How to get funding fast – the quickest routes to finance for SMEs

When you need to find business funding fast, what are your options and what are the quickest ways for you to secure more finance?

We talk you through the most viable fast funding options for SMEs who need finance in a hurry, and include practical tips on how to ensure your funding application goes as swiftly and smoothly as possible.

Unsecured Business Loans

Unsecured business loans are a form of finance which do not require a business asset as collateral against the loan.

Due to the fact that assets do not need to be valued, unsecured business loans are a feasible solution for businesses who need funding fast, as the application process is usually quicker than their secured counterpart.

Best for:

Unsecured business loans are a viable option for any business with over six months’ trading history looking for relief on cash flow, or to cover the cost of new stock or equipment.

They’re also ideal for small businesses who don’t own many assets and need access to a fixed amount of funding fast.

Watch out for:

Although the upfront costs may seem lower, unsecured business loans usually cost more than secured loans overall, due to the higher risk for the lender. There are also stricter limits on loan amounts due to their unsecured nature.

Some lenders will also ask for personal guarantees from business owners to pay off the loan in case the business defaults on payments.

How fast can I get an unsecured business loan?

As there is no need to value assets, and the legal process for unsecured business loans is generally simpler, funds can be with the business within a matter of days.

Using a funding portal such as Fleximize can help you save time securing business funding. You can apply online in less than 5 minutes, and if you qualify, the funds can be in your account in just 24-48 hours.

Invoice Finance

Invoice financing involves borrowing money against outstanding invoices. This is a potential option for those looking to free up cash flow when awaiting customer payment, as it’s one of the fastest ways to access capital.

Using your outstanding invoices as collateral, invoice financing companies will lend you up to 90% of the total value of those invoices, with the remaining 10%, minus fees, once the customer has paid.

Best for:

Invoice financing is particularly popular with SMEs and start-ups, who often suffer from poor cash flow due to slow-paying customers.

It’s also a feasible option for businesses with blemishes on their credit score or financial health, as invoice finance lenders may value the cost of your outstanding invoices over your credit history.

Watch out for:

There are two types of invoice finance – invoice discounting which involves customers paying you directly, and invoice factoring in which customers settle the invoice with the factoring company.

It’s important to be aware of the differences between the two, as invoice factoring will often involve your clients being aware of the factoring arrangement, whereas invoice discounting usually remains confidential.

Invoice financing is also only available to businesses that sell goods or services to other businesses in accordance with set terms, so ensure you fit the criteria before applying.

How fast can I get invoice finance?

Most lenders will provide businesses with the funds within 24 hours of submitting an invoice.

Business Asset Finance

Business asset finance is designed to make the purchase of assets, such as a car or piece of equipment, more affordable for businesses. It allows a company to spread the cost of the asset over a set period of time, with the loan being repaid in monthly instalments as opposed to a lump sum.

This finance model allows businesses to free up cash while still having access to assets which they may not be able to afford upfront.

Best for:

SMEs or start-ups who want to spread the cost of a large purchase over a long period of time. Most lenders will offer a level of flexibility when agreeing upon the payment term and deposit.

It’s also a good way to unlock capital for cash flow, as the business will eventually own the asset, with the option to sell it at a later date.

Watch out for:

Due to high interest rates, businesses will often end up paying substantially more for the asset overall than its cash price. The overall cost of the asset plus interest should therefore be carefully considered when taking out this type of finance.

Asset finance can work well for large asset purchases which are essential to the running of the business but isn’t the best route for businesses who only need the asset for a short period of time, in which case leasing may be a better option.

How fast can I get asset finance?

You can get approval and funds for asset finance in as little as 48 hours. For a more in-depth understanding of asset finance read;

Merchant Cash Advances

A merchant cash advance, or business cash advance, is an unsecured finance option based on a company’s card sales. It involves a business selling a percentage of future card sales to the provider, with agreed repayments and interest taken from live card sales.

Best for:

Merchant cash advances can work well for businesses that take a high amount of their sales through card terminals, such as retailers or restaurants.

The repayment model allows a business to tie repayments to actual sales, meaning that if trade slows repayments will fall and be easier to meet.

Watch out for:

Companies who receive a high percentage of their sales in cash won’t benefit, as the finance amount that is approved is directly correlated to card payments.

Providers can also be quite restrictive with their terms, including ensuring you don’t interfere with card sales by offering cash discounts or closing your business for more than a set number of days. Moreover, because your business trade will fluctuate, it’s difficult to track future repayments compared to other loan types.

Merchant cash advances are also one of the more expensive forms of fast cash and some lenders use factor rate to display the cost of the finance, which isn’t always straightforward to understand.

How fast can I get a merchant cash advance?

Merchant cash advances can usually be approved in a matter of days.

How to make the application process as swift as possible

Whether you opt for an alternative lender or a traditional bank loan, there are several steps that you can take to ensure the application process for business financing is as swift as possible.

1. Understand your business

It’s crucial to have a statement ready summarising your business model, stakeholders and trading history. Ensure that you’re comfortable talking about the nuances of your business, as this will instill a sense of confidence in the lender.

2. Have your records ready

Even if you’re applying for an unsecured loan, a lender is likely to want to see an up-to-date copy of your previous three months’ bank statements, management accounts, and details of any other finance you’re tied up in.

Having this to hand will save time during the application process and is crucial in helping the lender to ensure you don’t over-commit yourself.

3. Have a clear purpose for the loan

It’s important to approach a lender with a clear purpose for the loan, detailing the reason, preferred monthly repayments and loan amount you require.

Having a plan on how the money will be spent, including any future growth plans, will help the lender build a clearer picture of exactly how you plan on spending their money.

Last updated: 13th April, 2021

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