When a fast small business loan is needed, it never seems to be for enough money or fast enough! The frustrations faced by many small business owners due to paperwork headaches, lack of collateral and trying to be the chief financial and executive officer at the same time can lead to serious stress. There are several ways to get a fast small business loan and the preparation needed ahead of time may be minimal. Whether money is needed to start a business or whether an influx of capital is needed for operations due to a temporary cash flow problem, these methods may help immensely.
Banks and credit unions
The focus on this method will be minimal. Many small business owners lack the collateral or time to deal with a traditional bank. If the business owner does own a home or other property it may well be worth establishing a home equity line of credit that can be tapped for business purposes in an emergency. A quick input of some basic information into a HELOC calculator will show a realistic range of money that a person may expect with an asset-backed credit line.
If possible, it is always a good idea to take out a loan to build credit with a bank ahead of time. A secured loan is virtually guaranteed to be approved. The business owner deposits a $1000 or some other minimal amount into a certificate of deposit with the bank and receives a $1000 loan, which is paid back over the course of a year or more. The CD that was collateral is then returned to the business owner. An established payment history may mean the ability to get a fast small business loan in the future with an unsecured signature loan.
Peer to Peer Lending Sites
Peer to peer lending sites are one of the best ways to get a fast small business loan. The concept is simple: borrow small amounts from a bunch of regular people and pay it back like a traditional loan. Sites like Prosper.com or Lendingclub.com are easy to register for and use, and any type of credit score may qualify. It is up to the borrower to sell both himself and his business plan. The application is completed along with the amount of money sought at a stated desired interest rate attractive enough to lure bidders. Those with good credit and a sound business model might qualify for a lower rate than they were expecting. Many of these sites allow loans up to $25,000 so it can be a great way to get a business loan in a hurry. There are usually no penalties for early repayment and the fees to generate the loan are minimal.
A small business owner should be prepared to defend the business model and answer questions from prospective lenders. These people actually want to invest in success because they reap the rewards by collecting interest. At the same time, the people backing a loan are real people with real problems, too, and do not want to risk money on a bad venture. The amount of work dedicated to presenting a case and plan can really pay off. The turnaround time is very quick. Loan requests generally run for a week. The best part is that if other financing comes through or if the terms are not appealing on the final result, the loan may be canceled, or the original terms may be altered and relisted. Sometimes the second time will generate a better outcome. Peer to peer lending can be a great source for a quick business loan for either start up or ongoing operations.
The pawnshop is often an overlooked source for quick business loans. These businesses have cash to loan, have many convenient locations and long hours. This is not a useful source for startup funds necessarily, but can be a real safety net for unexpected cash flow issues. Late customer payments, a massive sale on much needed inventory, a broken window, and any number or other unexpected emergencies can offer a great opportunity or a serious threat that requires cash immediately. There are numerous small business owners that use a pawnshop to get cash for short periods of time. Desperate small business owners anxious to raise funds have used everything from equipment to cars to diamond wedding rings. The range of collateral that can be used in a pawnshop far exceeds the type of things banks generally ask for. This process is very quick, but the fees may be substantial. Use this method carefully and only for short periods of time when real funding is imminent.
Friends and relatives
For many people asking friends or relatives for a fast small business loan is a true last resort. Friends remain friends for a reason and relatives may try to leverage indebtedness into control over the borrower. The use of friends and relatives may be lucrative if done right. The trick for any small business owner is to keep the loan and relationship strictly business. Treat the acquaintance like any other investor. Sell them on the vision and long-term growth of the small business. The business owner should offer an attractive interest rate that will lure their money out of the bank and into the capital pool. The friend or relative should be offered a signed contract stating interest and repayment terms. When this approach it done well, rather than the small business owner offering thanks, the lender may be the one doing the thanking for being given the opportunity to invest in such a fine venture!
As long as there are small businesses, there will be a need for capital in the form of a fast small business loan. Methods like maxing out credit cards and small business associations may be explored as well, but are usually either too expensive or not fast enough. A smart business owner will understand how to present their vision in a favorable light or show supporting documentation of success for an ongoing enterprise to potential investors. Sell the business so investors will buy into it. This is always the best way to get a fast small business loan.