If you need a business loan, you probably don’t want to wait around for the money. You’d like to get the money from your business loan the same day so you can put it to good use…but is that even possible? Let’s find out.
How Same-Day Business Loans Work
Some lenders specialize in same-day business loans, also called instant business loans. Just like you’d imagine, the funds from the loan are sent to your bank account the day you’re approved. Many lenders process and approve applications in minutes, which means that if you apply for a loan today, you could potentially have the money by the end of the day.
Same-day business loans work like other loans. There’s an application process where you provide information about your business and its finances. You might be asked to connect to your bank account to demonstrate cash flow, or to submit financial statements.
Many online business loans use technology to review applications instantly. A human underwriter only needs to get involved if there are red flags or missing information. This speeds up the application process, which means you could get your money faster.
Once the application is approved and you’ve provided your bank information, the funds are electronically transferred to your business bank account.
How to Qualify for Same-Day Business Loans
Requirements for business loans that fund the same day will vary from one lender to another, but here are some common requirements.
- Credit score. Some lenders will approve applicants with lower credit scores (under 500, for example), while others will look for scores over 600.
- Time in business. At a minimum, you’ll need to be in operation for at least six months.
- Annual revenue. Some lenders may want you to be at a certain threshold of monthly or annual income to qualify.
Types of Same-Day Business Loans
Let’s look at some examples of business loans with same-day funding.
- Merchant cash advances. Rather than a loan, this is an advance against future credit and debit card sales. You’ll generally pay it back daily, plus a fee. Fora Financial, for example, advances up to $1.5 million in working capital.
- Short-term loans. These loans tend to be smaller, with short repayment terms. Kapitus, for example, requires repayment in six to 24 months.
- Online-only loans. Skip the bank and apply for a loan in minutes with an online-only lender, often with same-day funding. Flexibility Capital offers same-day business loans, lines of credit, and equipment loans.
What Can Help You Get Funding from Business Loans the Same Day?
Here’s how to streamline your application and put yourself in the best position for approval.
Make Sure Your Application Is Complete
Even though many lenders advertise that you can apply for business financing in just minutes, take your time. Carefully review the details in your application before submitting it. Make sure you’ve included all the required documentation so an underwriter doesn’t have to contact you, delaying your approval.
Check Your Creditworthiness
Before you apply for financing, know your credit situation, both personally and for your business. Once you know your credit score, make sure you’re applying with a lender that could approve an application with that score. For example, if your score is under 500, you’ll need to find a lender who will consider other criteria besides credit.
Have Your Business Financials in Order
Most lenders require some information about the finances of your business. You may be asked to connect your bank account or to provide a profit and loss statement or tax return. Make sure your finances are organized and up-to-date to speed up the process.
Benefits of Same-Day Business Loans
So why should you bother applying for business loans with same-day financing? There are plenty of reasons.
Immediate Access to Funds
Because these loans are funded the day you’re approved, you don’t have to wait to start using the money to grow your business. That means you can invest in your business today, not months from now.
Flexibility in Use
Same-day business loans can be used for a variety of business expenses, including:
- Marketing and advertising
- Equipment
- Hiring employees
- Inventory
- Product development
- Market expansion
- Technology
- Real estate
Minimal Paperwork
Traditional loans, like those offered by banks and credit unions, as well as the Small Business Administration, often require more paperwork than same-day business loans. With less time spent digging up documents, you can focus on how you’ll spend the loan funds.
Potential downsides of Same-Day Business Loans
With so many benefits of business loans that fund the same day, it’s hard to imagine there are any drawbacks. But you should be aware of a few things.
Higher Interest Rates
Sometimes, same-day business loans come with higher interest rates compared to comparable loans that go through a more lengthy underwriting process. Essentially, you’re paying for the convenience of accessing funds faster. Also, if the same-day lender has more flexible qualifiying criteria, that means they’re taking on more risk. Raising the risk level for the lender usually raises the interest rates for the borrower.
Shorter Repayment Terms
While SBA loans have long repayment periods up to 25 years, same-day business loans often need to be repaid in months, or up to two years. That means bigger payments, which may impact your overall budget.
Limited Loan Amounts
Some same-day business loans cap out at lower amounts compared to traditional financing. If you need millions, you may not be able to find a lender that will get you the funds the same day.
Alternatives to Business Loans with Same-Day Funding
If you can’t find a same-day business loan that you like or qualify for, consider these alternatives.
Business Credit Card
While it won’t put cash in your bank account, a business credit card could help you cover expenses, even when cash isn’t flowing. Use a card to purchase inventory or pay vendors. Paying your bill on time each month can help build your business credit profile.
Line of Credit
Sometimes you need access to cash. In that case, a line of credit is ideal. As you pay down your balance, the credit is available to be used again and again.
Personal Loans
If your business is too new to qualify for business loans, you may be able to take out a personal loan to grow your business.
Getting access to funds the day you apply for a business loan is a major perk. Although the higher interest rates and shorter terms require careful consideration, same-day business loans can be powerful tools for seizing time-sensitive opportunities without getting caught in lengthy approval processes.
