The process of applying for a business loan and having it approved requires lots of patience and perseverance. For many people, having such a loan approved in less than a month is next to impossible. This however doesn’t necessarily mean you cannot have your business loan approved quickly. All you need to do is identify business loans that are processed/approved within the shortest time frame possible. This article looks into the most common business loans and the processing time for the same.
A. Traditional Business Loans (Up To 3 Months)
This type of loan can take up to 3 months to be approved hence is at the bottom of the list for fast business loans. Traditional business loans are very common in the Australian market and commonly offered by the four largest banks in the country (Commonwealth Bank, ANZ, Westpac, and NAB). If the processing period takes longer than normal, this is related to the vast sums that one can borrow which is usually not less than $50,000. These loans are specially designed for persons/businesses looking for substantial amounts of money. The repayment period of the same extends to up to 10 years. This type of loan is ideal if you’re looking to purchase assets, business acquisition, or real estate.
Advantages of Traditional Business Loans
1. Low-interest rates which average 8% – the interest rate, however, depends on the collateral used to secure the loan.
2. More extended repayment periods of up to 30 years.
3. Flexibility to choose between variable and fixed rates. Some banks offer both.
4. Highly flexible repayments. The repayment plans can be monthly, quarterly, half yearly, or even annually.
1. Only established companies and businesses with years of proven track record qualify for this type of loan.
2. Strict scrutiny and substantial paperwork during the application process.
3. Loans can take up to 3 months to be processed/approved.
4. Relatively high minimum lending amounts putting it out of reach for entrepreneurs and small businesses.
B. Hire Purchase (Takes One or Two Weeks)
Commonly offered by traditional bank lenders, it can take up to 2 weeks for a hire purchase loan to be approved. This type of loan is specially designed for the purchase of machinery, vehicles and heavy equipment. The repayment periods for the same range between 1 and 5 years. If buying a car or truck for your business, you are then required to make monthly payments of the agreed amount for a set period. It is after you have cleared the payments that the bank can transfer the title to you. In most instances, the bank requires you (the company) to make a balloon payment, which is considerably higher than the monthly payments. The main idea here is to help keep the remaining monthly payments lower and manageable.
Advantages of Hire Purchase
1. Ability to select payment terms suiting your cash flow and life of the asset.
2. You may be able to claim input tax credits for payable interest and fees included in the principle.
3. You get the asset’s title once all payments are done. You can then decide on whether to continue using it or sell it off.
1. The bank holds the asset title until each payment is made.
2. Higher interest rates compared to traditional bank loan plans.
3. It is not the fastest available business loan out there.
C. Personal Loan (5 to 7 Days)
Yes, you can use a personal loan to fund your business. One of the advantages of a personal loan is that it is much easier to get when compared to business loans. In addition to this, there are no restrictions involved with personal loans – you can buy anything with the money. Personal loans, however, take about a week to be processed or approved, hence not the fastest way to get money out there. Personal loans, however, have a limit of $50,000 with a repayment period of 1 to 7 years.
Benefits of a Personal Loan
1. It is easier to obtain
2. Can be secured or unsecured. Interest rates are either fixed or variable.
3. Installment repayment plans make it easier to spread payments especially when looking to buy a substantial business asset.
1. Higher interest rates compared to business loans. Interest rates range between 8% and 20%.
2. The maximum amount you can borrow is determined by your credit rating, as well as the approval of the same.
3. Personal assets are at risk should you be unable to service the loan.
D. Business Credit Card (2 to 7 business days)
A business credit card falls under the fast business loans category, with approvals of less than 7 days. One of the benefits of a business credit card is the fact that it isn’t restricted. You can use the card to buy anything you want to boost your business. It also comes with flexible repayment plans for as long as you can pay the minimum required amount each month.
Advantages of a Business Credit Card
1. Flexible and very easy to use
2. Some business credit card companies offer an interest-free period (55 days) on purchases. This makes it an excellent way to make purchases for as long as you can repay within the given period.
3. You accumulate points, travel insurance, etc. from using the card (offered by specific companies)
1. Relatively high interest rates, up to 24%
2. Annual fees for the credit card
3. The business credit card may be linked to personal assets – this puts your assets at risk should you fail to make repayments.
E. Bank Overdrafts (1 or 2 days)
Bank overdrafts generally enable one to run on a negative balance on their regular business transaction accounts. Your business should however, have been in operation for several years to be able to get this line of credit. The best thing with bank overdrafts is it takes far less time to be processed as compared to business loans. If looking for a fast way to get a business loan, this should be on the top of your options.
Business Overdraft Pros
1. A quick way to get money if your business has a proven track record
2. Highly flexible. You only pay for what you need plus the interest.
3. Only the overdraft amount is chargeable.
4. It can either be unsecured or secured
1. Interest rates are considerably high (8 – 12 %)
2. You can be called upon to make immediate repayment for the same amount of the loan.
3. Requires establishment and ongoing fees.
F. Online-Unsecured Business Loans (One-Day Loans)
Approved in 24 hours or less, this is considered the fastest business loan you can get. Companies offering these loans use the advances in IT technology to make applications smooth and easy. No paperwork is required with an online-unsecured business loan as everything is done online. You only need to provide required information online via a secure portal. Loan processing begins immediately. Thanks to technology, the lender can easily work out if you qualify for the loan, thanks to being able to access your accounting and bank details. Lenders will, however, have to review your credit report before approving the loan request.
Advantages of Online Unsecured Business Loans
1. The application process is fast and easy
2. Instant access to funds once approved.
3. Higher eligibility rate even for businesses that aren’t eligible for bank loans.
1. High-interest rates when compared to traditional bank loans.
2. A personal guarantee may be required (this depends on the structure of your business).
While unsecured business loans may be alluring, you should take some time to read the company’s terms and conditions (fine print) before going ahead with the loan application. This is because some companies may include additional fees that you may not be aware of unless you have read their terms.