What Options Are There for Emergency Business Loans?

Sometimes your company needs a quick influx of cash to cover emergency needs such as equipment replacements, disaster or break-in recovery or an unexpected slump. These situations can quickly outpace your savings and put a critical strain on cashflow, so most entrepreneurs will turn to emergency business loans for help. There are three main options for this type of lending, credit lines, short term loans and long-term business loans, so knowing some of the pros and cons for each can help you choose the best fit.

Credit Lines

You can get credit lines from your bank, online lenders or your suppliers, but it is important to note that if your business and personal credit history is poor, you may have a harder time securing a line of credit and face higher interest rates. Choosing an online lender is usually quicker than going to your bank, but if you already have a line of credit, then you should ask for a limit increase before applying for another. Important information to compare between lenders includes interest rates, fees or financing charges and repayment schedules.

Short Term Lending

Short-term emergency business loans are expected to be repaid in weeks, usually twelve to twenty-four. This can be beneficial if you are expecting a large payment from insurance settlements, client invoices or disaster relief funds and just need some quick cash to keep you working in the meantime. You can expect short application processes and a lower required credit score than a credit line but may see higher interest rates and fees than long-term loans. Important information to know and compare includes payment frequency, what the total costs are and what past clients have to say.

Long-Term Lending

Long-term lending can be the best option for business owners looking to buy or lease new equipment, make substantial repairs or upgrades to business properties and stabilize cashflow for years to come. The most popular long-term loan programs are through the Small Business Administration because the terms can extend up to twenty-five years with low interest rates; you have to have been denied bank loans first or referred to their emergency lending programs, however, so this option may take longer than you have.

You have a couple of options for emergency business loans, each with its own pros, cons and important information to compare between lenders and lending types. Businesses and owners with higher credit scores will have an easier time finding low rates, quick approval and high dollar amounts, but those with lower scores can still shop around for the best solution.