Lendio Small Business Loans In Miami – For the most up-to-date information on emergency small business loans available to those affected by the COVID-19 pandemic, see this article on PPP loans.
Every small business needs a financial boost from time to time, and for many entrepreneurs, now is definitely one of those times. When you need urgent emergency cash, where can you turn? Traditional bank loans often require lengthy application processes and can take months to be approved and funded. Fortunately, they’re not your only alternative.
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If your business has been affected by COVID-19, start researching what benefits or relief you may be eligible for under the Coronavirus Relief, Assistance, and Economic Security Act (CRES). This emergency stimulus package includes SBA-guaranteed loans to help workers pay, access emergency cash and receive six months of debt relief from qualified borrowers. Funds quickly ran out in the program’s initial phase, but on April 24 the president signed a bill authorizing more than $320 billion in Payroll Protection Program (PPP) loans, about $60 billion of which will go to small businesses. $60 billion for the SBA Disaster Relief Fund.
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If you already have a relationship with an SBA lender, you may be eligible for an SBA Express Bridge Loan, which provides up to $25,000 provided the funds are repaid through an Economic Disaster Loan (EIDL).
Pros: PPP loans can be forgiven if used for approved purposes and if employees are kept on the payroll. Extraordinary economic loss grants of up to $10,000 are non-refundable. Both EIDL and Express Bridge loans allow quick repayment.
Cons: High demand means the program can run out of money quickly; If you don’t have a relationship with an SBA lender, getting approved can be difficult.
While most small businesses are financed in the form of payday loans, a business line of credit is a revolving type of credit. As with a credit card, you are given a credit limit and can withdraw up to that amount. You don’t have to make payments until you’ve actually used the money; when you pay the money back, it becomes a loan again. A business line of credit can be a good emergency tool for businesses that need working capital on a regular basis, such as seasonal businesses with predictable downtime or businesses that need to purchase materials or inventory well in advance of being able to sell.
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Pros: flexibility; you don’t have to pay it back until you use it. You can take out a loan from the line of credit repeatedly without applying again.
With their sometimes lengthy approval processes and strict criteria, traditional bank loans don’t work for many small businesses that need cash quickly. Many banks are reluctant to write small loans, so unless you’re looking for hundreds of thousands of dollars, the bank may not meet your needs. Online lenders are filling the void by offering smaller loan amounts, easy application processes, and lighter approval requirements. You can usually apply for these loans online, get approved right away, and have the money in your bank account within a day of being approved, sometimes faster.
Does your business frequently invoice clients for work performed or products delivered, but you wait 60, 90, or 120 days to get paid? Large corporate or government customers are often slow to pay, which can cause your business to suffer financially. The answer could be invoice financing. Here’s how it works: You sell your unpaid bills to a finance company in exchange for a percentage of their face value, usually 80-95%. Once the full invoice is received, you will receive the remaining value minus the finance company’s fee.
This service is provided by invoice factoring companies and invoice financing companies. The difference is that the factoring company takes over the collection of your invoices, which can be confusing or cause customers to worry that your business is in financial trouble. The financing company will continue to allow you to collect invoices yourself, so customers will never know that you have used the service.
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Cons: high interest rates; if a factoring company contacts your customers, the customers may think your business is in trouble.
Businesses such as restaurants and retailers that collect most of their payments by credit or debit card may find a merchant advance a quick source of emergency funding.
Business promotion companies lend you money against expected future credit or debit card payments from your customers. They then take a percentage of your credit or debit card payments daily or weekly to pay you back.
Cons: very high interest rates; a daily or weekly repayment can drain cash flow; if your future sales are uncertain, you may not be approved.
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If a key piece of equipment has broken down and needs to be replaced, or a sudden demand requires more equipment to keep up, equipment financing can help. You can find companies that specialize in equipment financing; many commercial equipment vendors or manufacturers also have their own financing programs.
You probably already have a business credit card in your wallet. If you haven’t, it’s easy to find attractive credit card offers. A business credit card that offers an introductory APR of 0% for six months, 12 months or longer can be used to pay for supplies, supplies, equipment or business services without accruing interest. However, try to avoid using commercial credit cards for cash advances; The APR on cash advances is usually much higher than on purchases.
Sometimes people you know and trust are the best sources of emergency business capital. However, there are two things to keep in mind before reaching out to your loved ones. First, only borrow from people who can afford to lose the money if you can’t pay it back (not your retired aunt with a steady income). Second, treat the transaction like any business loan. Write the loan document, pay the interest and create a schedule to make regular loan payments.
Whichever type of emergency funding you decide to apply for, here are some factors to keep in mind.
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Your current commercial bank is the first place you should look when looking for emergency financing. They know you and understand your business, which can speed up the approval process. But don’t stop there: shop around and compare different lenders to find the best possible terms.
SCORE and your local Small Business Development Center are two valuable resources to help you find the best funding opportunities. You can also visit online business loan marketplaces to search for the financing you need and connect with lenders. Popular lending markets include:
There are also online funders that will fund your business directly. Here are some of the more popular ones to consider:
When looking for quick business financing, you may be tempted to turn to a personal loan, home equity line of credit, or personal credit card for quick cash. But mixing personal and business funds is usually a mistake. At best, this can lead to problems at tax time, blurring the line between personal and business income and expenses. At worst, it can put your personal credit score or even your home at risk if you fail to repay the loan.
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When your business is tight on cash and you need quick funding to get you up and running, it’s easy to panic. But don’t jump at the first emergency funding source you find. Think carefully about how much money you need and why, be prepared with the information lenders want, and explore multiple options to find the best financing terms.
Small businesses have more alternatives than ever for emergency financing. By researching and weighing the pros and cons of each option, you can find the perfect funding source for your business.
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