Easy Business Loans
One of your ovens broke, and you have a big order to fill by next week. Or, you are barely keeping up with your business’s growth and do not have time to fill out all the paperwork involved in a traditional loan. Whatever the reason, an easy business loan could look like the answer you need.
The very reason that you need an easy business loan could mean that you do not have the time or energy to put into a bank’s loan application. Or, you might be concerned about the long wait to be approved, particularly if you are trying to capitalize on an opportunity that has a time limit.
Easy business loans typically fall into the “short-term” business loan category, as lenders will not want to extend capital for a significant time without looking more into your business history and financials. A short term business loan might be all you need, and you can apply online and receive an approval the same day. Below is a list of the requirements to get approved for business funding with our most basic program. There may be additional factors that are considered, meeting these three requirements though gives you a very high chance of having your application approved.
What Do I Need to Qualify?
Below is a list of the requirements to get approved for business funding with our most basic program. There may be additional factors that are considered, meeting these three requirements though gives you a very high chance of having your application approved.
What are the Characteristics of an Easy Business Loan?
In lending terms, an easy business loan can mean several things. Easy can take the form of quick approval, or an easier application process. Easy might mean that there are lower standards to meet to qualify, therefore it’s an easy loan to get.
When most people mention an easy business loan, they are thinking of the following;
- Lower qualifications
- Short applications
- Fast approval time
- Quick funding
- Shorter repayment terms
Banks and traditional lender have minimum qualifications, and it can take time and effort to prove that you meet them. Alternative lenders and those who give private business loans can approve an easy business loan without making you jump through a lot of hoops.
Easy business loans can be available to those with poor credit, too. Often, past mistakes will take years to drop off a credit report. Late payments when a spouse was in the hospital last longer than the medical bills, or start-ups just learning how to manage cash flow can run into budgeting issues. Alternative lenders look at your current situation when making a lending decision, not the past. For these reasons an easy business loan will not be out of reach.
If you have only been in business a short time, your excellent credit score might not matter to a bank. Lack of a proven track record of revenue generation or repayment ability will prevent you from a quick approval. Not everyone who applies for an easy business loan would fail to qualify for a traditional loan, but they may want the advantage of shorter applications and quick funding.
Do Banks Offer Easy Business Loans?
The quick answer is “no.” Due to their more stringent lending requirements, banks do not move quickly through the small business lending process. They require significant documentation. To even qualify for a loan through a traditional lenders, these are the hurdles you must clear;
- Credit score above 620.
- Time in business longer than two years.
- Strong annual cash flows.
Even if you meet some of their requirements, the approval process has never been easy. Banks request significant documentation in the form of; tax returns, financial statements, bank statements, invoices outstanding, business plans, and more.
It can take months to be approved for a small business loan, months during which opportunities could pass you by or your business’ situation could worsen. Applying for a small business loan through a bank will not be an easy process.
Types of Easy Business Loans
When you are looking for an easy business loan, you will want to consider how quickly you can be approved, how soon you will receive the money, and who will give you the best terms. The loan is unlikely to take the form of a fixed-rate, term loan, but will be an alternative form of capital.
Bad Credit Business Loans
Even if you do not, personally, have bad credit, a bad credit business loan might be the right loan product for you. If you are looking for an easy approval process, quick approvals, and fast turnaround times, these loans offer all that and more.
Because they are accustomed to working with businesses who do not have great credit, alternative lenders who offer these loans have streamlined their approval process and have different requirements. You will not have to produce years of bank statements and tax returns. Often, your business’ revenues and proof of identity are enough to be approved.
Their bad credit business loans do have higher interest rates than a bank loan, from 12% to 45%, but are still much less than a merchant cash advance. Typically, they require a minimum of $8,000 in monthly revenues.
Short Term Business Loans from Alternative Lenders
The best easy business loans on the market are through alternative lenders. They can approve a loan within 24 hours, and fund it within a few days. Loans are approved on the basis of annual revenues, and they will work with borrowers who have only been in business two months.
An easy business loan through an alternative lender will have a repayment period that ranges from two months to one and a half years.
Your payments on a short term loan will be higher than those on a long term loan, because the capital you’re repaying plus fees is spread over a shorter period. For example, if you take out a $8,000 loan, including fees, for five years, your monthly payment would be $133. The same loan, repaid over two years, would require $333 as a monthly payment.
These amounts are just an example. Since alternative lenders lend anywhere from $5,000 to $1 million business loans your payment will vary. But you should budget for higher loan payments if you take out a large business loan.
Alternative lenders also offer extremely flexible repayment plans for their bad credit business loans. They prefer auto-payments set up to deduct monthly, bi-weekly, weekly, or even daily. You can find an easy business loan that fits in with a business’ unusual cash flow pattern when you work with an alternative lender.
Merchant Cash Advances
If your business has strong revenues, look into a merchant cash advance. You can receive funding in a short period of time, and without having to complete lengthy loan applications.
With this type of funding, a lender advances cash on future sales. To determine how much they’ll give you, they analyze several months of credit and debit card transactions to get an average. They do not even pull your credit score, and your only application could be giving them your business name, address, and some bank statements.
Merchant cash advances are ideal for businesses who process a high volume of credit card sales, such as restaurants, grocery stores, and more. If your customers pay in cash or check, it is not a good choice.
The lender is repaid by deducting a percentage of each future sale that you swipe. That deduction includes the percent they take as profit, which can be quite high. Rates can start at 15% but frequently rise to triple digits. A merchant cash advance may be an easy business loan to obtain, but it is not a cheap one.
Invoice Financing and Factoring
Invoice financing and factoring is only easy to get if you have a large balance of past due receivables which might be enough to generate the capital you need. While lenders in this space do not request the massive amounts of documentation needed for a traditional loan application, there will be some paperwork involved.
Invoice financing exists to cover the lag between invoicing and getting paid. Bills will still come due during this time, so Accounts receivable (“A/R”) financing lenders, extend credit on these past due receivables to help you smooth over your cash flow.
In these transactions, you pledge the value of your past due receivables to the lender. Your personal credit is not a factor. The lender may check your customers’ credit, however. With invoice factoring the invoices are sold directly to the lender, and they collect on the past due balances. You have no further involvement with them.
Be careful when choosing your invoice factoring company, if they are aggressive in their collection tactics they could harm long-term customer relationships. As well, customers could become confused and think your business is in jeopardy if they receive calls from a collection company.
In invoice financing transactions, you pledge those balances. Invoice financing lenders either take a percentage or flat fee of the invoices to repay the loan’s capital plus the profit they want to make.
An invoice financing lender also holds back a reserve when they advance funds. The reserve protects them from customers who will never pay, and the amount they hold back will be based on your customer’s risk profile. The amount they advance of the invoices’ remaining value could be 80-85% of its total or much less.
How to Find the Best Easy Business Loan
If you need an easy business loan, you are probably short on time. You should still take a few moments to research and compare potential lenders.
Searching on the Internet will yield many options. Before you apply, compare the different rates, fees, and terms. If you have time, talk to a few of them and get different quotes. Not all high-risk lenders will offer you the same deal; comparison shopping could save you a lot of money.
When borrowing, it’s best to work with an established lender. Their lending experience works in your favor, as they know how to service private business loans, will not approve you for an amount you cannot repay, and can answer your questions. Shield Funding has been in business for over ten years, working with small businesses who need fast access to capital.
A longer time in business indicates that a lender has satisfied customers and knows how to meet the market’s needs. Lean on word of mouth by asking similar businesses in your network which lenders they have worked with if they needed an easy business loan. They might have experience with a lender on your list.
Improving Odds of Being Approved for Easy Business Loans
If you are worried that your business’ situation could worsen your odds of being improved for an easy business loan, here are a few tips to improve an application.
Wait to Apply for an Easy Business Loan
Just a few more months in business, enough to put you over a two-year mark, could drastically lower the fees you will pay on an easy or bad credit business loan. Unless you absolutely must get the capital now, see if you can wait to apply.
Work within your network to outsource a big order, or to borrow needed equipment. Talk to a customer to see if they can shift their production timeline. If you can, build your revenues in other ways while you’re waiting.
Fees and interest rates reflect the risk that a lender sees in lending to you. You will be charged more if they question your repayment ability. If you want to pay less for capital, demonstrate revenue growth and successful operations for a longer time.
Increase your Marketing Efforts
Increased revenues also help you qualify for an easy business loan. Monthly revenues can be a large part of the lending decision. Make a plan and put more effort into marketing. Utilize free marketing methods like social media, ask friends and families to write reviews, and invest a little in reaching out to potential new customers. Pushing marketing promotions leads to higher revenue leads to an easier time getting approved for a bad credit business loan.
Work on Your Credit Score
Not all easy business lenders check your credit score, but a higher score will not hurt if they do. Set up auto-pay for your bills to avoid late and missed payments that ding your score. If it is the first time you have had an issue paying on time, call the creditor and see if they will agree to not report it to the credit bureaus.
Your debt service ratio, i.e., the amount of your net income used to service debt, negatively impacts your credit score and might be a component of a lender’s underwriting decision. Paying down balances on revolving lines of credit, like credit cards, can immediately improve your ratio.
Read our bad credit repair guide if you’re interested in learning more about credit repair.
The Final Word on Easy Business Loans
An easy business loan can see your business through a tough spot, or push you to the next level of sales and reach. Immediate capital needs are rarely served by going to traditional lenders, but alternative lenders are eager to help.
While you will pay more in interest and fees and have a shorter repayment term and easy business loan will help your business reach its goals. Often, you can pay it off early and save money if there are no prepayment penalties. Your true cost of capital could wind up much lower than anticipated.
Alternative lenders fill the gaps left by traditional lenders, who have been drastically cutting back on small business lending at the same time as they extend the loan approval time. They make it easy to find a small business loan that meets your needs.