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Fast Business Loans: what SMEs need to know

Published on 21st August 2019 - Last update on 31st March 2020

As any experienced business owner will tell you, running and maintaining your own venture isn’t easy. Of course, it can very exciting to see your idea grow and thrive, but it also involves more than its fair share of unique responsibilities and challenges. In order to maintain day-to-day operations or see key projects reach fruition, it goes without saying that having access to sufficient amounts of capital is vital. But this can pose a major stumbling block for many SMEs, especially if you need funding at short notice. Yet if you’re looking for a Fast Business Loan in order to gain access to quick cash, this needn’t be a problem, providing you know where to look.

What can a Fast Business Loan be used for?

At any point in your business’ develop you may run into a situation where you need access to additional capital, sometimes even at short notice. Fortunately, there are plenty of Fast Business Loans available that could help. Plus, many of these products to impose little or no usage restrictions, but are frequently used to support everything from late payments, unexpected expenses, business tax, uneven cash flow, emergencies, staff wages and supplies to projects that have gone over budget. As such, a Fast/Quick Business Loan could be an invaluable tool in your business’ arsenal. The next challenge is identifying what products are available and sourcing an agreement that’s most suitable for your business.

Looking for help with supporting your business’ growth and day-to-day operations? Need additional funds at short notice? Apply for a Fast Business Loan and learn more about how your business could benefit

What types of Fast Business Loans are available?

Exploring the UK lending landscape can feel intimidating at the best of times. However, this is especially true if you’re looking to gain access to quick cash and are unfamiliar with how many of the finance solutions that are available work. But by holding your ground and looking deeper into what’s on offer, you may be pleasantly surprised by what you may find. So if you’re in need of a Fast Business Loan, suitable products could include Overdraft Replacement, Invoice Finance, Merchant Cash Advance or Asset Refinance. Plus, depending on your chosen product and the complexity of the request, a Fast Business Loan could offer you the funds your business needs in as little 48 hours. Therefore, before submitting an application, it’s vital that you fully understand how each of the products functions beforehand.

Overdraft Replacement

Overdraft Replacements can be established as either secured or unsecured agreements that can provide your business with a Line of Credit (LoC), giving you instant access to an allowance based up your past income (after an agreement has been agreed). There are no usage restrictions imposed on this allowance and you’re not obliged to make use of any of the funds that the product makes available. However, anything that you do drawdown will be charged interest will need to be fully repaid within 30 - 90 days, depending on the agreement. Plus, as soon as you’ve repaid anything that you’ve borrowed, your business will instantly regain access to this allowance on a revolving cycle. As such, Overdraft Replacement behaves very much like a credit card facility, offering your business a protective buffer.

Invoice Finance

Meanwhile, Invoice Finance offers you the ability to release up to 90% of the capital tied up in your business’ unpaid business-to-business (B2B) invoices, and is also not subject to any usage restrictions or borrowing limits. A secured package that uses the capital contained within your unpaid B2B invoices as collateral, Invoice Finance is most commonly available as Invoice Factoring or Invoice Discounting.

  • Factoring: this could be a useful solution for your business if you’re able to generate an annual turnover of no less than £25,000. You also need to maintain up-to-date business ledgers and have the capacity to exercise successful credit control procedures. But, you do have the option of passing credit control duties on to the lender who will pursue the debt on your behalf whilst exercising discretion, saving you time. Once the debtor has fully repaid what they owe, the lender will make a balance available to your business. This will be the remaining amount of the invoice (e.g. the remaining 10%) minus interest and service fees. Plus, it’s also worth noting that some providers offer Bad Debt Protection as standard, protecting your business should the debtor fail to repay what they owe.
  • Discounting: this type of Invoice Finance requires your business to generate an annual turnover of at least £100,000. You’ll also need to ensure that ledgers are all up-to-date and that you’re able to carry out successful credit control procedures. However, another key difference between Factoring and Discounting is that, with this option, the debtor pays directly into a lender-controlled facility, rather than your business. Nevertheless, when the debtor has fully resolved what they owe, the lender will, once again, release a balance to your business, minus interest and service fees.

Merchant Cash Advance

If you need to access quick cash but have an adverse credit rating, you may want to consider applying for a Merchant Cash Advance (MCA). Although Merchant Cash Advance is not considered a loan, it is a useful way of generating an advance for your business using your card-based (credit and debit card) revenue. As such, your business must be able to accept card-based transactions and be able to provide at least 3 or more of your latest consecutive sales reports in order to qualify. This is a vital aspect of the application process since this allows lenders to calculate your average monthly card-based revenue, which determines the size of the advance. So if you regularly generate around £35,000 in card sales, for example, you could receive an advance in the same region, if necessary.

Although Merchant Cash Advance is unsecured, lenders pay little or no attention to your credit rating when making a decision. This is because this type of funding uses a Flexible Monthly Repayment scheme that allows lenders to automatically intercept an agreed percentage (sweep rate) of your card-based revenue until the agreement has been fully repaid.

Asset Refinance

Finally, if you own any unencumbered assets (equipment, machinery or vehicles) that aren’t fixed into the structure of your premises, applying for Asset Refinance could enable you to release up to 100% of the equity they contain in order to generate a lump sum. This lump sum is also not subject to any usage restriction or credit limits other than what the lender is willing, or able, to provide. In addition, this finance solution also offers terms lasting up to 5 years, during which you're required to make Fixed Monthly Repayments, plus interest. Although this is a useful way of generating funds, you need to be aware that Asset Refinance is a form of secured asset-based lending. Therefore, if your business falls behind in the repayment scheme and defaults, the lender will gain the right to repossess these assets.

Looking for a fast way of raising funds for your business?

Raising funds for your business is vital for driving growth and maintaining successful day-to-day operations. However, despite the necessity, making sure that your business has access to sufficient amounts of capital as and when its required can prove challenging. But if you need funding at short notice, the Alternative Finance Industry is opening the doors to more Fast Business Loans than ever before. The issue is that you may not be aware of what of funding opportunities are available and how they work. Fortunately, help is at hand.

At Rangewell, we’re an Access to Finance specialist and have mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. So if you’re looking to raise capital for your business at short notice, apply for a Fast Business Loan today or find out more with Rangewell.

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David Harrison

David Harrison

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