, unexpected expenses happen. So, make sure your business has a plan if they do.
While there’s no limit to the possible number of unforeseen expenses that could happen during your time in business, there are some that may affect your business more frequently than others. Here are a few common reasons you may need to seek out lending solutions:
- Emergency repairs: When equipment is an essential part of your business’ daily operations, your business can’t afford waiting to get them fixed. Leveraging a small business loan can get operations moving again without having to compromise on other areas of your business. Waiting might lead to bigger problems down the line so it’s important to replace or repair as soon as you or your team spots an issue.
- Seasonal fluctuations: Much like anything else, business sales ebb and flow. Ensuring that your doors stay open during slower business months may require a financial boost that a small business loan can provide.
- Payroll: The more customers demand from your business, the more your business demands talented team members. Talent is an important differentiator when it comes to industry leaders. Obtaining fast working capital could be a great, workable solution for ensuring payroll is covered when you’re looking to scale your business.
- New business opportunities: When opportunity comes knocking, your business should be ready to take on that opportunity. This might include acquiring a new acquisition, a new piece of machinery, or introducing an ERP system to help scale your business. Although these are investments that can help improve your business, they still require capital to get things off the ground. Fast funding can help you achieve the growth your small business needs to keep your company evolving.
The best small business loans for quick working capital
Ultimately, the best small business loan is the one that is best suited for your business. Take a look at the various small business loans available to you:
- Short term loan: A term loan is a flexible lending option that provides your company with access to capital on a need-to basis. Once your company has been approved for a set amount, it will then be deposited into your business bank account for immediate use. Short term loans provide you with the working capital you need faster than a traditional loan and the ability to pay it off quickly.
- Line of credit: A line of credit is a flexible funding option that can be accessed by small business owners as a kind of revolving capital that works similarly to a credit card. Your business will be approved for a set amount of credit which then allows your business to draw on that amount when needed, only paying fees on the outstanding balance. This can be a great solution if your business only has a few consecutive purchases and doesn’t need to acquire a large loan amount.
- Business credit card: A business credit card can provide transactional ease when purchasing, invoicing, or providing funds for your business. A business credit card operates in a similar way as a traditional credit card – the difference tends to be in the benefits of purchases that business owners typically make for their company. Opening a business credit card is a fast and easy way to charge company related expenses especially when time isn’t really on your side.
Applying for a fast-working capital loan
Small business financing requirements will vary based on lender, but when applying for any small business loan, make sure you have these documents handy:
- Business plan: Most loan applications will require a detailed business plan along with the loan application. The business plan should include a complete set of projected financial statements – both profit and loss – cash flow, and a balance sheet. Lenders need to see what your business goals are and what you plan to do with your business’ working capital if approved for the loan.
- Financial statements: Many loan programs require anywhere from three months to one year of business bank statements to be submitted as part of the loan package which may include a detailed report of revenue and expenditures as well as company credit history.
- A business banking account: Having a separate business bank account can make your accounting easier to manage and can help you distinguish between your personal and professional financial records.
- At least 3 months of bank statements: Your lender will closely review bank statements to glean a better understanding of your business’ transactional history. Your lender will consider any disparity between your business bank statements and any other document (such as your business tax returns) as a potential red flag, so it’s important to audit your documents prior to submitting your application.
- Business license: Lenders need to ensure your business is licensed in your state to operate lawfully.
- Legal documents: Legal documents required by your lender may be in the form of:
- Articles of incorporation
- Copies of contracts you might have with third parties
- Franchise agreements
- Commercial leases
- Tax returns: Your company’s income tax returns can illustrate business performance which is an integral part of the loan application process.
- Collateral, depending on loan type: Collateral requirements vary greatly. However, it is a good idea to prepare a collateral document that describes the cost/value of personal or business property that may be used to secure the loan.
It’s important to keep in mind that each lender will have a different way of doing things so make sure you do your research and choose a lender that’s right for your business.
Common business loans FAQs
- Can I get a fast-working capital loan with bad credit? Credit is not the only determining factor when it comes to qualifying for a small business loan. Lenders will assess the overall performance of your small business by taking a look at business revenue, time in business, accounts receivables, and business credit history.
- Where do I get a fast-working capital loan? For access to quick working capital, your business may want to consider alternative lending. The loan application is offered online and can be completed in minutes. Banks and credit unions are a good option if your business is well established, and your business can provide substantial collateral. However, they may not be a good choice if your business needs financing quickly, since, with traditional banks and credit unions, the application and funding process can take days and, in some cases, weeks or months.
Summary & conclusion
Paying for unexpected expenses can be stressful, especially if your business doesn’t have emergency funds on hand. The good news is, there are many fast-funding options available that can help you cover what your business needs when it’s in a financial bind.
If you’d like to learn more about small business loans for fast funding or would like to speak with a business advisor about small business financing, please call one of our small business experts at Rapid Finance today: (877)-252-0827.