Most entrepreneurs require a loan to start their business. It’s because of the rising costs of starting one. For example, a small company with about five employees paid a minimum wage would need $180,000 on average to start. That’s a lot of money. Considering that Americans have an average of $41,000 in savings (the median was much lower at around $5,000), it would be near impossible to start a business from cash alone.
This is why most entrepreneurs rely on loans to get their businesses started. But taking out a loan is a huge responsibility. But not only that, but it’s also time-consuming. On average, loans can take between one to three months to get approved. Some people would take half a year for it to happen. In the business world, every time spent waiting is a time wasted. So if you want to get a fast business loan, here are five ways you can do it.
Go Rate Shopping
One of the main reasons entrepreneurs take so long to get a loan is indecisiveness. They go to one bank, get denied, and then move on to the next one without much research. This is a mistake.
The first step in getting a fast business loan is rate shopping. You should look at multiple lenders and compare their rates. People can do it easily online. Once you’ve found a few good options, you can start the loan application process.
You can submit as many loans as you want during the loan application process. But keep in mind that each application will show up on your credit report. So if you’re planning to apply for multiple loans, it would be best to space them out. On the other hand, having various applications can increase your chances of getting one approved fast.
Apply for an SBA Loan
The Small Business Administration (SBA) is a government agency that provides loans to small businesses. However, the SBA doesn’t give out the loans directly. Instead, they work with partner banks and lenders to provide financing to entrepreneurs.
One of the benefits of getting an SBA loan is that they’re easier to qualify for. The requirements are not as strict as traditional loans. The approval process can take longer, up to 120 days, but it only takes a month most of the time.
The best way to increase your chances of getting approved for an SBA loan is to work with a Small Business Development Center (SBDC). They can help you with the application process and ensure that you have all the required documents.
Get a Business Credit Card
Another way to get a fast business loan is to apply for a business credit card. This is an option for entrepreneurs who need a smaller amount of money and can’t qualify for a traditional loan.
The approval process for a business credit card is much faster than for a loan. It can take as little as 48 hours. And you can use the credit line right away.
One of the downsides of using a business credit card is higher interest rates. So if you’re not careful, you can end up paying a lot of money in interest.
Another downside is that you need to have good personal credit to qualify. So if your credit is not good, this might not be an option for you.
Do P2P Lending
Peer-to-peer (P2P) lending is a newer way of getting loans. It’s an online platform where people can lend and borrow money from each other. The interest rates are usually lower than traditional loans because there’s no bank involved.
The approval process for P2P loans is also faster. It can take as little as a few days. And you can use the money for anything you want.
One of the downsides of P2P lending is that it’s not available in all states. So if you live in a state where it’s not available, this won’t be an option for you. It might also not be safe. If you want to do P2P lending safely, consider doing it in a secured loan servicing system. A secured system can ensure that you don’t scam. It can also be convenient as they usually offer repayment options.
Get a Loan from Family and Friends
Another way to get a fast business loan is to ask for money from family and friends. You don’t need to go through applying for a loan. And you can usually get the money quickly.
The downside of this option is that it can be challenging to ask for money from people you know. And if you don’t have anyone willing to lend you money, this won’t be an option for you.
You should also think about how this will affect your relationship with the person you’re borrowing from. For example, if you cannot repay the loan, it could damage your relationship.
So if you decide to go this route, make sure that you have a repayment plan. And be honest with the person you’re borrowing from about your ability to repay the loan.
These are five ways to get a fast business loan. If you don’t want to wait too long for your loans to get approved, consider one of these options.
