Types Of Same-Day Business Loans, Their Advantages and Disadvantages
Immediate hard cash is quite essential and desired by small businesses. There are numerous financing options available for small-scale entrepreneurs looking for same-day loan approvals and fund disbursements. However, it is often confusing for the borrowers to understand which kind of loan is suitable for their businesses.
The most popular types of quick loans are:
These can be utilized for multiple short-term business purposes like working capital, training/hiring, business expansion and marketing. But, the fees are much higher than the conventional loans and also the amount needs to be repaid quite quickly. These generally get a repayment period of 3 to 18 months approximately.
Business Lines of Credit
These come with lower interest rates and higher credit limits, compared to business credit cards. Hence, it is ideal for those who are planning to carry a balance from one month to the next. These are also beneficial for those who want to borrow more than what an average business credit card account will offer.
This kind of funding can be received by putting up the borrowers’ invoices as collateral in exchange for the amount that needs to be repaid after the borrowers have collected their customers’ outstanding payments. Besides, the other form of Invoice Factoring involves the use of the borrowers’ customers’ invoices. This necessitates selling the borrowers’ outstanding invoices to a factoring company, which then collects the invoices on the borrowers’ behalf. These kinds of funding options are ideal for businesses suffering from irregular cash flow, especially when the customers are not paying their invoices regularly. However, these come with higher fees compared to other funding options.
Invoice Financing or accounts receivable financing
Those applying for Invoice Financing will work with the lender to get an advance of about 85% of the number of their outstanding invoices. Hence, the borrower will get paid immediately. Later, when the customers pay their invoices, the borrower receives the remaining 15% after subtracting the lender’s fees.
Merchant Cash Advances(MCAs)
These are one of the best options for businesses that are new to the industry and have poor credit scores. Fundamentally, getting MCA means selling the future revenue of a business at a discounted price to the lender or the MCA company, which takes a portion of the borrower’s sales revenue daily. Some lenders offer weekly or monthly repayment schedules as well. These offer an option of paying less when the sales graph is going down and more when it is going up.
Merchant Cash Advances(MCAs)
These are one of the best options for businesses that are new to the industry and have poor credit scores. Fundamentally, getting MCA means selling the future revenue, of a business, at a discounted price, to the lender or the MCA company, which takes a portion of the borrower’s sales revenue on a daily basis. Some lenders offer weekly or monthly repayment schedules as well. These offer an option of paying less when the sales graph is going down and more when it is going up.
Benefits of Same-Day Business Loans:
These funds are considerably easier to qualify. One doesn’t need to have a h4 business history or a good credit score. Though the personal credit of the entrepreneur and the business credit is reviewed, the approvals do not solely depend on these, unlike conventional financial institutions.
Same-day business loans are extremely beneficial for small businesses during emergencies. One can prevent any crisis from severely affecting a business by arranging the working capital through these loans, at a quick notice.
These financings allow one to access the funds and 24 hrs small business loans after closing. The day after, the funds get deposited directly into the borrowers’ business accounts.
When an entrepreneur is running low on funds, cash can be injected into the business with the help of same-day business loans. This is how one can continue pleasing the customers and smoothly run the business, in spite of the financial constraints it is facing.
Same-day business loans are available in multiple financing products. These options allow the borrowers to explore different products and understand which are the ideal options capable of meeting their specific needs.
These financing options have benign requirements and simple application processes. Also, very minimal documentation is needed.
Drawbacks of Same-Day Business Loans
This kind of funding have higher approval rates and are quite expensive in terms of higher fees.
The repayment terms are often confusing and inconvenient. These can be daily, weekly or monthly.
There can be a risk of being deceived. There are multiple lenders who often take advantage of the borrowers’ urgent need for funds and charge unfairly. Therefore, thorough research is mandatory.
Eligibility Factors For Same-Day Business Loans
The use of the funds, the profitability of the business, trade history, collateral, personal and business credit scores are the few factors, based on which, the eligibility of the borrower is determined.
To know more about same-day business loans and apply for these, you can visit ZEROPOINT Finance by