What Is an Emergency Business Loan?
Emergency loans refer to a type of business financing that offers a quick and easy application process so business owners can access capital in as little time as possible. These types of loans are often unsecured and can be obtained within a few days.
In addition, emergency loans generally don’t have many restrictions on how businesses can use the funds. And they have minimal requirements that extend their availability to business owners with poor credit.
All in all, emergency business loans offer relief to businesses in need of additional cash due to disasters and other unexpected events.
Types of Emergency Business Loans
Emergency loans come in different forms and can be used for a variety of purposes, such as purchasing inventory or equipment.
The following loans have fast approval processes for businesses needing working capital in a jiffy.
Short-Term Business Loans
Short-term business loans are a type of business funding with short repayment periods. The repayment terms typically range from six months to two years. Approved borrowers receive a lump sum amount, repaid through fixed monthly payments that include interest and fees.
Most short-term loans are unsecured loans, meaning you don’t have to put up collateral. In addition, they offer a flexible funding option for startups and new businesses that may not be eligible for traditional long-term bank loans. This is why short-term loans are the most popular form of small business loans.
Business Line of Credit
A business line of credit provides flexible access to capital when you need it. With this type of loan, you get a credit line with a set credit limit. It works similarly to a credit card.
Aside from the benefit of having access to funds you can use on an as-needed basis, you also only pay interest on the money you withdraw. Plus, most credit lines are revolving. This means the account replenishes as you pay back what you borrowed.
A line of credit is an excellent funding option for covering business expenses when you’re experiencing cash flow gaps. It helps you overcome the bump while you work on improving your bottom line and stabilizing your cash flow.
Invoice factoring is a form of invoice financing where you sell your unpaid invoices in exchange for cash upfront. This is why factoring is technically not a loan. But it does allow you to borrow money from a lender by using your accounts receivables as collateral.
In this type of agreement, the factoring company gives you a percentage of your total invoice value upfront. When the invoices come due, the lender collects from your customers. Then, they deduct any factoring fees and give you the remaining amount.
Since your company’s accounts receivables secures the loan, you don’t have to put up any collateral. Lenders are also less strict with personal credit, which means invoice factoring is a financing option available to business owners with less-than-stellar credit.
Merchant Cash Advance
Merchant cash advances (MCAs) work similarly to invoice factoring. But with MCAs, you’re selling your future sales instead of your accounts receivable. In a merchant cash advance agreement, you receive cash upfront in exchange for a percentage of your future revenue.
Then, the lender takes a percentage of your daily or weekly sales as repayment for the loan. The deduction applies until the loan amount is paid in full.
The eligibility requirements for merchant cash advances are also minimal. These types of credit have low documentation and are available to business owners with bad credit.
The benefit of an MCA is that you aren’t obligated to pay a specific amount each time. When sales are low, you don’t have to pay more than the allotted percentage from your sales. Still, consider the fees to decide whether your business can handle daily or weekly deductions from your cash flow.
How Do You Get an Emergency Business Loan?
When you’re looking for an emergency business loan, you probably needed the money yesterday. However, it’s still prudent to take your time to understand your options. Before you start sending out loan applications, figure out why you need a loan.
There are many types of loans available to businesses. Having a clear idea of why you need additional capital can help you find the right loan to match your needs. Narrowing down your focus can help you figure out the ideal terms for your business and how much to borrow.
It can also make your search quicker if you understand what your company can meet when it comes to eligibility requirements. For instance, if you don’t have any personal or business assets to put up as collateral, your options are limited to unsecured loans.
Having all this information can save you a lot of time and effort and bring you closer to getting the funds you need. Then, all you need to do is prepare a solid application and apply with the right documents to get your funding.
Make the application process even easier with Clarify. When you work with us, you only need to fill out one application form — it takes two minutes! Then, you’re matched with a Clarify advisor who will work alongside you to choose the best loan option based on your needs. Talk to us today and receive funding in your bank account in as little as 24 hours!
What You Need to Apply for an Emergency Business Loan
Banks, financial institutions, and alternative lenders look at different qualifying factors to assess loan eligibility. The requirements vary depending on the loan, but lenders typically check credit history, how long your business has been in operation, monthly revenue, and how much debt your business can afford.
SBA disaster loans backed by the U.S. Small Business Administration (SBA) and traditional loans from banks are typically difficult to qualify for because they have stricter requirements. And although online lenders are more flexible, most also have minimum requirements for credit scores, annual revenue, and years in business.
Your chances of getting approved quickly might also increase if you can offer collateral.
Why Choose Clarify Capital for an Emergency Business Loan
At Clarify, we understand that it’s always crunch time when you run a business. And in times of crisis, speed and efficiency are even more important. So, when unexpected costs come up and you need to act fast, we make the process of getting a loan as easy as possible to help you get back on track quickly.
On top of handling your business emergency, we don’t want you to worry about hidden fees and penalties. That’s why we keep things simple. You won’t find any sneaky charges or confusing terms with us.
Financing with Clarify means you have an expert on your side. Just because your needs are urgent doesn’t mean you should make rushed and misinformed decisions. Your dedicated advisor will work with you to find the best option out there. We strive to get you the lowest rate and most competitive funding available every time.
Emergency Business Loan FAQs
Below are quick answers to frequently asked questions. If you have other questions about our services or loan options, contact a Clarify advisor today.
It can be difficult to qualify for loans with bad credit if you’re applying to traditional banks. But you may find something if you expand your search to include alternative lenders. Aside from your credit score, online lenders consider other factors like time in business and revenue to increase your chances of getting approved for a loan.
At Clarify, we work with all business owners — no matter your credit situation. We recommend that borrowers have a minimum credit score of 550. If your credit score is below 550, speak to a Clarify advisor to discuss your options.
Our marketplace consists of more than 75 lenders, and requirements can vary depending on the type of loan you need. We do our best to help you get the terms that suit your business goals.
The approval process varies depending on the type of loan you need. Your wait time also depends on whether your business qualifies right away as per the lender’s requirements.
Make sure you have all the necessary documents that lenders may request, like your driver’s license, bank statements, company financial statements, business and personal tax returns, and a business plan. Having all of these on hand can make the application process quicker and easier for all parties.
At Clarify, we have streamlined our loan application process. Once approved, you can access your capital in as little as 24 hours!