Running a business is like riding a never-ending rollercoaster. While it’s definitely fun and fulfilling, you will also face highs, lows, and sharp twists and turns. Cash flow issues are one of the most common problems small business owners face. In fact, a U.S. Bank study, 82% of companies that went bankrupt says that cash flow problems played a huge part in their failure. Fortunately, your business doesn’t have to end this way. When faced with a mountain of business expenses, applying for fast business loans can help.
Fast business loans are financing solutions that have a quicker underwriting process compared to traditional loans. Depending on the lender you’re working with, approval and funding can happen in as little as 24 to 48 hours. Note that bank loans often take weeks (even months!) before they approve your loan.
If you think your business benefits more from a fast business loan, here are general tips on how to qualify for one.
Check Your Credit Score
Some loans heavily consider business credit scores while others couldn’t care less. To avoid wasting time on applying for loans you can’t qualify for, make sure to check your personal and business credit scores. If your scores are less than ideal, don’t lose hope. There are a few tips you can do to improve your scores:
Pay your outstanding debts.
Pay your bills on time.
Keep debt levels low.
Regularly check your credit report.
While you work on your credit rating, you can apply for other financing options that don’t require a high credit score.
Prepare the Necessary Documents
Having all your important documents in once place can hasten the application process. In this way, you don’t have to sift through a pile of papers or scan your computer for the necessary documents. The requirements depend on the lender you’re working with. Some of the documentation potential lenders might as for include:
Personal and Business Tax Returns
Proof of ID
Proof of Address
Copy of Business Lease
Again, some lenders may require more while others may need less paperwork. Make sure to check in with your preferred lender before getting preapproved.
Know the Type of Fast Business Loan You Need
Before you apply for fast business loans, it’s important to understand which type of loan works best for you. It’s going to be a total waste of time if you apply for invoice financing and find out you don’t qualify because your company doesn’t process invoices. Applying for the wrong type of loan slows down the process and sometimes even ends in rejection.
If you’re not sure which loan works best for you, you can consult a trusted financial advisor. They can evaluate your business and help you understand the pros and cons of different loan types.
Outline How Much You Want to Borrow and How You Plan to Use the Funds
Lenders will want to know how much money you’re looking to borrow and how you plan to use the funds. Are you borrowing a loan for working capital? Are you planning to use it to purchase equipment and machinery? Other loan uses may include the following:
New Product Development
Purchase Inventory and Supplies
Enhance Sales and Marketing
Research and Development
Keep in mind that there are loans that specify the use of funds. Make sure to check in with your lender before applying for a loan.
Think Like a Lender
Lenders assess your business loan application based on numerous factors. They decide whether or not you qualify for a loan based on your credit and risk profile. So to increase the chances of approval, you’ll need to think like a lender. They often look at the following factors:
Time in Business
Credit Score or Report
Make sure to review these factors carefully and make the necessary changes if needed.
Apply for Fast Business Loans for Your Business
Fast business loans can be a lifesaver for companies in need of immediate working capital to address cash flow issues. As mentioned, banks can take weeks before they issue the loan. On the other hand, alternative lending companies can deposit the money into your account within 24 to 48 business hours.