Stuff happens in both life and business. Hurricanes and tornadoes, accidents and losses, surprise bills or expenses — whatever the reason, you may find yourself in dire need of emergency cash your business. Knowing where to look and how to land a loan or advance can rescue you from more serious trouble or even ruin. In some cases, you can turn to the government for help. In others you may have to tap specialized commercial lenders. There is money available to meet your needs, although sometimes at rather steep rates. Still, landing a disaster loan, emergency money or fast cash can:
- Help you rebuild your business after a natural disaster
- Help you through a cash crunch
- Pay off overdue bills and give you time to reorganize your business
- Give you the cash to take advantage of an immediate business opportunity
- Provide cash for equipment or expansion needs
Get a disaster loan from the SBAThe U.S. Small Business Administration (SBA) doles out disaster loans to businesses affected by natural disasters. The loans come in two types: funds to repair or replace businesses that suffer physical damage, and funds to help businesses that suffer economic losses. To qualify, businesses must be located in a declared national disaster area and show physical or economic hardship from the event. Loans up to $1.5 million (for physical damage and economic injury combined) are available.
SBA disaster loan application and filing requirements. If a disaster has been declared in your state, a federal Disaster Recovery Center (DRC) may provide help in landing an SBA disaster loan. You can also access a page on the FEMA website that provides links to other disaster assistance.
Get a cash advanceFor a sudden cash squeeze, consider a cash advance against your receivables. Companies that specialize in business cash advances will front you cash quickly (often in a few days) and accept your future receivables as payment. A business with a strong cash flow can qualify for a significant cash advance of $250,000 or more with little paperwork. But be careful - the cost can be significant, and you'll be pledging your future business income for the quick infusion of cash.
Get a quick loanCertain lenders specialize in providing quick loans to businesses with fewer restrictions than conventional lenders. Although their rates can be high, approval comes in as little as two days, with the cash arriving shortly after. The loans often are unsecured loans or use equipment as collateral.
Use your business credit cardYour business credit card can also be a source of relatively quick cash. Credit cards like Visa and American Express also offer business lines of credit that allow you to apply through the same process as your regular credit card. Your approval process is usually quicker if you apply through an existing business credit card. Again, the interest rate can be high, so it's best to use this method if you can pay off the balance quickly.
- Pay close attention to financing costs: There's a reason so many companies exist to make fast, unsecured loans to businesses. They make a lot of money doing it, which means that your business is their profit center. Make sure you can afford a quick loan before you accept it.
- Don't wait to apply for an SBA disaster loan: When your business is damaged by a natural disaster, you don't have to wait until you get your insurance settlement to apply. The SBA will accept your application early in the process so you can get pre-approved and be ready to borrow, even if you aren't sure how much you'll need.
- Pay back fast: If you can afford it, pay off emergency loans quickly. You're better off using longer-term, lower-interest credit for your borrowing needs.
- Refinance: If you can't pay back an emergency loan quickly but your business improves, you may be able to refinance your emergency loan with a cheaper, conventional loan.