Fast business loans are often geared towards SMEs that need to cover immediate expenses or seize a time-sensitive opportunity. Unlike traditional business loans where applications can take one week to up to several months – fast business loans can provide your business the funding it needs within a matter of days, or even hours in some cases.
Fast business loans have simple, streamlined application processes – with many lenders in this market requiring minimal paperwork. Approval decisions are often based on factors like your business cash flow or credit card sales, rather than simply an extensive credit history.
The benefits of fast business loans
Quick access to funds: The primary advantage of these loans is speed of approval. Fast loans can provide much-needed capital within a short time-frame – giving businesses the capital to handle emergencies or time-sensitive opportunities.
Simplified application process: Many fast business loans have straightforward applications with minimal documentation required. This simplified process can be helpful, especially if your business has limited financial history.
Flexible use of funds: Unlike traditional business loans, fast business loans will likely come with fewer restrictions on how the funding can be used. Wherever you deploy the funds, business owners have flexibility with fast business loans.
Availability to varied credit profiles: Fast loans are often accessible to businesses with less-than-perfect credit history. Alternative fast loan lenders may prioritise your business’s cash flow and revenue over your credit score when evaluating applications.
The drawbacks of fast business loans
While the benefits to fast business loans are appealing, there are several drawbacks your business should be aware of:
Higher interest rates
Fast business loans come at a cost. Typically, you will be paying significantly higher interest rates compared to traditional loans. This compensates the lender for the increased risk associated with fast business loans.
Short repayment periods
Most fast loans come with a short repayment period, often ranging from a few months to one year. A compressed repayment term puts a short term strain on your business cash flow, so you’ll need to ensure you can afford the repayments to avoid default.
Smaller loan amounts
Fast loans generally have lower borrowing limits, meaning they may not be suitable for larger business investments.
Risk of predatory brokers and lenders
The fast loan market is rife with lenders who provide unfavourable hidden terms. You won’t find this problem with Mill Wood, as we believe in honest business – we are transparent with our fee structure and any associated additional costs with your loan.
Potential for over-reliance
The ease of securing a fast business loan can lead to organisation’s becoming over-reliant on this type of funding. Being in a cycle of high-cost borrowing can lead to financial issues down the line.
Fast business loans can provide your business a lifeline in urgent situations, but they’re not without risks. Before applying for a fast loan, assess how likely it is you can pay the loan back. Evaluate your business’s financial health, and make sure you are aware of the true cost of the loan. We recommend you seek financial advise prior to applying for a fast loan.
This type of loan should be used responsibly and strategically to support the stability and growth of your business. If you’re looking to speak with a broker with the know-how to navigate commercial finance, get in touch with Mill Wood.
