July 11, 2022 By Max Freedman

There may be times when a small business owner needs to get a loan to boost cash flow to meet business goals. One factor to consider is how quickly you need loan proceeds as different types of funding come with different time to fund. Some loans fund swiftly and some take more time. Before you start a loan application, determine how quickly you need the funding and review these factors that can impact the speed of the process.

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But just how fast can you get a small business loan, and what terms can you expect with an expedited loan? Read on to find out.

What is a small business loan?

A small business loan is a lump-sum amount of money you borrow to help start or grow your business. It can help you buy equipment or commercial real estate, hire new employees, keep up with payroll, refinance your debts, and more.

How fast can you get a small business loan?

Loan processing speed depends on several factors, but generally, the more favorable a loan’s terms, the longer it will take to process. Business financing from traditional lenders often takes months because they offer higher loan amounts, so they’ll vet you more thoroughly. While loans with faster payouts (even same-day) are available, their terms and conditions are often less borrower-friendly than traditional options. Namely, they usually come with shorter repayment terms and higher interest rates.

6 factors to consider when you need a small business loan quickly

Despite the higher financial risk, dire economic situations may necessitate a short-term rapid-funding loan. However, not every fast business loan offers the same benefits and drawbacks. Understanding the factors that comprise the typical loan package can help you find a fast option that poses less risk. Here are six key factors to consider.

1. Loan amount

What do you need your extra money for, and how much will this amount of money cost you? The more money you borrow, the more your loan will cost – every dollar you borrow generates interest and fees. That’s why you should consider applying for a loan that can cover all your expenses, but not much more than that, if at all.

2. Interest rate

Short-term loans can have higher interest rates that pose challenges to paying off the loan within your repayment period. That’s why, before you apply for any loan, you should research the lender’s average interest rates. You should then attempt to build a repayment plan while taking these rates into account. That way, before committing yourself to a loan offer, you know whether your annual revenue can adequately cover your repayment.

3. Repayment period

Many short-term loans from online alternative lenders have repayment periods of around one year. Short-term bank loans typically let you repay them over two to five years. That said, the amount of time you’ll have to repay your loan can vary from lender to lender, not just by loan type. You should do some research to find a timeline that fits your budget.

Longer repayment periods lead to lower monthly payments since you’ll have more months among which to divide your total owed. On the other hand, shorter repayment periods – although they theoretically relieve you of debt more quickly – lead to higher monthly payments. So sure, you can pay off your loan more quickly, but if you can’t afford the high installment amounts, you’ll wind up paying extra fees. Those fees can make what you first thought was an affordable short-term loan prohibitively expensive.

4. Additional fees

There’s more than just the long-term cost to worry about when taking out a small business loan. There’s usually a more immediate price – namely, additional fees. The fees added will depend on the lender, but you can typically expect loan application fees, origination fees, service fees, and more. Combine that with interest, and you get your APR, the clearest indicator of your loan’s true cost.

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5. Lender reputation

A financial institution's reputation with prior borrowers says a lot about the loan options they’ll likely offer you. A poor reputation among former applicants often hints at terms and conditions that can prove a significant drain on your financial resources. Likewise, while short-term loans may come with less-than-ideal terms, a short-term lender with a good reputation is more likely to accommodate your needs.

6. How prepared you are with documents

Coming to the table with proper documentation is essential to a smooth loan approval process. SBA loans and traditional bank loans require more paperwork, as the banks that offer them are highly risk-averse and will thoroughly review your credentials. On the other hand, some short-term loans may require less comprehensive documentation, so they can be faster to obtain. The most common documents lenders ask for include your proof of identity, financial statements, business plan, and potentially dozens more.

Tips on how to speed up the small business lending process

If your small business needs extra working capital, there are a few things you can do to help ensure the fastest loan approval process possible.

Choose peer-to-peer lending

Peer-to-peer (P2P) lending doesn’t follow the typical processes of other loan types – instead, it runs off the contributions of individuals. It’s primarily an online process where struggling small businesses find private, individual lenders – as in, everyday people – to fund them. Directly connecting business owners with the lender cuts out the middleman and allows for faster money transfers. However, these loans typically have higher interest rates and shorter repayment terms than traditional financing options.

Consider alternative online lenders

Alternative online lenders can provide financial assistance when your credit history doesn’t meet the minimum requirements for traditional financiers. They often care less about your personal credit history and more about your business plan and growth plan. Additionally, some online lenders don’t ask for collateral unless an applicant is looking for larger loan amounts. However, their interest rates are some of the highest around.

Look into SBA Express loans

Small business owners with good credit scores may qualify for certain loans that resemble traditional loans with much faster approval periods. For example, SBA Express Loans are available to businesses with less than 20 people and guarantee fund transfer within 36 hours. The Express Loan program can get you up to $500,000 in funding, but it has stricter prerequisites than other fast business loans. These requirements include a minimum credit score of 680 and one year of business experience.

Get your paperwork in order

Not every lender will require the same forms to approve you for a loan. Check carefully – providing the wrong documentation can slow the process down significantly. Of course, there’s one big caveat here: You’re probably applying for fast loans because you’re short on time, so why would you research this all?

Shrug that notion off – you really should take the time to get everything in order.

Decide whether you can wait longer

Ultimately, while the accelerated disbursement of fast loans can be helpful, they often come with prohibitively high-interest rates and short repayment periods. Therefore, they should be seen as a last resort. If you can wait longer for funding, it might be best to do so.

The best traditional financing options, such as SBA 7(a) loans and bank term loans, are almost always worth the wait. A good strategy could be using a business credit card for more minor expenses while waiting for your loan to be approved and disbursed. Business credit cards can help you build your company’s credit score and avoid fees if you pay on time. SmartBiz® can offer you a business credit card as a custom financing option.

Get funding fast

A short-term business loan can be helpful in a pinch due to its fast turnaround time. However, quick loans may come with less favorable terms than other financing options. Their high interest rates and short repayment periods can ultimately prove too costly to be worthwhile. Nonetheless, in situations when you need money as quickly as possible, you have options, including SmartBiz Custom Financing. This option helps you find the best loan options for your business with minimal financial risk – and rapid funding.


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