Business Line of Credit and Invoice Financing

As painful as it may be to think about it, you may encounter a situation in the life cycle of your business that you’ll need to come up with money… money that you, unfortunately, don’t have. It happens to many business owners for any number of reasons. Sometimes, emergencies happen—and those kinds of things you simply can’t control. Not every reason you might need to come up with cash is bad, though. You might need to finance a large purchase order for an exciting opportunity, for instance.
Whatever your reason for seeking a small business loan quickly, you have a few options for finding financing fast.
1. Business Line of Credit
You can think of a business line of credit as a kind of hybrid between what you might know as a “traditional” business loan and a business credit card cash advance. You’ll work with a lender to get approved, based on your creditworthiness, for a certain amount of financing that you can borrow against. This approval can be as fast as a single day.
The interesting part about a business line of credit is that you don’t have to use the full amount of financing that you’re approved for; you only “draw” from the total what you choose. And you only pay interest against what you draw, too. So, if you don’t know exactly how much you need to cover your expenses, a business line of credit could be a good option.
2. Invoice Financing
For cash flow issues, invoice financing is a classic quick-fix—and for many business owners, a smart option. With this type of small business loan, you work with a lender to finance up to 85% of the total of an unpaid invoice. The lender will front you the money, and then, when the invoice is paid, you’ll receive the remaining 15%, minus fees and interest. This financing approval can also happen in as little as a day.
3. Equipment Financing
When equipment that you need to run your business breaks, there’s often no time to wait around—you need a replacement quickly to get your business back on track. This is where equipment financing—also called an equipment loan—can work well. Especially because qualified buyers can enjoy approval in as few as a couple of days. You’ll secure an equipment quote, and a lender will front you the money to purchase that piece of equipment. The loan term will be the life of the equipment, over which you’ll pay back the money you borrowed, plus fees.
4. Short-Term Loan
A term loan is what you likely think of when you think of a business loan. It’s a lump sum of money that gets deposited into your business bank account that you’ll repay, with interest, at the end of a prearranged period (aka your term).
A short-term loan is that model on a condensed timeline: sometimes less than 18 months, and generally less than a year. The benefit to short-term loans is that you can access them faster, sometimes within a couple of days and with generally weaker credit history; the drawback is that they’re more expensive than their medium- and longer-term counterparts. Still, if you want fast access to capital and the freedom to do what you want with the money, a short-term loan could be the right pick for you.
5. Business Credit Card
You might not think of a business credit card as a fast loan option, but the credit you can access with your business credit card is, indeed, like a loan. Particularly, 0% introductory APR business credit cards are excellent tools for businesses who need very fast access to cash because their balances don’t begin accruing interest until after their 0% introductory periods are up—and, sometimes, they can last upwards of a year.
Of course, you’ll have to be strategic with how you use this line of credit. If you don’t make plans to pay back your balance on time, you will be left with interest and, potentially, hefty payments. But, on the flip side, if you’re able to pay back your balance before your 0% APR period ends, and you continue to pay your bill in full and on time, you’ll be building valuable credit for your business.
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Whatever you choose, know that your options will be contingent on the strength of your credit score—personal first, and business if you have it—as well as other business data, including revenue history, business bank account balances, time in business and more. What lenders will look for depends on the kind of loan you’re applying for. If you’re in a bind, be flexible and understand that a lack of time may limit your choices, but it doesn’t eliminate them.