There are many different reasons that a business could need an immediate influx of cash. Hopefully, in your case it will be one of the good ones, like a fantastic opportunity for expansion, a large order that you need a new machine in order to fill, or something like that. Unfortunately, sometimes the need for fast cash stems from a negative emergency like a major flood, broken equipment that needs quick replacement or serious delay in payments from customers that leads to cashflow problems. No matter where the need for quick cash stems from, it is extremely beneficial to know how to obtain quick money should your business require it.
Take out a Working Capital Loan
Although you will pay significantly more, if you are in need of quick cash, you can take out a loan from an online business lender which will be much faster than borrowing from a traditional bank. There are many online lenders who will be able to fund your business in days rather than months. One specific type of loan to look at is a working capital loan. This is a short-term loan that can usually be obtained in 48 hours or less. Some of lenders will ask for collateral and some will not. These types of loans most often require daily payments, so they’ll only be relevant if you have enough money coming in.
Take out a Short-Term Business Loan
If you need to borrow a large sum of money in a single payment, you can take out a business loan for a term of up to 18 months. These types of loans can be very costly but are a great option for quick cash when you need it. The interest on short-term business loans is similar to that of a credit card which is pretty high compared to other options. Still, since it is over a short period of time, it could be worthwhile. It is also important to note is that most short-term loans also limit the amount of money you can borrow, so if you need a substantial sum, this may not be the right option for you.
Business Line of Credit
If you open a line of credit with your bank for your business when you are not in an emergent situation, you will be able to access the funds when the need arises. This might take some time to set up (as well as some advance planning), however once it is established, tapping into a source of quick cash at an affordable interest rate will be much easier. Business credit lines usually require cultivating a good relationship with the bank, updating your financials regularly and maintaining a good credit rating. This method of getting fast money has the benefit of only paying interest on the amount you are currently using. Another advantage is being able to call upon these funds repeatedly, even while you still have an amount outstanding. It is unlikely that loan sources will allow multiple loans at the same time. Being able to re-borrow can offer a level of comfort that will mean you can take less at a time and pay less interest.
Credit Cash Advance
A relatively easy but expensive way to get quick money for your business is to take a cash advance from your business credit card. This is clearly one of the most expensive methods of taking care of business emergencies, but it is also one of the fastest. Most cards will allow you to take a cash advance by just going to a local ATM. Business credit cards usually offer even less attractive terms than personal credit card and should really be used as a last resort for your business when you need fast money.
If your business needs quick money to purchase new machinery, financing could be your best bet. It is common to be able to finance new equipment with a minimal down payment and relatively low interest. This is one of the most affordable ways to deal with these business emergencies, whether they are due to growth or damage. This financing is available through some of the same online lenders as the quick business loans but since the machinery is the collateral the interest is lower and the term can be longer. Equipment financing is also available through banks and sometimes even the machinery provider.
Invoice factoring is another effective way of getting an influx of fast cash for your business. Your business to business company can sell its accounts receivable to a third party at a discount. The third party (the factor) will then collect the debt from the customer, and your company will have already received the funds, only a percentage of them and not the whole amount. Factoring is a reasonable way to meet your immediate need for quick money. Sometimes the factor will require the invoices to be due within 90 days so before you choose this path, make sure your accounts receivable in the next few months will meet your current demand.
Each method of obtaining quick cash for your business needs has specific advantages and disadvantages. Which option is best for your particular situation will depend on your personal circumstances. How immediate is your need? What is your credit score? How much collateral does your business have? What are your open accounts receivable? What do you need the funds for? The answers to these questions will help you determine which of these choices is most realistic and hopefully it will be smooth sailing from there.