Many businesses finance growth and meet short-term capital needs with a small business loan. There are times when fast access to additional capital, or access to a fast business loan, is critical to taking advantage of an opportunity to create additional ROI or meet a short-term business challenge. Unfortunately, because popular media promotes the idea that money is the solution to every business challenge and the more the better—it’s important to remember that borrowing more than is required can be expensive for small businesses; and could even put their viability at risk.
Although a traditional small business loan from the bank is a good option for some borrowers and some circumstances, there are many situations when the typical weeks-long processes associated with their application criteria makes it simply too slow or burdensome given the business need. When unexpected expenses, or opportunities require a fast business loan, the local bank might not be the best choice.
Fortunately, in many instances a quick answer to your loan application is often available online. Lenders like OnDeck, for example, are often able to have an answer to your loan request in under an hour—sometimes as quickly as within a few minutes, and once approved, you can often have the loan proceeds in your bank account the next day, sometimes within 24 hours.
Common Circumstances that Require a Fast Small Business Loan
Not all businesses or surprises are the same, but here are some pretty common business expenses that are sometimes difficult to anticipate:
- Equipment failure: If your business relies on specialized equipment to do business, regardless of whether it’s a pizza oven critical to your restaurant or a large milling machine that plays an integral role within your manufacturing process, every hour that equipment is down is costing your business money. Acting fast to get up and running again is a part of staying viable.
- Building maintenance problems: If you do business out of an older building, it’s not uncommon to occasionally face plumbing, electrical, or other building maintenance problems. The costs of digging up a sewer line to the street or putting a new roof on your building can easily add up beyond what might be available in your cash flow—particularly if the expenses are unexpected and need to be responded to quickly.
- Growing pains: Most business owners welcome the opportunity to grow, but sometimes growth comes with unexpected expenses. There are sometimes overlooked expenses to hiring new employees like additional supplies, training, or maybe the need to purchase a new desk and office equipment. Depending upon your business, ramping up a new employee can become expensive. While most business owners want to see their businesses grow, it’s difficult to anticipate every expense associated with growth.
- Unexpected opportunities to increase profits: Not all surprises are bad news. For example, suppliers sometimes offer unexpected discounts to their customers who can act quickly to take advantage of a special offer. It might be an opportunity to purchase quick-turnaround inventory at a steep discount or maybe a special offer on a new piece of timesaving equipment that will make serving your customers more efficient. To take advantage of opportunities like these, you’ll need to act fast and won’t be able to wait for several weeks to get an answer from the local bank.
- An opportunity to expand: Maybe that extra space next door has become available or the bigger storefront down the street has gone up for sale. The opportunity to expand might make it possible to secure more customers and generate more income, but the added expense might be something you hadn’t anticipated. Quick access to capital might be required to pull it all together.
These are just a few of the unexpected business expenses that might require a fast business loan. Knowing where to look for a quick business loan when you need an answer right away can sometimes make the difference between solving a problem, taking advantage of an opportunity, or not.
Speed to Funding
In a survey conducted in the spring of 2016 by the Electronic Transaction Association (ETA), 63 percent of the small businesses surveyed identified speed to funding as the reason they chose an online business loan. 57 percent cited the easy application process and 51 percent the affordable total loan cost. Needless to say, a quick answer and quick access to funds is an important consideration to many small business owners.
96 percent of those surveyed said the reason they were borrowing was to secure capital to enable or drive business growth. Additionally, these small businesses generally anticipate a 5x return for every dollar they borrow. In other words, they expect to earn $5 for every $1 they finance to purchase things like inventory (51 percent) or equipment (54 percent).
A Fast Business Loan From OnDeck
While a traditional bank loan often requires specific collateral before they will lend to a small business and may rely heavily on the personal credit of the business owner, OnDeck offers fast small business loans from $5,000 to $500,000 with a general lien on business assets during the loan term and a personal guarantee. In this way, small business owners are able to access the capital they need quickly without securing the loan with specific collateral, and are able to repay the loan quickly to manage expenses.
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