Need Help From Emergency Business Loans? Here Are Your Best Options

Georgia McIntyre

Georgia McIntyre

Finance Writer at Fundera
Georgia McIntyre is the resident Finance Writer at Fundera. She specializes in all things small business finance, from lending to accounting. Questions for Georgia? Comment below!
Georgia McIntyre

As a small business owner, you’re always on your toes—ready to deal with any curveball that’s thrown your way.

But even the most prepared small business owner can get blindsided by an unexpected cost or a blip in your business’s operations. Maybe your store’s pipes burst, your delivery van broke down, or computers just refused to turn on.

Whatever the reason, your business is on the line, and you need capital—right now.

Luckily, there are many emergency business loans that can help you out when you’re in a capital crunch.

So don’t panic. Take a deep breath, and use this step-by-step guide to learn how and where to find emergency business loans.

What Are Emergency Business Loans?

Emergency business loans are a business owner’s financing solution when they need capital for their business right away. They could be a short-term business loan that helps an owner cover unexpected damage costs, stabilize cash flow when a crucial customer hasn’t paid, or seize a once-in-a-lifetime opportunity that will pass if they don’t grab it.

There are a few different emergency business loans you can look for when you need a quick capital fix:

  1. Merchant Cash Advances
  2. Short-Term Loans
  3. Medium-Term Loans
  4. Invoice Financing

One of these financing options could be the emergency business loan for you.

We’re willing to bet that, when it comes to researching your options, you don’t have time to dilly dally. So we’ll cut to the chase. Here are the ins-and-outs of the emergency business loans available for your small business:

1. Standard Emergency Business Loans: Merchant Cash Advances

If you’re searching for emergency business loans, you’ll absolutely come across merchant cash advances (MCAs).

With an MCA, a merchant capital company advances you a lump sum of capital that you can use as an emergency business loan. You’ll pay that company back by offering a slice of your business’s daily credit card sales. When you take on an MCA, you’ll agree on a set percentage that the lender can take from your credit card sales each day.

Why You Should Avoid These Emergency Business Loans

An MCA can give you the immediate cash you need to get yourself out of a capital bind, but proceed with caution: a merchant cash advance is the most expensive financing product on the market. We’re talking 70% APRs in the best cases, and as high as 350% APRs in the worst.

When you need emergency business loans, a merchant cash advance might seem like your only option. But taking out an MCA when you’re in a cash crunch will probably only dig you deeper into a hole.

Depending on the percentage that your lender takes from your credit card sales, you can pay off your MCA in less than a year’s time. This might sound like a good deal, but there’s really no benefit to paying off your MCA quickly. And with such high daily repayments draining your merchant account, your struggling cash flow will suffer even more.

So when it comes to merchant cash advances, add them to the list of emergency business loans… But avoid them if you can. Chances are good that you can find less expensive emergency business loans.

2. Short-Term Loans as Emergency Business Loans

Instead of taking out an MCA, consider applying for short-term loans instead.

A short-term loan can be the streamlined solution a small business owner needs to get out of a cash flow crunch. These small business loans work especially well when you only need to handle one-off events to get your business back on its feet.

Short-term loans work just like a traditional term loans, except they’re much faster to fund. Traditional term loans from banks can take weeks or even months. With a short-term loan, you might be able to get the capital you need the same day you apply for it.

On top of that, you’ll also pay back a short-term loan much sooner than you would a traditional term loan. Short-term lenders, like Direct Capital for example, typically give out these loans over a 3- to 24-month term. And in most cases, you’ll pay your short-term loan back with daily repayments.

How can you get these emergency business loans so quickly?

Well, there are a few answers to that question:

  • Short-term lenders use new technology to make the entire loan application and funding process faster. Instead of handing in a stack of paperwork, you can upload your documents on an online lender’s platform and submit your application in minutes. After that, lenders use efficient underwriting algorithms to approve your business loan application in as little as one day.
  • While banks are subject to strict regulation, alternative lenders aren’t nearly as affected… Which is one reason why short-term lenders typically require less paperwork and have laxer requirements. This means that you can secure these emergency business loans without having to jump through hoops to qualify.

The Best Short-Term Lenders Offering Emergency Business Loans

If you think a short-term loan can meet your emergency financing needs, here are a couple lenders you should consider working with:

CAN Capital

CAN Capital can give you a short-term loan of anywhere between $2,500 and $150,000 for your single location business at a 3 to 24 month term. They’ll charge a 1.15 to 1.48 factor rate on your short-term loan.

And if you’re looking for fast business loans to get you out of an emergency, CAN Capital can help you out—they can approve your application the same day you send it in.

OnDeck

OnDeck offers short-term loans ranging from $5,000 to $250,000 at 3- to 24-month terms. When you take out a short-term loan from OnDeck, expect to have a 8.5% to 79% APR. And just like CAN Capital, OnDeck offers these emergency business loans the same day a borrower applies for one.

3. Medium-Term Online Loans as Emergency Business Loans

When you need a quick infusion of capital to get out of a bind, you might’ve crossed out traditional term loans on your list of emergency business loans.

It’s pretty common knowledge that applying for a traditional term loan from a bank takes a long time—sometimes 9 or 10 months.

So a term loan from a bank probably won’t be a financing solution in an emergency. But have you considered applying to a medium-term loan from an online lender?

Online lenders can’t fund medium-term loans as fast as they can finance short-term loans or merchant cash advances. But if you can stand to wait a few days for that capital, consider applying for medium-term loans for your business.

Don’t Rule These Emergency Business Loans Out

Lenders recognize that even the most qualified small business owners can’t control everything that happens to their business. And just because your business has found itself in an emergency, that doesn’t mean that it wasn’t strong and successful before you took the unexpected hit.

If you run a business that could’ve qualified for a medium-term loan before the emergency, you should consider applying to one now as an emergency business loan… Especially if you know that you’ll get back on your feet once you have the capital. As long as you can prove that you could generate enough cash flow to cover the cost of financing, medium-term online lenders might help you out with the costs of recovering.

And if you do qualify for a medium-term loan from an online lender, you’ll get much lower rates than what you’d find with other emergency business loans.

Plus, depending on the lender you work with, you won’t have to sacrifice speed—some medium-term online loans can be funded within a day or two of applying.

The Best Medium-Term Lenders Offering Emergency Business Loans

If you want to save money on emergency business loans, applying for a medium-term loan is worth a shot.

Here are a couple of online lenders that can give you fast capital at a low cost:

Bond Street

Bond Street offers borrowers anywhere from $25,000 to $1 million at a 12- to 36-month term. Interest rates on a medium-term loan from Bond Street range from 6% to 23%. And at a minimum, Bond Street can fund your application the same day you apply.

Interested in a loan from Bond Street? Check out the Bond Street reviews.

Fundation

Fundation’s medium-term loan ranges from $30,000 to $500,000 at a 12- to 48-month term. Interest rates on a medium-term loan from Fundation are slightly higher than Bond Street’s, but they’re still very competitive for an online loan product—they start at 7.99% and go up to 28.99%.

Fundation can approve you in less than one day, but on average they fund new applications within 3 days.

4. Emergency Business Loans: Invoice Financing

If you find yourself in a cash flow crunch because your customers aren’t paying your invoices, invoice financing might be the perfect solution for your business.

When your cash reserves dip to a dangerous level, invoice financing companies can give you cash upfront for your outstanding invoices. Typically, invoice financing companies advance you a certain portion of your unpaid invoices and hold the remaining amount in reserve. Once your customers pay up, you’ll get the remaining reserve (minus the fees).

If you’re in this emergency, invoice financing can help you out in a pinch—the approval process and time to funding tends to be pretty speedy. But it can be an expensive way to finance your business, as you’ll only collect a percentage of your invoice value instead of everything your customers owed you.

You’re essentially trading in some of your earnings in exchange for immediate capital when you’re in this sort of emergency.

The Best Invoice Financing Companies to Work With

If your business’s cash flow emergency really just comes down to those pesky unpaid invoices, invoice financing could be your best solution.

Here are a couple of the best invoice financing companies that can help you out:

BlueVine

BlueVine offers business owners a quick and simple way to finance their outstanding accounts receivables. BlueVine typically advances you 85% of your invoice value and holds the remaining 15% in reserve. Once your customers have paid their invoice in full, you’ll get the reserve back, minus BlueVine’s fees.

And when you need the capital fast, BlueVine can help you out: they fund new applications in less than 24 hours.

Fundbox

Fundbox advances business owners the full amount of their outstanding invoices, letting borrowers pay them back (plus fees) over 12 equal weekly payments. Fundbox integrates with your accounting application, making it easy and fast to apply online. Once you’re approved,  you select the invoices you need financed, and you’ll get the funds in your bank account the next business day. Check out Fundbox reviews to learn more.  

Need Emergency Business Loans? Think Through These Things First

Here are 3 big questions to answer before you take on any emergency business loans.

1. Have I researched all my options?

If you’re searching for emergency business loans, we’re willing to bet that speed is your number one priority. And if you needed that emergency business loan yesterday, you might latch onto the first offer that comes your way.

We’re here to warn you against that, for one simple reason: the first loan offer you get isn’t necessarily the best offer. With so many small business lenders offering emergency business loans, working with the right one can make a huge difference in the end.

So no matter how urgently you need emergency business loans, this should always be your first step: research your options and shop your loan offers to get the best deal.

We’ve given you a list of 4 emergency business loans that you might consider for your business. But before you commit to any of these emergency business loans, make sure the financing you go with is the right fit for your business.

2. Do I know what I qualify for?

Every business owner can find an emergency business loan when they need it. But the quality of the emergency financing you get will depend on what you qualify for.

Business owners with strong credit scores and business financials might qualify for fast medium-term loans from online lenders. On the other hand, if you run a very young business or you have a less-than-stellar personal credit score, you might only qualify for small (and expensive) short-term loans.

If you’re searching for emergency business loans on a time-crunch, you’ll save time by knowing your credit score and where your business stands, so you only consider realistic options for your business.

Plus, if you’ve been monitoring your credit and have a good idea of your eligibility for loan products, you might avoid settling for a higher-cost loan than you need to take on.

3. Have I considered the costs?

In a lot of cases, business owners looking for emergency business loans just need fast business loans.

And as a general rule, fast cash is expensive cash.

Yes, these emergency business loans can give you the capital you need within hours, but you’re paying for faster service with higher fees and interest rates. Before you take on any of these emergency business loans, think realistically about whether you can afford fast capital.

You’re using these loans to get yourself out of an emergency. But if these expensive short-term solutions leave you worse off in the long-run, are they really worth it?

If you’re confident that an emergency business loan can help you get back on your feet for good, then it might be worth your while to pay a higher price tag.  

4 Tips for Applying to Emergency Business Loans—Fast

Gearing up to apply for one of these emergency business loans? You probably don’t have any time to spare.

So to avoid some scrambling during your application process, here are some tips to applying for business loans as quickly as possible:

1. Figure out how much you need.

Determining how much capital you need before you apply is the first step for applying to emergency business loans fast. Spending a bit of extra time upfront will save you hours down the line.

Asking for the right amount of capital—for both your business and your lender—could make or break your approval chances. And if you’re looking for fast capital to get your business out of an emergency, you don’t have time to apply over and over again.

You can use your financial projections to figure out the right number to ask for.

2. Know how much you can afford to borrow.

By now you know that emergency business loans come at a price—and you don’t want to take on more than you can afford to borrow.

You’ll want to assess what your ideal monthly payment will be, what your maximum payment can be, how quickly you want to pay your loan back, and how much you can afford to pay in interest.

You can use your debt service coverage ratio, or DSCR, to calculate just how much your business can afford.

Don’t know what that is?

It’s just a simple formula:

Cash flow / Loan payment = Debt service coverage ratio

Your DSCR is a mathematical equation that divides your cash flow by your loan payment for the same period of time. So for a loan with monthly payments, you’d take your monthly cash flow and divide that by your monthly loan payment to figure out your DSCR.

Every lender will set a minimum DSCR for their business loans. In general, your DSCR should be more than 1.25, but it could be as low as 1.15 or as high as 1.5—depending on your qualifications and the current economic conditions.

3. Prepare all your documents.

When it comes to applying for emergency business loans as fast as possible, here’s the biggest takeaway: prepare, prepare, prepare.

Short- and medium-term lenders can approve you quickly, but only if you give them everything they need to do so right away. So, you’ll only get that same-day funding speed you’re looking for if you’re prepared to get your complete application in quickly.

To prepare for your business loan application, know the conventional loan requirements that most lenders will ask for and get those documents together.

In general, the more that you’re prepared to submit, the better. And if your lender asks for additional documentation throughout the approval process, get that information over to them quickly.

Your ability to provide a complete application is often what stands in the way of your loan approval. If you want the fastest time to funding, your best bet is to be prepared before you apply and to be responsive during the process.

4. Consider using an online marketplace.

If you’re looking for fast emergency capital, there are a few reasons why you should work with an online marketplace over a bank or direct small business lender.

For one, online marketplaces can connect you to a variety of financing options to help you find the lowest rate possible. Plus, you can send your application to multiple lenders at once, saving you time in the application process. Some marketplaces can even help you determine the offers that are the best fit for your small business. All of this makes getting a business loan that much faster.

If you choose to work with an online marketplace, make sure you’ve found the right one for your small business.

You’re in a rush, but it’s worth it in the long-run to take the time to find a marketplace that’s legitimate, has your needs as their #1 priority, and will connect you to the most lenders in an unbiased way.

The Bottom Line on Emergency Business Loans

If you’re feeling a little hopeless after an unexpected hit to your business, chin up! There are lots of emergency business loans that can help you get back on your feet.

But before you sign on the dotted line for just any quick fix, make sure you’re committing to the right financing option for your small business. A loan that doesn’t meet your needs or is too expensive will only set your business back even farther. If you do your homework and select the right product, you can be sure to get the best deal.

And once you get those funds in your bank account, you’re well on your way to the road of recovery.

Good luck!

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Georgia McIntyre

Georgia McIntyre

Finance Writer at Fundera
Georgia McIntyre is the resident Finance Writer at Fundera. She specializes in all things small business finance, from lending to accounting. Questions for Georgia? Comment below!
Georgia McIntyre

6 Comments

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    But even the most prepared small business owner can get blindsided by an unexpected cost or a blip in your business’s operations. Maybe your store’s pipes burst, your delivery van broke down, or computers just refused to turn on.

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