Emergency Business Loans

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What are Emergency Business Loans?

Emergency business loans are just that – a business loan or busines line of credit for a business emergency or a crisis that small businesses may be faced with. There are always specific issues in running a company that can either be predicted or not predicted. Still, the reality is when there is a crisis, it’s a priority that the business gets capital fast.

Emergencies require a business loan product that can process and fund your firm quickly from application to funds in your bank account fast, period. Businesses with knowledge about financing options make your decision easier when time is of the essence. Banks are not the source if you need funds fast and in a crisis. Banks are cautious and have to protect depositors, so banks will not be an option if speed is what you need.

Online lenders like AdvancePoint Capital offer emergency business loans and other great alternatives to bank loans for small businesses searching for emergency business loan options. Check out our Google reviews! Lets us be your lending partner .

What are considered emergencies in the eyes of small businesses or a lender for that matter?

Below is a list of the common needs and uses for small businesses faced with and emergency financial assistance:

  • Capital to stabilize bank account

  • Working capital for firm shortfalls

  • Advertising and marketing

  • Repairs of existing facilities

  • Equipment breakdowns

  • Inventory, supplies, and other assets

  • Emergency payroll issues

  • Emergency cash infusions due to extenuating circumstances

  • Crisis relief for accounts receivable issues

The 5 Best Types of Emergency Business Loan Options: How to Get Funding Fast

An “emergency loan” for a business can come in many forms. So let’s dive right into the many options and details of what resources are available for companies in a crisis. It’s an emergency, after all!

Emergency Business Line of Credit

A business line of credit is the most flexible financing product for small companies. Business lines of credit operate a lot like a credit card in that it is an open revolving line of credit that allows for draws at any time up to a specific credit limit. Keep in mind; online lenders work faster and are more automated than going into a bank for a business line of credit, so we recommend small business owners use online lenders unless you have a special relationship with your bank and can get a credit line fast, as traditional banks are typically slow to process and fund businesses.

Program Overview

Rates: Fixed interest rates starting at 1% per month simple interest

Repayment Term: Revolving with renewals quarterly; 6 months or 12 months

Draw Fee: 0% to 3%

Remittance: Monthly payments or Weekly Payments

Special Features: You can draw as little or as much money up to a credit limit at any time

Credit Standards: Must have excellent credit and deep credit history

Application Timeline: Same day to 48 hours

Earning Requirements: $250,000 per year or more

Benefits and Best Uses of Business Line of Credit

An emergency business line of credit has excellent rates, good terms, and low fees, but one word can explain why business owners choose this product, flexibility. The ability to draw cash at any time and use it when you need it is a must for any business owner’s financial toolbox. It is not uncommon for small companies to have this funding product and other products like term loans and charge cards. Funds can be used for various purposes, but the most common is general working capital and finance needs.

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Emergency Lines of Credit

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Emergency Small Business Loan

An emergency small business loan are short term loans that offer a fixed lump sum upfront, with a set payback amount over a fixed term, typically 6 to 18 months. When you cannot qualify for bank financing, term loans can be a great alternative. Rates are based on factor costs, not principal and interest. Loan terms may have a higher cost difference when compared to other emergency business loans from traditional financing institutions. The good news is these products require very little paperwork for the application process and credit requirements are much more forgiving than conventional funding and is considered the best emergency business loan because of it speed from application to funding. Many online lenders offer this product.

Program Overview

Credit Amount: Up to $500,000

Rates: Factor rates starting at 1.10 up to 1.45

Repayment Term: Term loans are typically 6 to 18 months

Fees: 1% to 5%

Remittance: Weekly, bi-weekly, monthly, and in some cases daily Monday-Friday

Credit Score: All credit accepted from poor to excellent

Application Process: Fast process; funds can be available same business day to 24 hours

Annual Revenue Requirements: $180,000 per year or more

Benefits and Best Uses

Short-term business financing has higher rates, shorter terms, and fees but can come to the firm’s rescue that needs cash flow now and can’t get approved for more traditional products. Funds can be used for a variety of different purposes but most commonly used for working capital problems.

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Emergency Small Business Loans

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Merchant Cash Advance (MCA)

Merchant Cash Advance also known as a Purchase of Future Sales Agreement, provide a fixed cash upfront to a small business with a discounted purchase price or specified amount customers pay back that is a more significant amount than the lump sum upfront provided to the merchant. The difference is repaid by taking a fixed percentage of future credit card sales batches until the payback amount is paid back in total. There is no term limit with advances as the fixed back percentage never changes. The time frame to pay back depends on the volumes of future credit card sales. It’s estimated that MCAs are set up with expectations of being repaid in 6 to 18 months, but again, it may be longer or shorter depending on future credit card sales. Funds can be used for various purposes, but the most common are general working capital and finances.

Program Overview

Rates: Factor rates between 1.09% up to 1.45%

Repayment Guidelines: No term limits estimated payback periods are 6 to 18 months

Draw Fee: 1% to 5%

Remittance: Fixed percentage splits from future credit card batches

Credit Score: All credit types considered from poor to excellent

Turnaround Time: 24 to 48 hours

Revenue Requirements: $180,000 per year or more

Benefits and Best Uses

MCAs cost more than traditional bank financing with higher rates and fees. Still, the flexibility of repayment, which is attached to the fixed percentage of future sales, really helps companies that fluctuate in sales or are a seasonal operation. Remember, not all small companies are equal, and sometimes traditional products are not an option for some. Funds can be used for various purposes, but a majority of money is cash flow needed.

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Merchant Cash Advances

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Business Cash Advances (BCA)

Business cash advances, also known as a Purchase of Future Sales Agreements, provide a fixed lump sum of money upfront to a small firm with a set payback which is higher, called a discounted purchase price, also known as a specified amount. This payback amount is a more significant amount than the lump sum upfront provided to the borrower. The amount is repaid by taking a fixed percentage of future overall sales, which is different from an MCA, which takes a percentage of future credit card sales. Payments are collected by a fixed daily or weekly payment deducted from a business bank account based on the fixed percentage of future sales.

Every month, if the fixed payments take more than the set future percentage of sales, then a refund back to the merchant can occur. This repayment continues until the payback amount is paid back in full. Therefore, there is no term limit with advances as the fixed payback percentage ever changes. The time frame to pay back depends on the volumes of future overall sales. It’s estimated that business cash advances are set up with expectations of being repaid in 6 to 18 months. Still, again, it may be longer or shorter depending on future credit card sales.

Program Overview

Rates: Factor rates between 1.09% up to 1.45%
Repayment Guidelines: No term limits estimated payback periods are 6 to 18 months
Fees: 1% to 5%
Remittance: Fixed ACH payments weekly or daily Monday-Friday
Credit Score: All credit types considered from poor to excellent
Turnaround Time: Same day to 24 hours
Revenue Requirements: $180,000 per year or more

Benefits and Best Uses

Business cash advances can provide money in a pinch that traditional loans can’t process in the same time frame. There is no doubt that the costs are higher than conventional financing, but the reality is if speed is the requirement, crisis funding is what it is.

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Business Cash Advances

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Business Cash Advances (BCA)

Business cash advances, also known as a Purchase of Future Sales Agreements, provide a fixed lump sum of cash upfront to a small firm with a set payback which is higher, called a discounted purchase price, also known as a specified amount. This payback amount is a more significant amount than the upfront amount provided to the borrower. The amount is repaid by taking a fixed percentage of future overall sales, which is different from an MCA, which takes a percentage of future credit card sales. Payments are collected by a fixed daily or weekly payment deducted from a business account based on the fixed percentage of future sales.

Every month, if the fixed payments take more than the set future percentage of sales, then a refund back to the merchant can occur. This repayment continues until the payback amount is paid back in full. Therefore, there is no term limit with advances as the fixed payback percentage ever changes. The time frame to pay back depends on the volumes of future overall sales. It’s estimated that business cash advances are set up with expectations of being repaid in 6 to 18 months. Still, again, it may be longer or shorter depending on future credit card sales.

Program Overview

Rates: Factor rates between 1.09% up to 1.45%

Repayment Guidelines: No term limits estimated payback periods are 6 to 18 months

Fees: 1% to 5%

Remittance: Fixed ACH payments weekly or daily Monday-Friday

Credit Score: All credit types considered from poor to excellent

Turnaround Time: Same day to 24 hours

Annual Revenue Requirements: $120,000 per year or more

Benefits and Best Uses

Business cash advances can provide money in a pinch that traditional loans can’t process in the same time frame. There is no doubt that the costs are higher than conventional financing, but the reality is if speed is the requirement, crisis funding is what it is.

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Business Cash Advances

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U.S. Small Business Administration Emergency Loans:

The Small Business Administration (SBA) is a federal government agency whose office is headquartered in Washington DC that provides resources, programs, guidelines, and financing guarantees to approved SBA lenders (service provider) to issue a SBA loan to small companies. The administration’s mission is to help American enterprises start, build, and grow their companies successfully. The administration is not a lender but provides a guarantee that gives approved lenders the ability to take on the risk of lending and decisions under the terms that they would not ordinarily do so independently and have rights reserved for any recourse need.

These loans are highly sought after by small companies, and there are many government agency-approved lenders to choose from. The application processes can be lengthy, hard credit pull is required, but with the help of experienced SBA-approved lenders, the application package can be a smooth and efficient experience. Keep in mind; some loans may require cash reserves, a business model or business plan from the firm.

Economic Injury Disaster Loans (EIDL)

Economic Injury Disaster Loans (EIDL) are emergency business loans that provide emergency business funding to companies after natural disasters like tornadoes, wildfires, or floods. However, when President Trump declared a nationwide health emergency based on the recommendation of the CDC on March 13th, 2020, U.S. Congress provided small companies access by way of the CARES Act or emergency funding through the Economic Injury Disaster Loan. The paycheck protection program was also a SBA disaster loan that has since expired. Both programs offered monthly payments and a fixed interest rate. These SBA disaster loans offered some financial protection during extreme emergencies.

SBA disaster Loans are designed for small business owners and nonprofit organizations to retain employees and other expenses like health care costs to remain stable during the pandemic which was obviously a business emergency. If small business owners urgently need cash while waiting for decision and disbursement on a Economic Injury Disaster Loan , they may qualify for an Express Disaster Bridge Loan. Express Bridge Loans enable small companies that currently have a business relationship with an approved lender to quickly access financing up to $25,000 to respond to COVID-19 related business issues.

Updates: EIDL $10,000 advance on the EIDL is no longer available.

EIDL Frequently Asked Questions

 

SBA Express Loans

The Small Business Administration partially guarantees express loans with expedited credit decisions. Express loans offer credit decisions in 24 to 36 hours making it a great emergency business loan. Like all SBA loans, the administration doesn’t do any direct lending for express loans. Instead, the administration works with a network of approved business lenders who underwrite and issue the loans. However, the administration does guarantee a portion of the credit amount, meaning if the borrower defaults on the monetary amount, the lender won’t lose all of their money.

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SBA Emergency Loans

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Invoice Factoring

Invoice factoring advances unpaid invoices to a company to increase the speed of cash flow to the business. This solution provides funds quickly, and there is no need to wait for unpaid invoices to be collected and received by the client with invoice financing in place as the factoring company handles the collection. Invoice financing has affordable costs that a factoring company would charge ranging from 1% to 2.5% fee off of the face value of the invoice advanced. A factoring company offers small companies that issue invoices to their customers with repayment guidelines up to a net of 60 days, some exceptions even longer. This is not a loan but an advance of unpaid invoices so does not have an interest rate, but flat fee.

Invoice Factoring Overview

Interest Rate: None

Repayment Guidelines: Not traditional financing

Fees: 1% to 3% fee based on the outstanding invoices. Monthly service fees may apply depending on the volume of invoices factored

Borrower Credit Requirements: The credit score of the business owner does not matter as no credit report is required.

Application Process: A couple of days for approval and set up

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Invoice Factoring

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Other Options for Business Owners that are faced with an Emergency

Business Credit Cards

A business credit card is a great option when time is of the essence in an emergency. It is important to realize that you will pay interest over time with a business credit card and its important to budget for repayment. If you have poor credit it may be difficult to obtain this option. Business credit cards have a personal guarantee.

Personal Loans

Many business owners resort to personal loans in an emergency as it’s a short term loan that you can get a personal loan approval in a pinch. Remember that a personal loan has a personal guarantee and if you were to close your business you still would be saddled with the debt.

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Frequently Asked Questions

Frequently Asked Questions (FAQ) About Emergency Business Loans

The short answer is no. There are many options today when searching for emergency business loans for your company to use for a crisis. The key is to evaluate all products you qualify for and find out which is best for your establishment. Compare, shop, and save!

Most of the small business loans suggested for emergency business loans can be obtained either the same day or within 24 hours. Check with your specific lender at the time of application for turnaround times from application to funding.

There is a wide variance in either rate, which is principal and interest or short-term business lending. These rates are based on factor costs depending on products and your credit qualifications. Typical long-term rates start at prime or treasury index plus 2.00% and up. Standard interest rates as of 2020 are 6.50% up to 28.99% for medium to short-term business loans, and factor rates vary from 1.09 to 1.45 of the funding amount. That is an extensive range, and you need to compare offers carefully.

The short answer is yes. If you have bad credit, and haven’t made timely payments in the past, there are options such as short-term business loans, MCA, and BCA that can offer fast turnaround times for emergency cash flow issues with your company. Remember, the worse your credit, the higher the rates and fees, as well as an effect on loan terms of any business financing product, will be.

You will sacrifice the length of the term to get emergency financing fast. Short-term business lending and MCA durations are 6 to 18 months. Business lines of credit are six months to 12 months, and credit cards have no term limit. Processing to funding times for these products can be the same day to 24 hours.

Final Thoughts About Emergency Business Loans

Although you may be faced with an emergency/crisis, take the time to consider who you are looking to get funds from. Have you checked the company’s reviews? Do you feel that you were offered every program available? Will the loan program work for the funds you need to get a return on the investment?

Final Thoughts About Emergency Business Loans

Although you may be faced with an emergency/crisis, take the time to consider who you are looking to get funds from. Have you checked the company’s reviews? Do you feel that you were offered every program available? Will the loan program work for the funds you need to get a return on the investment?

How to Apply for Emergency Business Loans:

AdvancePoint Capital offers a straightforward emergency business financing. Our customers love the fast, streamlined process and high approval rates that come from working with us. Let us help you decide what program is best suited for your unique situation. All credit scores are considered. Applying for a loan with AdvancePoint Capital is as simple as a 1, 2, 3, 4 process. Start with this online form, fill out the short application page, wait a few hours for your approval, and then get your offer!

 

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