What is an Emergency Business Loan?

Emergency business loans are just that, business loans for emergencies! There are always certain issues that arise in running a business that can either be predicted or not predicted, but the reality is when there is an emergency the business needs
money fast.

Emergencies require a business loan product that can process and fund your business quickly from application to funds in your business bank account, period. Knowing your business funding options when time is of the essence can really make your choices easier to make.

So what are considered emergencies in the eyes of a business owner or business lender for that matter?

Emergency Business Loans Needs and Uses

  • Cash flow to stabilize business bank account
  • Advertising/marketing
  • Repairs of existing facilities
  • Equipment breakdowns
  • Inventory or supplies
  • Emergency payroll issues
  • Emergency cash infusions due to extenuating circumstances
  • Emergency relief for accounts receivable issues

So let’s dive right into the options and details of what’s available for business funding in an emergency.
It’s an emergency after all!

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

Business Lines of Credit for Emergency Business Loans

Business lines of credit are the most flexible business funding products. 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 business lenders work faster and are more automated than going into a bank for a business line of credit, so we recommend strongly using online business lenders unless you have a special relationship with your banker.

Product Overview

Rates: Interest rates starting at 4.5% and up depending on many factors
Terms: Revolving with renewals quarterly, 6 months or 12 months
Fees: 1% to 3% origination fees
Payments: Monthly
Credit Standards: Must have excellent credit and deep credit history
Special features: You can draw as little or as much money up to a credit limit at any time
Turnaround Time: Same day to 48 hours

Benefits and Best Uses of Business Lines of Credit

Business lines of credit have great rates, good terms, and low fees, but one word can explain why business owners choose this product, Flexibility. The ability to draw money 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 businesses to have this business product along with other products like term loans and credit cards. The use of the money can be used for a variety of different purposes but most common is general working capital and cash flow needs.

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Short Term Business Loans for Emergency Business Loans

Short term business loans are loans that have a fixed lump sum offered upfront, with a fixed payback amount over a fixed term of time typically 6 to 18 months. When you cannot qualify for more traditional business loans products, short term business financing can be a great alternative. In defining short term business loans means terms typically from 6 months up to 18 months to repay. Rates are based on factor costs and not principal & interest and cost more than traditional business loans. The good news is these products require very little paperwork and credit requirements are much more forgiving than traditional business loans.

Product Overview

Rates: Factor rates starting at 1.10 up to 1.45
Terms: Typically 6 to 18 months
Fees: 1% to 5% origination fees
Payments: Weekly, bi-weekly, monthly, and in some cases daily Monday-Friday
Credit Standards: All credit accepted from poor to excellent
Turnaround Time: Fast Process. Approval of funding can be the same day to 24 hours

Benefits and Best Uses of Short Term Business Loans for Emergency Business Loans

Short term business financing has higher rates, shorter terms, and fees but can come into the rescue the business that is in need of the money now and can’t get approved for more traditional business loan products. The use of the money can be used for a variety of different purposes but most commonly used for cash flow problems.

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Merchant Cash Advance for Emergency Business Loans

Merchant Cash Advances, also known as a Purchase of Future Sales Agreements, advance a fixed sum of money upfront to a business owner with a discounted purchase price (also known as specified amount) to payback that is a greater amount than the lump sum upfront provided to the merchant. The advance is repaid by taking a fixed percentage of future credit card sales batches until the payback amount is paid back in full, 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 Merchant Cash Advances 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.

Product Overview

Rates: Factor rates between 1.09% up to 1.45%
Terms: No term limits estimated payback periods are 6 to 18 months
Fees: Typically 1% to 5% origination fees
Payments: Fixed percentage splits from future credit card batches
Credit Standards: All credit types considered from poor to excellent
Turnaround Time: 24 to 48 hours

Benefits and Best Uses of Merchant Cash Advance for Emergency Business Loans

Merchant cash advances do cost more than traditional bank financing with higher rates and fees but the flexibility of repayment which is attached to the fixed percentage of future sales really helps businesses that fluctuate in sales or are a seasonal business. Remember not all businesses are equal and sometimes traditional business loan products are not an option for some. The use of the money can be used for a variety of different purposes but a majority of money is cash flow needs.

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Business Cash Advance for Emergency Business Loans

Business cash advances, also known as a Purchase of Future Sales Agreements, advance a fixed lump sum of money upfront to a business owner with a set payback which is higher called a discounted purchase price, also known as a specified amount. This payback amount is a greater amount than the lump sum upfront provided to the business owner. The advance is repaid by taking a fixed percentage of future overall sales, which is different than a merchant cash advance which takes a percentage of future credit card sales. Payments are collected by a fixed daily or weekly payment deducted from business bank account which is based on the fixed percentage of future sales. Every month, if the fixed payments take more than the set future percentage of sales than 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 but again it may be longer or shorter depending on future credit card sales of the dentist practice.

Product Overview

Rates: Factor rates between 1.09% up to 1.45%
Terms: No term limits estimated payback periods are 6 to 18 months
Fees: Typically 1% to 5% origination fees
Payments: Fixed ACH payments weekly or daily Monday-Friday
Credit Standards: All credit types considered from poor to excellent
Turnaround Time: Same day to 24 hours

Benefits and Best Uses of Business Cash Advance for Emergency Business Loans

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

Business Credit Cards for Working Capital

Like credit cards, Business credit cards function as a revolving credit line in which a card is issued that can be used for both purchases and payments. Most businesses use business cred cards in conjunction with other business loan products

Product Overview

Rates: Interest rates start at 0% up to 28.99%
Terms: Revolving, no term limits
Fees: 1% to 3% origination fees
Payments: Low flexible monthly payments
Credit Standards: Must have good to excellent credit and deep credit history

Benefits and Best Uses of Business Credit Cards for Working Capital

The flexibility and access of money that business credit cards offer are second to none. The ability to both purchase items and use it to pay for bills or invoices can also free up short term cash flow problems and is very convenient.

The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.

Frequently Asked Questions:

Are Emergency Business Loans Difficult to Obtain?
The short answer is No. As of 2020, there are more ways than ever to get a loan for your business to use for an emergency. The key is to evaluate all products you qualify for and find out which is best for you and your business. Compare, shop, and save!

I Need a Short-Term Emergency Business Loan Now. How Fast Can I Get One?
Most of the business loan products 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.

What Are the Interest Rates for Emergency Business Loans?
There is a wide variance in either interest rates which are principal & interest or short term business lending which 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% an up. Typical 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 a big range and you need to compare offers carefully.

Can I Qualify for an Emergency Business Loan If I Have Bad Credit?
The short answer is Yes. If you have bad credit there are options such as short term business loans, merchant cash advance and business cash advance that can offer fast turnaround time for emergency cash flow issues with your business. Remember, the worse your credit, the higher the rates and fees, as well as an effect on terms of any business financing product, will be.

What Term Lengths Can I Get With Emergency Business Loans?
You will sacrifice in the length of term to get an emergency business loan fast. With Short term business lending and merchant cash advance durations are 6 to 18 months, Business Lines of Credit are 6 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.

How Much Will Emergency Business Loans Cost in Fees?
When you need money fast due to an emergency you sometimes have to sacrifice in costs so the fast business loan products tend to cost more so expect fees to be higher than more traditional business financing. Origination fees should range from 1% to 5% of the amount you are borrowing. Business credit cards have no origination fees, but due have annual fees you may want to be aware of.

How to Apply for Emergency Business Loans:

AdvancePoint Capital offers an easy business loan experience. Our customers love the fast, streamlined process and high approval rates that come from working with us. 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, then fill out the short application page, wait a few hours for your approval, and then get your money!

* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.