The Best Emergency Business Loans
Last updated April 4, 2024
Emergency business loans provide relief when your business experiences a disaster, loss of revenue, or another emergency.
These small business loans
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Best Emergency Business Loan Options
When it comes down to it, you may seek out an emergency loan for your business for a number of reasons. You may have suffered a physical or economic disaster, you might be experiencing a seasonal slow, or you might need to cover unexpected expenses.
Whatever the reason, it’s important to have quick access to capital when you need it. Here are some of the best options for emergency business loans.
1. Short-Term Business Loans
Our first option for an emergency business loan is a short-term loan.
With terms of 18 months or less, short-term business loans are ideal for solving cash flow emergencies, as well as handling one-off, short-term financing emergencies. Compared to bank loans or other long-term products, short-term loans have flexible qualifications, but will also have higher interest rates.
Pros
✔️ Fast to fund.
✔️ Simple application process.
✔️ Flexible qualifications.
✔️ Bad credit often acceptable.
Cons
✖️ Higher interest rates compared with other products.
✖️ Repayment often daily or weekly instead of monthly.
2. Invoice Financing
If you find yourself in a cash flow crunch because your customers aren’t paying their invoices, invoice financing
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 (80% to 90%) of your unpaid invoices and hold the remaining amount in reserve. Once your customers pay up, you’ll get the remaining reserve (minus the lender’s 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. That said, 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.
Pros
✔️ Solves cash flow issues that result for unpaid invoices.
✔️ Fast to fund.
✔️ Unpaid invoices serve as collateral.
✔️ Often available for startups and businesses with bad credit.
Cons
✖️ Can be expensive.
✖️ Fees calculated based on time it takes for invoice to be paid.
✖️ Only available for businesses that invoice customers.
3. Business Line of Credit
One of the most flexible forms of financing, a business line of credit
With a business line of credit, you receive access to a pool of funds to draw from when you need capital, and you’ll only pay interest on what you use. And, in many cases, business lines of credit are revolving—once you repay what you’ve borrowed, your credit line resets and you can use it again when needed.
That said, business lines of credit are available from both banks and online lenders—so if you need one quickly, you’ll likely want to find an online lender who can fund your application in just a few days.
If you have more time, on the other hand, a business line of credit from a bank is a great affordable tool to keep in your back pocket for emergencies—and will likely offer a lower interest rate.
Pros
✔️ Only pay interest on funds that are drawn.
✔️ Capital available when needed.
✔️ Can keep on-hand if revolving line of credit.
✔️ Lower interest rates than term loans of similar sizes.
Cons
✖️ May require a personal guarantee or UCC-lien.
✖️ Online lenders will have higher interest rates compared with banks.
4. SBA Disaster Loans
Finally, if your business needs financial assistance recovering from a declared physical or economic disaster, then an SBA disaster loan may be the best emergency business loan for you.
Unlike typical SBA loans
There are four types of SBA disaster loans:
- Home and personal property disaster loans
- Business physical disaster loans
- Economic injury disaster loans
- Military reservists economic injury disaster loans
The SBA lists currently declared disasters on their website
Pros
✔️ Low interest, long-term loans.
✔️ Designed specifically to help businesses suffering as a result of a declared disaster.
Cons
✖️ Slow to fund.
✖️ Lengthy and time-intensive application process.
✖️ Have to meet specific requirements to qualify.
✖️ Not available for businesses with average or poor credit.
✖️ Only available in declared disaster situations.
Use our guide to learn more about how to apply for an SBA disaster loan
Fundera Can Help
If you’re feeling worried after an unexpected hit to your business, just know that there are a variety of emergency business loans that can help you get back on your feet. We can help you find the right emergency loan for your small business.
How much do you need?
No cost to you
Your credit score won't be impacted
Compare multiple lenders with one application