Small businesses often are in need of capital. That is the lifeblood of any business. A business’ cash flow is paramount for it’s success. Fast business capital can save a business from falling behind their competition or from shutting it’s doors for good.
Unfortunately, there aren’t many options for small businesses to turn to for fast business capital. Going to a bank is the first and smartest step as a bank loan will more than likely provide the least expensive option with the best terms. But, this doesn’t fulfill a business’ need for obtaining “fast” capital. Banks are historically slow in providing capital. The application process itself takes way too long, weeks in fact just to find out your are denied. The paper work involved to apply is also daunting.
But let’s suppose you go through all barriers with the application process, wait weeks, get approved…then what? Then, you may have to wait another 2-3 weeks to actually get the cash. Application to funding overall equals about 4-8 weeks.
Options For Fast Business Capital
The options for small business owners are limited. Family and friends will probably not be an option as you most likely turn to them to get your business started in the first place. Again, banks take way too long but what if you are not “bankable?” Meaning, that you have only been open for few years or your credit isn’t good enough, or you are considered a “high risk” industry.
The option that is left for fast business capital is the alternative business lending sector. This sector is made up of private alternative banks which specialize in financing “non-bankable” businesses. You can get funding in less than a week. These alternative lenders are well versed with dealing with high risk businesses that banks will not lend to. They have established a lightening fast process of underwriting that isn’t dependent on your credit score, enabling small businesses to secure capital fast.
But with this convenience will come a cost and you should tread lightly and do your homework. Alternative lenders can be expensive. The cost of borrowing will be 15-45% and this is for a relatively short term; 2-18 months in most cases. When determining what the APR is it will approach upwards of 60-70%. Again, this is only an option to provide fast business capital to increase cash flow, buy inventory, hire new people, expand, secure a new lease, buy supplies, make payroll, etc.
Many small businesses go this route and use this type of alternative funding correctly. They usually will solve an immediate problem or will make a purchase that returns much more revenue than what the capital cost. In these two instances, this makes sense. You shouldn’t be taking alternative funding to pay for a trip to Hawaii. Small business funding of this type is a viable option when used correctly and certainly alleviates the issue of not being able to get a bank loan.
Can Alternative Lenders Provide Fast Business Capital That Fast?
If your definition of fast is 2-10 days then the answer is yes! If you receive an approval decision, which takes 2-24 hours, you are available to speak to the lender, and can provide the documentation needed for fast business capital (application, bank statements, lease, ID, voided check) then you can get capital quickly. What usually holds up the process is you, the business owner. Be prepared with the items listed above and you can receive fast business capital in a matter of days.