7 Loan Options for Your Business's Cash Flow Emergency

Aug 03, 2022

Let's face it, sometimes a business comes up short on cash. It can happen to the most prepared businesses. And lenders have taken note that sometimes all it takes to get a business running again is a little help.

Gone are the days of cash flow emergencies that sent businesses spiraling out of business. In are the days of available loan options to help your business thrive again.

There are a few different options to consider when it comes to borrowing money for your business when you're already short on cash. But more lenders are offering attractive loans that can help you out in a bad situation. In some cases, all you have to do is fill out an application and perform a phone interview.

In this article, we're discussing seven options your business has in the event of a cash flow emergency. Keep reading to learn more.

Short-Term Lines of Credit

A short-term line of credit may help you in a cash flow emergency situation, especially if you have bad credit. These lenders tend to be more lenient than conventional lenders and offer an easy application process.

This type of credit line can come in useful for a cash flow emergency because you only pay interest on the money you actually draw from the loan. It's a convenient way to get cash when you need it without the hassle of long terms.

These loans are generally more flexible than a standard line of credit and have shorter repayment periods.

Short Term Loans

A short-term loan functions like a traditional small business term loan. The approval process, however, is much faster with some lenders offering same day approval to eligible borrowers.

The repayment schedule for these loans is short. It ranges from 1 month to 18 months and it's important to note that these loans can become expensive. They are more suitable for emergency cash flow situations that can be paid back quickly.

Long-Term Online Loans

A long-term small business loan may take a few weeks to process so it's better reserved for a cash flow emergency that isn't dire.

These loan options come with competitive financing rates compared to other 'fast funding' options and the approval process is much quicker than with a traditional bank loan.

You generally have more time to repay these loans and you'll find lower monthly payments, too. The only drawback is that it may be more difficult for your business to qualify depending on how long you've been established, available finances and have collateral to pledge.

Merchant Cash Advances

Merchant cash advances, otherwise known as MCAs work by loaning you a lump sum of capital in return for a percentage of your daily credit card sales. This option is quite costly with fees ranging anywhere from 70%-350%.

MCAs are a viable and immediate option to get cash flow moving again. But it comes with high risk.

It's important to be careful with this type of borrowing because you could find yourself in a deeper hole than when you started with the astronomical fees. Use this as a last resort in the event that your company is desparate.

Business Credit Cards

A credit card is essentially a short-term loan. And, in today's world, credit is just as good as cash most places we find ourselves spending, including businesses.

Sole proprietors need only their social security number and date of birth to apply for an unsecured credit card. Larger businesses will need their Federal Tax ID.

There are many business credit cards that offer 0% introductory APR and only 15% thereafter on new accounts. If you need to free up cash flow in your finances, a business credit card may be the way to go.

Invoice Financing

If your business is suffering because of unpaid invoices, invoice financing may help.

Invoice financing companies advance portions of outstanding invoices so that you can alleviate yourself from a cash flow emergency. They will hold the remaining funds in reserve. Once your customers pay, the reserve funds are disbursed, less the fees.

It works much like a conventional line of credit allowing you to borrow up to 80% of the value of your eligible receivables. The approval process is generally pretty quick for an invoice financing loan so you can rest assured that your business will be back on track in no time.

Working Capital Loans

A working capital loan is a perfect way to help your business in a cash flow emergency situation. It is a specialized loan that is designed to meet the everyday financial needs of a running business.

With a working capital loan, you may be better prepared to handle any financial difficulties that may arise. You will also maintain ownership of your company. There is no collateral required for a working capital loan and they offer shorter terms.

The greatest advantage of this type of loan is that you can get it quick and use the money however you see fit. Use it for payroll, or to pay off debt.

Get Help For Your Cash Flow Emergency

Running into a cash flow emergency doesn't have to be stressful and scary. There are options available to you where you can get cash, fast. Being in the know is the first step to success in a sink or swim situation.

Weigh out the pros and cons of each type of loan before you proceed with one to ensure the best outcome for your business. Each financial situation is different and one loan may be more suitable than the next. You can make the decision based on loan requirements and qualifications or your business' finances.

Regardless of your need for cash, you need it fast. If you find yourself in a cash flow emergency situation or if you have questions, contact us. It's simple to qualify.


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