Small business owners often find themselves needing an influx of cash to meet business goals. While the amount you want to borrow certainly matters, you’ll also need to consider how quickly you can get the funding. Some loans fund swiftly while others take more time. Before you begin the application process, determine how quickly you’ll need the money and what factors impact the process.
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, hire new employees, keep up with payroll, and refinance existing obligations.
How fast can you get a small business loan?
The timeline for a small business loan depends largely on the type of financing you pursue and how prepared you are. SBA loans, traditional bank loans, online business loans, and business lines of credit each follow different underwriting processes. SBA loans and conventional bank loans typically involve more documentation and a structured review process.
These options often require detailed financial statements, tax returns, and a clear explanation of how the funds will support business growth. While the process may be more thorough, it is designed to support long-term stability and responsible lending. More detailed processes mean that these loans can take several weeks to get from application to funding.
Online and other alternative lenders often promote fast business loans with streamlined applications and automated reviews. In some cases, funding decisions may happen more quickly, particularly for smaller working capital loans.
6 factors to consider when you need a small business loan quickly
It’s best to apply for funding proactively. When business owners wait until they’re in a dire financial situation, they may find themselves agreeing to loan terms that aren’t conducive to long-term business health. It’s hard to be successful in any industry if you’re constantly reacting to changes in the business landscape. Still, if you’re in a position to need funds quickly, there are some 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 may 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 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 may 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 in 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 you might be able to pay off your loan more quickly. However, if you can’t afford the high installment amounts, you may 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 typically 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, and service charges. Combine that with interest, and you get your APR, the clearest indicator of your loan’s true cost.
5. Lender reputation
A financial institution's reputation with prior borrowers says a lot about the loan options it will 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
While much of the loan approval process is out of your control, there are steps that you can take to speed things up. In addition to the documents that you’ll need to provide during the initial application stage, your lender may request additional documentation throughout the process. Having your paperwork in order and being ready to produce it shortly when information is requested is the most effective way to expedite the procedure.
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 may be able to do to help ensure the fastest loan approval process possible.
Choose peer-to-peer lending
Peer-to-peer 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 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 may be able to provide financial assistance when your credit history doesn’t meet the minimum requirements for traditional financing. They often care little about your personal credit history but 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 transfer of funds 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
Having your paperwork in order may be the most effective way to speed up the process. Not every lender will require the same forms to approve you for a loan. Carefully review your paperwork to ensure everything is accurate and be ready to present documentation as soon as it's requested. If you’re applying for funding because you’re short on time, this step may help take days or weeks off the underwriting process.
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 might be helpful in a pinch due to its fast turnaround time. However, quick loans may come with less favorable terms than other financing options. It’s best to work with a lender who is efficient and organized, which ensures that you get a loan that is good for your business without leaving you in limbo for an extended period. Find out if you pre-qualify with SmartBiz Bank® today.
FAQs
Which types of small business loans are funded the fastest?
Online business loans and certain working capital loans are often funded more quickly than traditional financing options because their applications and underwriting processes are more streamlined. Business lines of credit can also provide relatively fast access to funds once the credit facility is established. The fastest option for any borrower ultimately depends on documentation readiness, the complexity of the request, and the willingness to take on a loan with less-favorable terms.
Can you get a small business loan in 24 hours?
In some cases, certain online or alternative lenders may advertise approvals within 24 hours, particularly for smaller loan amounts. However, receiving full funding within that time frame is not typical for most established small businesses seeking structured financing.
Does your credit score impact how quickly you receive funding?
Yes, your credit score can influence both approval and timing. A strong personal and business credit history may streamline underwriting because it reduces the need for additional clarification or documentation. Lower credit scores can trigger a more detailed review, which may extend the business loan approval process.
What documents are needed to speed up the loan process?
Clean, organized documentation is the most effective way to accelerate a small business loan application. Lenders commonly request recent business and personal tax returns, financial statements such as profit and loss reports and balance sheets, bank statements, business formation documents, and details about how funds will be used.
