Three types of emergency business loans

Emergency business loans offer financial relief to investors with sudden and unexpected or expected business expenses.

These credit products give investors fast access to money; some lenders even have longer repayment terms. Knowing these credit product lenders will ensure your venture stays afloat during the low season.

The best lenders offer emergency loans with flexible repayment terms and competitive interest rates. They also ensure that this product is approved and disbursed quickly – some are processed and disbursed within a single business day. Here are some common emergency business loans.

1) SBA (Small Business Administration) loan

The SBA loan is a government program designed for SMEs in need of financing. It has loan limits and terms of up to $5 million and 30 years. Unlike most credit products, the SBA loan is backed by a guarantee of about 85% of the loaned amount.

The government promises to repay about 85% of the principal if the business owner defaults. However, they’ll need a personal guarantee from anyone who owns at least 20% of the business. This unique program helps small business owners cover economic injury, physical damages, and other expenses.

Unfortunately, this loan can take longer to process than most emergency loan lenders. You can take a cash advance product while waiting for the bank to process and disburse the loan. Investors with a poor credit history can try the online companies that offer loans without credit check. There’s also one company that offers $500 cash advance no credit check. Since they don’t consider your credit score, these lenders tend to have a higher interest rate, so you should borrow the exact amount that you need.

2) Business line of credit

This product lets businesses draw funds when needed to a certain limit. The business line of credit functions like a credit card. This means the lender sets the borrowing limit so that you can use it anytime you need cash. Plus, you’ll only pay interest on the amount you withdrew and not the set borrowing limit.

This type of emergency loan is ideal for ventures with fluctuating cash flow. This line of credit can also benefit seasonal businesses that require funds to survive during poor seasons. However, to qualify for this package, the lender will require you to have sufficient revenue and a great credit history.

3) Working capital loans

This credit product caters to things like debt payment, rent, and payroll. Remember, the working capital loan isn’t intended for long-term investment. It’s designed to cover some of your firm’s urgent operational costs. This loan can be beneficial to ventures with irregular or cyclic revenue platforms. A good example is a retail business that peaks during certain seasons and may need funds to manage the low season periods.

Be prepared for emergencies

Almost every business will require an emergency loan at some point. It’s always good to be prepared for such occurrences by maintaining a great credit score. To be safe, you should set up a business line of credit with your bank.

This cash will always be available, even when you don’t need it. You can apply for the SBA and working capital loans if your business is still new. The above loan products are mandatory for any business to function properly, even during low seasons.