Emergency Business Loans & How to Find Them
Business owners are often faced with lots of unpredictable circumstances that can cause challenges. Equipment may break down, debtors may fail to pay bills, and of course, a pandemic could occur, causing catastrophic economic challenges. An emergency business loan could provide relief for business owners at just the right moment.
WHAT IS AN EMERGENCY BUSINESS LOAN?
An emergency business loan is fast, accessible funding that can be used to help your business cover unexpected costs in times of crisis. These are short-term business loans with a repayment period of usually no more than 18 months and a higher APR. However, due to the economic disruption caused by the COVID-19 pandemic, federal and state governments and banks, and private institutions have increased their offerings for lower-interest loans.
WHERE TO FIND EMERGENCY BUSINESS LOANS?
Alternative Online Lenders
Emergency small business loans are offered primarily by alternative online lenders. They typically have lower approval requirements than conventional lenders. Therefore, if your business is in its early stages or generates a low amount of revenue, there may be an emergency business finance option for you. The application process is facilitated entirely online. Decisions are made in hours, and in certain circumstances, funds from emergency small business loans can be deposited the same day approval is issued.
Emergency SBA Loans
Paycheck Protection Program loans:
For businesses hoping to keep their doors open and cover operational costs such as payroll, emergency loans are a practical option. The Paycheck Protection Program (PPP) provides emergency funding for small businesses to help keep their workforce employed during the COVID-19 crisis. Borrowers may be eligible for PPP loan forgiveness. These emergency SBA loans are intended to provide short-term funding for small businesses so they can keep employees on the payroll, even if they have to close their doors.
COVID-19 Economic Injury Disaster Loans:
As part of its disaster assistance program, the SBA provides working capital loans of up to $2 million to small businesses and nonprofits affected by the coronavirus. Small business owners, including agricultural industries and nonprofit organizations in the U.S, Washington D.C., and U.S territories, can apply for an Economic Injury Disaster Loan. The EIDL program is designed to provide economic relief to businesses currently experiencing a temporary loss of revenue due to COVID-19.
4 Additional Ways to Get Emergency Funding for Small Business
Here are some of the best options for emergency business loans:
1. Take Out a Short-Term Loan
Some lenders can approve up to $500,000 in short-term funding, and capital can be released the same day as approval. These loans are usually repaid over a 3-18-month period.
2. Consider a Merchant Cash Advance
A merchant cash advance (MCA) is another emergency funding option for small businesses that provide the borrower with a lump sum of cash in exchange for a portion of its future sales.
3. Open a Line of Credit
Like a credit card, a line of credit allows businesses to withdraw money — up to a maximum amount — to cover various expenses. Lines of credit can be secured with collateral or unsecured. Interest is paid only on the amount of capital withdrawn, and capital becomes available again after payments are made.
4. Use Your Unpaid Invoices as Collateral
Unpaid Invoices can be used as collateral for an emergency business loan. Borrowers can get access to a portion of those funds owing via accounts receivable financing.
In this process, the lender will offer small businesses emergency funding for up to 80% of the money owed. Once the invoice is paid, the company will receive the balance taking away the lender's fees.
If your business is currently being affected by the pandemic or any other emergency, Loan Quail can help. To find out the best option for your business, visit our website to get started on your loan application today.
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