According to a 2023 report from the Federal Reserve Banks, 65% of businesses applying for loans from online lenders cited “speed of decision or funding” as a determining factor when choosing a loan. With so many financing options available, small business owners are turning to online lenders for access to working capital—many looking to submit applications, get approved, and start using funds by the next day.
What is a fast business loan?
A “fast business loan” refers to business financing that allows you to gain access to capital quickly and with as little friction as possible. Many online lenders offer a simple process: apply online, get a decision in hours or even minutes, and receive funds in your bank account within 1–2 business days. You may also see financing options advertised as “same-day business loans.”
Sometimes, lenders will let you apply without even doing a hard credit check, which helps speed up the decision and preserves your business credit score. It’s important to note that you may still undergo a hard credit pull if you’re approved, though.
Types of fast business loans
A fast business loan could come in the form of a lump sum, like a traditional loan, or a business line of credit. There are several differences between the two, but the main thing to know is that you’re responsible to repay your entire loan if you receive it in a lump sum. If you have a line of credit, you’re responsible to repay each individual draw you’re approved for—so you only pay for what you use.
Explore business loans vs. lines of credit.
Why do business owners look for fast business loans?
While some business owners might be seeking startup capital to get their companies off the ground, most lenders have a minimum requirement for time in business, as well as proof of regular annual revenue. With that in mind, here are two of the most common uses for business loans:
- Growth capital – You plan to invest in the business to grow top-line revenue. For example, you might put money into research and development (R&D) to develop new products or services, or increase marketing spend to boost sales.
- Operational capital – You need a buffer of cash to help cover day-to-day operational expenses, like paying vendor bills, hiring staff to support a surge in business, or paying your team while you wait on customers to pay you.
Factors to consider when shopping around for loans
When you start researching types of business loans and the best lenders to work with, you should always keep your business needs top of mind.
First, look at qualifications to make sure you’re pursuing a loan or line of credit that you have a good chance of qualifying for. Don’t waste time chasing a really low interest rate or other feature you may not have the credentials for quite yet.
Also, remember that you’re looking for fast loans for a reason—you need immediate access to business capital. Today, credit and loan decisions can be made in a matter of minutes. Some lenders can offer same-day funding, especially if you use a business checking account with the same financial services company you get your loan from. In other cases, you may need to pay extra for same-day or overnight funding, or you might be required to wait 1–3 days for funds to land in your existing bank account.
Pros and cons of quick business loans
Line of credit advantages and disadvantages
Well-suited for ongoing operational capital
With a business line of credit, you can draw the funds you need when you need them—so, you only pay interest on the money you put to work, not the full amount available on your credit line. One of the biggest advantages of a line of credit is that you can use it to establish borrowing power before you need to use it.
A potential disadvantage of using a line of credit for your business is that there may be a shorter window available in which to use it, as each individual draw typically requires approval from your lender. If your revenue or ability to repay change drastically, your available credit may decrease as well.
Pros:
- Only pay for what you need
- Replenishes as you repay
- No prepayment penalties
Cons:
- Variable interest rate
- Potential for shorter windows of availability
See how Tech Leaf used a Bluevine Line of Credit to power growth.
Business loan advantages and disadvantages
Well-suited for large, short-term borrowing needs
Loans are usually more appropriate when your business has a larger expense to cover, with plans to put most of that capital to work right away. With fixed-term loans, you know exactly how much principal and interest you’ll be paying back, so you can factor that payment into your budget and cash flow planning.
Pros:
- Access to a lump sum of money
- Fixed interest rate
Cons:
- Does not replenish
- Early repayments may be penalized
How to get a good interest rate on your business loan
Most lenders have minimum credit score requirements for business owners, along with a minimum revenue and minimum amount of time in business. So, maintaining a high personal credit score can certainly benefit your business, especially if you’re seeking a loan or line of credit for quick cash infusion into your company.
As a borrower, you should also provide all your bank accounts and documentation to increase your chances of getting better rates and maximizing your loan amount.
If you have a clean financial background—that is, with no bankruptcies—you’ll be in a much better position to get approved for a fast business loan. Just like your credit score, personal financial information is part of the criteria lenders use to evaluate their risk and underwrite your small business loan.
Dos and don’ts for managing your business debt
Here’s a list of tips for what you should and shouldn’t do when applying for and managing your business loan and/or line of credit.
Do: Have a clear view of your cash flow.
It’s important to know how much you need and how you plan to use the extra capital. It’s also crucial to understand your ability to make the necessary repayments within the term of the loan or line of credit you sign up for.
Don’t: Ignore the credit check method.
Depending on the lender, you may undergo a soft credit pull—which doesn’t impact your credit score—or a hard pull. Hard credit checks appear on your credit report and can negatively impact your credit score temporarily. Know what you’re getting into when you apply, especially if you’re applying for multiple offers in a short period of time.
Do: Read the fine print.
Some lenders are more transparent than others about annual percentage rates, fees, and penalties associated with when and how you make repayments. Be sure to do your homework and have a full grasp on your loan’s terms and conditions.
Don’t: Disregard the loan structure.
The goal is to gain access to the capital your business needs, in the form of a line of credit or loan that best suits the way you operate. In some cases, the terms and structure of business financing are just as important as the dollar amount and interest rate.
Do: Connect all your bank accounts.
It’s better to provide all your business and/or personal bank accounts and documentation to set yourself up for the best possible business loan terms.
Don’t: Overlook your current banking platform.
The best available rates and terms could be closer than you think. If you have a business checking account with a banking platform that also offers loans or lines of credit, consider applying there first—you may get preferred rates and terms as an existing customer.
By keeping your business checking and, say, line of credit in one platform, you could also get instant access to your approved draws right in your checking account.
Manage all your business finances in one place with Bluevine.
