Fast business loans are the solution when you need access to funds fast, whether you need to cover a cash flow shortage, take advantage of a limited-time opportunity or move quickly in a new direction.
Whatever the reason, if you’re a business owner looking for a business loan fast, let’s check out some of the options available from slowest to fastest.
Hire purchase – 1 to 2 weeks
This is a form of equipment finance for the purchase of vehicles, machinery and equipment, with terms between 1 and 5 years.
For instance, if you’re purchasing machinery for your business, you make monthly payments for an agreed period. After all the payments have been made, the bank transfers the title to you. A hire purchase sometimes includes the option to make a balloon payment at the end of the term. This is a larger payment that decreases the size of monthly payments.
Hire purchases pros
- You are able to choose the term and payments to suit your cash flow and the useful life of the asset.
- You can possibly claiming input tax credits for the GST owed on interest and fees included in the hire purchase price.
- After making all the payments, you can take the title of the asset and choose whether you will sell it or continue to use it.
Hire purchase cons
- Until all payments have been made, the bank owns the asset.
- The interest rate is typically higher than for a traditional bank loan.
- With a 1 to 2-week approval time, it’s a slower option among fast business loans in Australia.
Not so fast! This might not be an option if you’re looking for fast funds.
Personal loan – five to seven days
While it’s not recommended that you take out a personal loan for business purposes, this might be the only option for a new business. A personal loan is often easier to get than a traditional business loan from bank lenders and can be used for any purpose. At 5 to 7 days for approval, it’s not the fastest option available.
Personal loan pros
- You can get this relatively quickly.
- Various options are available, including fixed and variable interest rates, secured and unsecured.
- Repayments are spread over the term, making it possible to purchase large assets.
- With a fixed term, there is an exit strategy.
Personal loan cons
- Interest rates can be higher than for other forms of business loans
- Approval and the amount you are able to get are based on your personal credit rating.
- You are individually responsible for repaying the loan and your personal assets are at risk if you’re unable to repay.
- You won’t develop a business credit history by using a personal loan for business purposes.
Don’t mix it up. Mixing business and personal funds can get messy, so it’s best to avoid this one if you can.
Business credit card – 2 to 7 days
Depending on your situation including time in business and credit score – you can usually get a business credit card in around a week. A business credit card gives you the flexibility to spend funds on whatever you want. Plus, as long as you pay the minimum amount, you can vary payments to suit your circumstances.
Business credit card pros
- They’re easy to use and flexible
- Many offer an interest-free period on purchases (up to 55 days), making it a cost-effective way to make business purchases as long as you repay the amount during the interest-free period.
- Some business cards offer rewards – such as travel points and travel insurance (although you’ll pay higher fees for these cards).
Business credit card cons
- Higher interest rates than other forms of fast business finance – this could be from 12% to 24%
- Business credit cards often have annual fees
- There’s no exit strategy, so you could end up carrying a balance and accruing interest each month with no end in sight.
Credit card crunch? Be careful to avoid this when using a business credit card too often.
Business overdraft – 1 to 2 days
With a business overdraft, you get a predetermined amount of credit attached to your business transaction account. So, for example, if you have an overdraft for $50,000, you can ‘overdraw’ this from your account. If you are an established bank customer, the application process can be fairly quick.
Business overdraft pros
- Fast and easy to get if you have a few years of good credit history.
- Flexibility – only use the funds you need and pay interest on what you are using
- Available in secured and unsecured versions.
Business overdraft cons
- Has a higher interest rate than other types of fast small business loans.
- Can be ‘called in’ by the lender at any time for complete repayment.
- Fees include the establishment and ongoing fees.
You can get too ‘drafty’ by constantly using your overdraft and never getting back into positive territory with your bank account.
Online business loans – fast unsecured business loans in 1 day
These types of loans are at the top of the list for finding a fast business loan. Fintech lenders make it easy to apply online in as little time as ordering an espresso. In most cases, you’ll receive an answer within several hours and funds in 1 business day. Online business loans come in secured versions as well, and these have lower interest rates due to the decreased risk for lenders.
Online business loan pros
- Provide a fast and easy online application process
- Quick decisions and access to funds if approved
- Simpler eligibility requirements for new businesses that often don’t meet traditional lending requirements.
- There is an exit strategy with regular repayments and a finite loan term.
Online business loan cons
- Higher interest rates, especially with unsecured loans
- Shorter loan terms than traditional business loans.
- You might need to provide a personal guarantee.
Hands down, these types of loans are the fastest business finance option available.
Looking for a fast business loan?
If you’re looking for quick business finance, applying for a business loan from Lumi takes around 5 minutes and you’ll get a decision and funds the same day if approved.
Also, check out our business loan calculator to get an estimate of total loan repayments and interest.