7 Things to Consider Before Applying for Same Day Business Funding
As an entrepreneur, you know that unexpected challenges and hurdles are part of the job. Payment delays from customers, natural disasters and the loss of a key employee are just a few real life examples of events that can strike at any time, causing a massive disruption to your operations. However, there is a potential solution that could help alleviate the strain of these situations. That solution is same day business funding.
What Types of Institutions Specialize in Same Day Business Funding?
Getting unsecured working capital through traditional lending institutions, particularly banks, can be an arduous and time consuming process that could further derail your business when you need funding immediately. Banks enforce strict regulations that mandate thorough scrutiny of business history prior to approving a business loan. Time is money and you need to get your business back on track. Unfortunately, traditional banking institutions are not a good fit to provide same day business funding for these reasons.
With the advent of fintech and alternative lending, getting a small business loan has been simplified. Non-bank direct lenders have demonstrated enhanced efficiency and expedited lending processes that enable businesses to receive funding within 24 hours. These companies have not only embraced innovative technology to streamline the funding process, but they also have more lenient credit standards. This modernized and flexible approach to lending has enabled rapid turnaround times, which is a feature that caters to business owners in need of same day business funding to maintain their business.
How to Approach Applying for Same Day Business Funding
When searching for same day business funding through non-bank alternative lenders, the pressure of the situation may lead to panic and hasty decisions which could ultimately hurt your business in the long run. Rather than allowing this to happen, it’s important to be prepared with an efficient strategy when it comes to the application process to make sure your loan funds quickly. While the application and funding process for alternative lending is lightning fast compared to traditional bank loans, the process is a bit different and the speed at which that process moves is still partially within your control.
In this blog post, we’ll unpack seven key areas to be mindful of when applying for same day business funding. With an enhanced focus on these areas, you can expedite your funding timeline, ensure an overall seamless experience and safeguard the future of your business by enabling informed decision making in a timely manner.
1. Your Specific Business Needs
Having a clear understanding of how the loan will be utilized is essential to present a robust business case to potential lenders. Lenders carefully review every detail of the loan application before sanctioning it, and a lack of clarity in the intended usage of the funds can lead to inefficiencies in processing your loan application. When a business has a well-defined plan for the loan, as well as the exact amount requested, it demonstrates to lenders that the company is proactive and is more likely to pay back the loan on time. Precise planning helps to prioritize speed and ultimately ensures that the loan serves its intended purpose.
2. Personal & Business Credit Scores
In today’s competitive business environment, it’s essential for businesses to have an accurate understanding of their credit profile to secure funding quickly and efficiently. By understanding your personal and business credit scores, you can hone-in on types of financing solutions that are realistic based on your credit standing. This knowledge will allow you to target the right loan products and specialty lenders and increase the likelihood of getting streamlined loan approval. In addition, by regularly monitoring your credit scores, you can stay on top of any gaps and take the necessary steps to improve your scores if necessary.
3. Other General Eligibility Criteria
Knowing general eligibility concepts ahead of time can help save applicants time, such as where to apply, what to expect and what questions to ask. Bankruptcies, negative cash flow and poor loan payment history are primary red flags that alternative lenders can easily identify. While lenders won’t necessarily decline your application, they will require a stronger showing in other areas to counterbalance. Annual revenue, debt obligation, cash flow and profitability are some additional factors that will be considered. Most alternative lenders require a minimum time in business of six months to two years, depending on the lender, the loan type and the strength of your revenue. And finally, minimum annual revenue is typically about $100,000 for unsecured business loans.
4. Required Funding Documentation
Part of being a responsible borrower is ensuring that you submit complete and accurate documentation. Aside from complying with the lender’s requirements, specific documentation certainly helps expedite the loan application process. Having all of the necessary documents ready and organized not only shows the lender that you are serious about your application, but it also helps in reviewing your application more efficiently. In addition, specific documentation helps establish your business’s credibility and financial stability, which can increase your chances of getting approved. Here are some of the most common documents that most alternative lenders need:
Most Recent Three Months of Bank Statements
Most Recent Business Tax Returns
Copy of Driver’s License
Copy of Voided Check
5. Same Day Business Funding Options
Researching and understanding different funding options allows entrepreneurs to identify the most suitable lending institution and avoids wasting time on applications that are unlikely to be approved. This information can help business owners create a targeted and effective financing strategy by selecting a handful of funding sources that best suit their business needs, industry and financial position. By knowing the specific requirements and processes for each funding source ahead of time, entrepreneurs can gather the necessary documents and information more efficiently and accelerate the loan approval and funding processes.
6. Level of Personalized Engagement
If you are a small business owner in need of immediate financial assistance, time is of the essence. You want to ensure that the lender you work with understands the urgency of your situation and provides you with a personalized level of service that addresses your specific needs. This type of service can include assistance with the application process, guidance about the available funding programs and customized lending solutions that meet your business requirements. Personalized customer service can be a lifesaver for small businesses that need funds quickly. Furthermore, personalized customer service can help build trust and loyalty with the lender, which can lead to a long-term business relationship that benefits your small business in the future.
7. Your Ability to Repay the Loan
It’s crucial to know the cost of a business loan in terms of both interest and monthly payments before rushing into the application process for same day business funding. Doing so enables business owners to make strategic and informed decisions that will have a positive impact on the business. A couple significant considerations to be made include interest rate and APR. Analyzing the terms and considering the size of the loan and repayment period can help in understanding the cost implication of the loan. Mismanagement of funds can lead to unforeseen circumstances, and therefore, it’s imperative to be realistic about the amount you can repay monthly.
Is Same Day Business Funding Right For My Business?
There are definitely pros and cons to obtaining a business loan quickly. One obvious benefit is the ability to quickly obtain the funds needed to move your business forward. This can be especially helpful for businesses that are experiencing sudden cash flow issues or are in need of emergency financing to capitalize on a time-sensitive opportunity.
However, it’s important for business owners to be cautious when taking out a loan quickly. Decisions that need to be made fast can lead to taking out loans with unfavorable terms, which can ultimately undermine the long-term growth of the business. Additionally, some business owners may become overly reliant on loans to cover short term cash flow problems, creating a cycle of debt that can be difficult to break.
In closing, while quick business loans can be advantageous, business owners should carefully evaluate the aforementioned critical areas before deciding to take out a loan.
