Need Fast Funding For a Growth Opportunity?
You don’t always need a sudden influx of cash for a crisis. Sometimes, you need it to jump on top of an opportunity to grow or scale your business. The window may not be open for very long, and you may need to act right now.
Maybe you’re a coffee shop and the property next to you suddenly became vacant. This would be an amazing chance for you to expand your space. You could knock down a wall and build something special. However, you don’t really have the cash for this right now and you know this prime space won’t last long on the open market.
Or maybe you’re a chef with a food truck that makes Instagram-worthy sandwiches. A friend referred you to a great used truck for sale at a price that screams, “You’d be foolish not to.” You could get your trusted sous chef to run this truck while you get the other one up and running. You know that 2 trucks on the road would mean 2x the income and your brand becoming a franchise. However, you don’t quite have enough liquid cash to make this sale happen.
Either of these situations can be tantalizing and even frustrating as you picture what this could do for your future and your business. But, it seems just out of reach.
Don’t worry, there is no need to let this opportunity slip away. Here are a few ways to make it happen. You do have options available to help you grow your business. All of them have their pros and cons and some are better suited for “emergency” situations like this.
Here are the most viable options.
This is a great way to secure a much-needed influx of cash… when you can get it.
The upper end of what you can receive from a bank is high, so this could be a good way to fund a major purchase or renovation. Your bank will spend the same amount of money processing a $5,000 loan and a $1,000,000 loan, but the will make much more profit on the latter. So they want to give you a large sum of money… if you qualify.
There is no doubt that bank loans (whether you’re looking for personal or small business) are the most difficult type to get, and it’s getting even harder. Their lending parameters are tightly-regulated, which makes most major banks extremely risk-averse when determining who they will work with.
The process of going through the bank can also be extremely long, drawn-out, and intrusive. You may be asked to provide a business plan, all of your financials, and even your personal financial records. All of this can make it extremely disheartening if things don’t go your way.
You will most likely be asked to provide, in writing:
Any applicable business licenses and permits, that may include:
Given the long process and difficult criteria, bank loans are most often not the best fit for a crisis situation. Your sudden opportunity may slip away while you’re trying to get the money together.
What About Private Lenders?
Private lenders do offer more relaxed lending criteria, as they are not as tightly regulated as major banks. They can make more discretionary calls and open their doors to businesses with less than perfect credit.
However, the trade-off there is that the cost of borrowing is higher. The more money you need, the bigger deal that is.
The private loan process may be faster than the bank as well, but it’s not quite as fast as some of the other options we will explore below. Just like the bank loan, if you go through a long application process only to get turned down, you’re frustrated because you essentially just wasted time that you could spend exploring other options. Now, you may have little to no time to find something else.
One of the major downsides to private or bank loans is that you’re required to make monthly payments, almost immediately. If you were borrowing a large amount of money to renovate your business and closed the doors for 2 weeks, you would still have to scramble to come up with the full amount to make that first payment, even if you only have 2 weeks of sales or revenue to show for it. Some of the other options we will explore today have more flexible payment terms.
A Merchant Cash Advance
We have already covered why going to the banks for a loan may not be an option, so many business owners will explore alternative funding options to keep things afloat.
For example, a merchant cash advance offers an excellent alternative to going through a bank for fast funding.
An MCA could provide your business with the cash you need, in exchange for a small percentage of your future transactions until you pay the amount (plus fees) back.
This is particularly attractive to small business owners for 4 reasons:
- You stand a good chance of being approved because an MCA is not subject to traditional lending criteria. It is not classified as a type of loan, rather a form of funding.
- The turnaround time is remarkably fast. The process is not bogged down by nearly as much paperwork. It’s not unusual for the company to receive an answer in 24 hours or less.
- You’re paying back via a percentage of your income. This means that when business is slow and you’re getting back on your feet, you will be paying back less money than when business is good and sales are high.
- You’re free to use the cash on anything you see fit. Other types of loans or funding may restrict your use. Certain options may not allow you to buy inventory, while others cannot be used on real estate. With an MCA, your money is your money, period.
Given the flexible terms and fast turnaround time, an MCA is often going to be the best solution to get fast funding to grow your business.
Small Business Association (SBA) Loans
These loans are highly-coveted because they offer amazing terms and they can really help you launch your business the right way. Or, in this case, they can help you grow your business.
However, this makes them highly competitive and a successful application can take a lot of effort. We highly recommend that you review the SBA loan requirements before you commit to pursuing it.
They are often more willing to work with small businesses with damaged credit, compared to major banks. However, your application could still be denied. Generally, the minimum requirements are:
- Proven annual business revenue of over $180,000
- You should have a minimum credit score of 680
- Your business should be in operations for a minimum of four years
You will be asked to provide:
- How much your business wants to borrow
- Details of how your business plans to use the funds
- Financial projections for the next 12 to 36 months
- A cash flow statement
- Current profit and loss (P&L) statement
- Current balance sheet
- Two years of business tax returns
- Two years of personal tax returns (from all owners)
- Personal financial statements for each business owner
- Resumes for each owner
- A business plan
- Proof of ownership
- Business licenses and leases
If you have the time and resources to invest in the process, it can be well worth your while. However, like a bank loan, this is likely not the best option if you’re in need of fast emergency funding. The turnaround time can be anywhere from 30-90 days to get an answer.
If you have a bit of time to wait, fantastic. However, this may not be the best option if you’re eyeing a small window that is getting smaller by the day. Or hour!
A Business Line of Credit
Getting a business line of credit through a bank is just as difficult as getting a loan. However, there are other options available. Do you qualify for a business line of credit through other lender/funders? Click that link to find out.
A line of credit can be a great option in a situation where you don’t know exactly how much money you will need. You simply know that you need more.
Access to revolving credit means you’re free to borrow and payback amounts on an on-going basis, and only paying fees and interest on what you actually use. If you have a line of credit up to $30,000, you are under no obligation to use it all. If you took out a loan for $30,000, you would be charged interest on the whole amount and start making monthly payments right away.
In terms of the application process and turnaround time for a line of credit, that all depends on who you work with. You can get a business line of credit from either a bank or a private lender.
- Banks: Will be a longer (and more stringent) application process, but they will give you a better interest rate
- Private lenders: Have looser requirements and a faster turnaround time, but they will charge you (often considerably) higher interest rates
You should also keep in mind that the terms aren’t always as flexible as they seem. You don’t have 100% easy access to your funds. Your lenders may even ask you to submit documents every time you need to access your line of credit. They may also ask you to take part in a yearly review so you can maintain access to your line of credit.
In other cases, the line of credit may be secured, which means the lender will require you to put up an asset as collateral to get approved. This can be a bit too risky for many businesses. The only big-ticket items that they could put up are the very things that drive their business. For example, a tow truck company may be asked to put up their tow truck. From there, it becomes a very risk vs. reward based decision.
A line of credit also has a fairly low ceiling when it comes to the amount you can borrow or have access to. If you’re in need of a significant amount of money, this is probably not the best way to go.
Ready to Talk About Your Options?
We specialize in helping business owners like you get the funding they need, whether it’s for a crisis or an opportunity. We can help you!
Our merchant cash advances are perfect to take advantage of these sudden opportunities. You can qualify for up to $500,000 of funding and receive your answer in as little as 24 hours. As long as you’ve been in business for 6 months and you have at least $10,000 of deposits a month, you may qualify.
You can start right by calling 1-888-550-3162 or emailing firstname.lastname@example.org. Or you can click the blue Apply Now button at the top of the screen. Your application can be done 100% online to speed up the process!