Is your business struggling to source some cash to sustain stable business operations? An emergency business loan can put your business operations back on track and manage to pay your suppliers and creditors.
Hence, there are several options available for your company to raise cash to fuel growth. However, the struggle to a financial emergency is rare to have the same level of options when it comes to business financing.
There are several lines of credit and short-term loans designed to bridge financial gaps. These credit platforms will give your company the money it needs. Extra cash from a quick business loan can help you recover from an unexpected cost.
Every day, you will be facing tough decisions. However, financial matters are the one you really should not take lightly. Moreover, when sales are down, and costs are high, expect potential problems will arise at any moment. Always remember that business has irregular trading cycles and frequently struggling for cash at crucial times.
When your company is experiencing a financial emergency and a shortage of cash to pay suppliers and creditors, it is vital to be quick and fast in making the decision.
Consequently, cash flow problems lead to insolvency and closure of any business. Failing to seek emergency financing will force your business to consider options like closing your company to pay your creditors and suppliers.
Thus, mobilizing money using an emergency loan can give your company the cash it needs to continue trading and paying the creditors. In this way, you have ample time to re-assess and improve your cash flow and get back on track.
Ways to get a quick emergency business loan
Get a short-term loan
Applying for traditional loans is not much help to solve the immediate need of your cash flow crisis. The easiest for businesses to get the lump sum or the quick cash is through a short-term loan.
Usually, the short term business loans is under the term of less than a year. It has simplified (and typically online) applications, and can get the money you want to borrow directly to your account in 24 to 72 hours. Moreover, most of them don’t even require collateral.
The critical point to ponder is that it has high rates but very few regulatory requirements to comply.
The repayment schedule is accelerated. So, these loans charge a flat rate instead of interest. The price is a percentage of the amount you borrowed (£10,000 x 20% = £2,000, so you’ll be paying for £12,000). You’ will be able to complete the payment of the credit immediately. The payment schedule could be weekly or even daily, with fixed payments automatically withdrawn from your business bank account.
Get a merchant cash advance (MCA)
An MCA is likely similar to a short-term loan and shares few characteristics. MCAs have simple application processes and qualification. The platform is less governed by the financial regulatory bodies than short term loans. You can also get the money in one to two days. Also, MCA and short-term loan are the same to follow flat-rate approach.
The MCA lending firm will collect a percentage of your daily credit and debt according to the sales. The lender receives the lump sum and gives you plus their fee. Since your sales may vary from day to day, MCAs don’t have exact term lengths. If purchases are right, then you can pay the debt off more quickly.
However, MCAs are one of the most expensive ways to borrow money.
An installment loan from an alternative lender
Some alternative lenders offer products that resemble traditional installment loans. These loans are known to be in longer-terms and regular monthly (sometimes weekly) payments.
However, installment loans don’t necessarily promise the 24-48 hour turnarounds, not like with short-term loans and merchant cash advances.
Use of business credit card
Business credit cards can be convenient to pay emergencies. However, it is limited to emergency costs that are smaller in amount. Moreover, the loan will become expensive when you let balance to sit in your card month after month.
On the other hand, if you pay on time and in full, you won’t owe any interest. Better yet, use the advantage of the rewards programs that credit cards offer.
A quick way to get an emergency business loan without too much risk is invoice factoring. Factoring companies offer to purchase your unpaid invoices for around 80 percent of the face value and less small fee. You’ll be getting an advance on your invoices by signing them over to a third party, which is the factoring company.
The catch is that you should have unpaid invoices in hand for you to qualify for invoice factoring.
Line of credit
There are banks and alternative lenders that offer business lines of credit. It is a revolving line of credit that is like a credit card.
It works when the lender will approve your business application for a certain amount of credit with an agreed period. During that time, you can withdraw money upon your line of credit in any increments. However, you have to make sure that withdrawals don’t exceed your credit limit.
You pay and owe interest on the amount of credit you’re using. Every time you pay your balance, the loan becomes available to use again.