Emergency Business Loans: How to Get Urgent Funding

Funding speed: 24 to 48 hours.

Funding speed: As fast as the same day, with a wire transfer.

Funding speed: As soon as the same day.

Funding speed: Can take several weeks.

Funding speed:  As fast as 24 hours.

Funding speed: As soon as the next business day.

Funding speed: Typically within 48 hours — no collateral required.

Here are some of the most common types of emergency small-business loans:

The federal government offers emergency business loans through the U.S. Small Business Administration. The SBA disaster loan program includes four types of loans to accommodate different scenarios:

• Home and personal property loans. Replace or repair your home or personal property after a disaster.

• Business physical disaster loans. Replace or repair business property, such as machinery, equipment, fixtures or inventory, after a disaster.

• Economic injury disaster loans. Help businesses meet financial obligations and operating expenses that they could typically meet if not for a disaster.

• Military reservist injury loans. Help businesses meet operating expenses because an essential employee was called to active duty.

With the exception of the military reservist injury loan, you can only apply for an SBA disaster loan if your business is located in a declared disaster zone^[0]

If you can qualify, these government emergency business loans offer low interest rates and long repayment terms. You can apply online through the SBA website, but keep in mind that the process may take several weeks^[0]

A business term loan is a lump sum of capital that you pay back on a fixed schedule, with interest, over a predetermined period. A term loan is a good option for emergency financing when you need to pay for a one-time, specific expense, such as replacing broken equipment or damaged pipes.

Business term loans are available from both traditional lenders (banks and credit unions) and online lenders. If you need an emergency business loan, however, online lenders generally have streamlined applications, more flexible qualification requirements and the ability to fund faster than traditional lenders. Some can fund applications within the same day — and most within a few business days. As a result, though, online emergency business loans will typically be short-term loans that have higher interest rates.

A business line of credit allows you to draw from a set limit of funds and only pay interest on the portion of money you borrow. Business lines of credit are one of the most flexible types of business financing — making them a good option for emergency working capital needs.

Like term loans, business lines of credit are available from both traditional and online lenders. Banks will typically have the lowest interest rates on credit lines, but online lenders can offer fast funding and flexible eligibility criteria.

Business lines of credit may have lower maximum funding amounts than term loans — but often have revolving terms. This means you can continue to draw on the line as long as you make your payments on time and don’t exceed your credit limit.

Invoice factoring can help business owners who need emergency funding by giving them access to capital tied up in unpaid invoices.

With invoice factoring, you sell your outstanding invoices to a factoring company at a discount. The company pays you a percentage of the invoice upfront and assumes responsibility for collecting the payment from your customer. Once your customer repays the factoring company, you receive the remaining invoice amount, minus the company’s fees.

Invoice factoring is generally available from online lenders or fintech companies. Because factoring companies prioritize the value of your invoices and your customers’ payment history, this emergency business loan can be easy to qualify for and fast to fund, but can be expensive — especially if your customers are late to repay their invoices.

With a merchant cash advance (MCA), a company provides you with a lump sum of cash that you repay using a percentage of your daily or weekly debit and credit card sales, plus fees.
Merchant cash advances are typically fast to fund — sometimes as quickly as 24 hours — and easy to qualify for. Many MCA providers can work with startups and businesses with bad credit and require minimal documentation during the application process.

Consider these factors to determine which emergency loan is right for your business’s needs:

• Loan type. The right type of loan will depend on the kind of emergency your business has experienced and why you need funding. If, for example, you need to cover daily expenses during a slow period, you might opt for a working capital line of credit. On the other hand, you might choose equipment financing to replace broken or damaged equipment.

• Interest rates. Business loan rates can vary based on the lender, loan type and your qualifications. Because emergency business loans are often fast to fund, however, interest rates may be higher than other loan options. Compare rates from multiple providers to find the best offer — and make sure you can afford any debt you take on.

• Funding speed. When your business experiences a disaster, you usually need capital quickly. Some online lenders can offer same-day business loans. As you explore different options, talk to lenders about their process and timeline, so you know when you can expect your funds.

• Repayment terms. Emergency business loans often have short repayment terms. You’ll want to make sure that you can manage potential payments (especially if they’re daily or weekly) based on your existing budget. 

• Lender reputation. Reading online reviews can give you a better sense of a lender’s reputation and what it’s like to work for them. Be wary of predatory lenders that may try to take advantage of you when you’re in need of quick funding. These lenders may promise “guaranteed approval” or similar terms that seem too good to be true.

Start by thinking about how much financing you need, how much debt you can afford and consider what type of business loan would be best for your emergency situation.

It may also be helpful to draft a plan that details exactly how you plan to use your capital — that way, you know how these funds will help address your immediate needs and how your business can grow in the future.

The best type of emergency business loan for your business will also depend on what you can qualify for. Specific business loan requirements vary by lender, but you can consider common underwriting criteria — time in business, annual revenue, personal credit score — to know where you stand before applying.

You might also think about your cash flow and available collateral. If you’re considering an SBA disaster loan, you should confirm that your business falls into a declared disaster area — and check that you meet any additional SBA loan qualifications.

As you research lenders, consider factors such as interest rates, repayment terms, loan amounts, funding speed, application process and lender reputation.

It can be helpful to read reviews of lenders online or talk to former customers to verify a lender’s reputation. Keep in mind that fast funding can often result in higher interest rates. You’ll want to make sure that you can afford any debt that you take on.

The application process varies based on the lender, but if you opt for an online lender, the process should be fairly straightforward. Along with a simple application, you’ll typically provide basic documentation, such as business and personal bank statements and tax returns, as well as business financial statements. The lender will likely require you to sign a personal guarantee as well.

An emergency business loan may not be the right choice if your need for capital isn’t immediate — especially if you can qualify for more competitive rates and terms by waiting.

There may also be instances where taking on debt will actually harm your financial situation instead of helping, even through a disaster. In those cases, consider these alternative financing options:

• Business credit cards. If you’re looking for a quick and revolving source of financing to cover cash flow gaps, business credit cards can be a good option. Many business credit cards require good credit — a score of 690 or higher — to qualify. They can provide benefits like flexibility and spending rewards, but business credit cards can also become expensive if you’re not diligent about making payments. 

• Personal loans. It is possible to take out a personal loan instead of a business loan to access much-needed capital for your small business. Personal loans can be easier to qualify for, particularly if you don’t have enough time in business or revenue to qualify for a business loan, and personal loans may fund faster than some business loans. 

• Self-funding. If you have a business emergency fund or other money in savings, this may be the time to use it. Just be sure you have a plan to build your savings back up so you’re not vulnerable in the event of future emergencies or opportunities.

• Crowdfunding. This likely won’t be your fastest alternative option for accessing emergency business funding, but particularly if your small business is already well-established within a community of supportive customers, crowdfunding presents a valuable opportunity to access emergency funding. In addition to helping you access capital without the worry of meeting stringent loan requirements or completing lengthy applications, crowdfunding doubles as an avenue for marketing your business.