Types of Emergency Loans for Your Business
Things happen, and even with stellar financial planning, sometimes you’re going to have to take out emergency loans for your business. Whether you’re planning ahead or scrambling to find a solution for an unexpected cash flow problem, here are some options for you to consider.
1. Lines of Credit
If you need leeway on some smaller expenses, opening a business credit card or other line of credit can be a good way to be prepared for unexpected costs. These options allow you a little bit of extra time to pay off purchases you weren’t planning on, which may be all you need to make ends meet. Just make sure you don’t wait to put these systems in place until a crisis hits, and make sure you pay them off quickly. Otherwise, those interest rates can really add up.
2. Short-Term Loan
Many alternative lenders offer easy-to-get short-term loan options. These are designed to be fast to apply and get approval for in emergency situations, and they are usually set up to only last a year or so. They do tend to have higher interest rates, though, and naturally come with a higher risk since they don’t come from a bank. Still, if you need cash quickly, this can be a helpful option.
3. Express Bank Loan
Similar to short-term options from third parties, express loans are intended to be used in situations where you need cash fast. These are structured more like your typical loans that stretch over longer periods of time, and require certain qualifications. This can make them more difficult to get, but they often come with lower interest rates and have the assurance that comes with working with a bank.
4. Disaster Loans
If you need emergency loans because of a natural disaster, there are some more specific options to help you with that. SBA disaster loans, for example, are designed to help businesses and individual recover from economic and physical losses. To qualify, your area needs to have declared a disaster, but once you do qualify, you’ll get low interest rates and can use the money to repair or replace your buildings, inventory, or equipment.
When you find your business tight on cash, there are plenty of options available to help you get back onto secure footing. If you can, do some preemptive research to get to know your options so that you can move quickly to get the money you need.