Fast business funding and loans

Worried about cash flow for your small business? Need cash fast? Find out more about fast business funding and who the key providers are

Cash flow is an ongoing concern for small businesses, who often have to deal with reluctant lenders and mountains of paperwork. Which is why more and more are turning to fast funding and loans.

As to why small businesses are being turned down for loans, 31 per cent said it was because their business was too young, too-high levels of existing debt (22 per cent) and insufficient collateral (20 per cent). The research, from Yolt, also revealed that only one in five businesses felt the borrowing process was easy.

However, there may be a fast business funding option that is better for you, which we’ll be exploring in this article.

>See also: Small business finance – the complete guide

What type(s) of funding can I get?

Les Roberts, content manager at Bionic, said: “Typically, a business loan can range from as little as £1,000 up to several million. Repayment terms can vary from one month to 15 years, depending on the type of loan and the lender. Business loan rates in the UK will also vary, depending on a number of factors – from the length and size of the loan to your business’ financial position.”

With this kind of funding, you’re generally looking at secured loans (which requires something that you own as collateral), unsecured loans (a loan which doesn’t involve any kind of collateral) and merchant cash advances (where you repay your loan as a percentage of future sales).

What can I use funding for?

Each provider may have stipulations, but you can really use your loan for anything. This could include:

  • Improving cash flow
  • Buying equipment/stock
  • Take advantage of a one-off buying opportunity
  • Clear debt
  • Pay suppliers

The British Business Bank said that the main reason SMEs is to support their business working capital or cash flow.

“Fast finance is generally better used when you need to raise funds quickly, such as to bridge a short-term cash flow issues, or to take advantage of an opportunity that might have arisen, such as buying some stock in bulk at a discount,” said Stuart Airey, head of corporate finance at Accounts and Legal. “It’s not totally suited to longer-term borrowing, although can be used that way if other options aren’t available.”

>See also: Alternative business funding for small businesses

What happens if I can’t repay my loan?

If you can’t repay, then fees will likely be added and/or the interest rate will be increased.

Will I need a business bank account?

If you’re a sole trader, you may be able to get away with a personal bank account but otherwise you’ll need a business bank account. This can also depend on your credit score. In general, you’re better off having a business bank account, even if you’re a sole trader. Read more at 5 benefits of using a business bank account over a personal account.

>See also: Small business startup funding

Risks of fast business funding

As mentioned before, proving your viability as a business can prove restrictive. “The biggest struggle is actually being able to borrow money,” said Airey. “Unless you’ve got a couple of years profitable trading history and are willing to offer a personal guarantee, a lot of lenders won’t consider them an investible business. This makes it really difficult for brand new businesses to secure any financing.”  

CEO and founder of Unbiased, Karen Barrett, told Small Business: “For small businesses in need an immediate cash injection, short-term loans can offer a ready-made solution – applications are processed much faster than traditional loans, often accepted within 24 hours. But be warned. The less stringent underwriting process means they often attract higher interest rates, as well as heavy penalties for those who fail to repay on time. For this reason, it would be wise to seek professional advice before signing on the bottom line.”

You can mitigate this by asking the right questions. Airey said that you should be asking:

  • What other options are available?
  • Whether trying to raise equity funding might be a better option

He added that businesses need to be asking themselves how they’re going to repay the finance and ensure they consider the future cash flows of the business will be sufficient to meet future repayments.

“Often small businesses don’t shop around when it comes to finance, and the majority take the first offer they receive, which might not be the best product available to them,” said Airey. “Fast funding is generally easier to apply for, but applying with multiple lenders can take time, as their document requests can vary.”

One concern you might have is protecting your credit score. Most firms will run with a soft credit check, so it won’t affect your credit rating. Be sure to check before you apply, though.

The best fast funding providers in the UK

As Airey says, finding the right provider can make a real difference, so here are a few UK-based providers to kick off your search. Note that most of them will have some kind of eligibility criteria in terms of how long you’ve been trading and/or your minimum turnover.

Cashsolv

Loan limit: £20,000-£250,000

Repayment term: 1-12 months

Type of finance: Unsecured loans

Time taken for approval: Money will reach your bank within 24 hours

Can I repay early? No

Cashsolv instant loans are specifically designed for emergencies but there’s no guidance outlining how you should spend it.

You have the option of either repaying in one lump sum at the end of the loan term or to repay in monthly instalments.

Cashsolv asks for “reasonably up-to-date” accounts before they give you a loan. You’ll also have to be able to declare how you intend to make repayments along with supporting documents. Cashsolv will be doing ID checks to keep itself in-line with money laundering regulations and you’ll be required to provide a proof of address.

As this is a short-term loan, early repayments won’t be accepted.   

Century Business Finance

Loan limit: £5,000 – £250,000

Repayment term: Six – 60 months

Type of finance: Secured and unsecured loans

Time taken for approval: Same-day approval

Can I repay early? Yes, on loans from £10,000

Century Business Finance promises a two-minute application process and low rates.

There are a few different financing options available: cashflow loans, unsecured business loans, same day business loans, VAT & tax business loans and fast business loans. Once approved, the money will be in your bank account the same day. Note that a financial services intermediary fee will be taken out of your account within seven days of receiving the funding.  

You must have been trading for at least six months and a turnover of £72,000 per year.

Century Business Finance will allow you to repay early on loans from £10,000.

Iwoca

Loan limit: £1,000-£750,000

Repayment term: From one day to five years

Type of finance: Unsecured

Time taken for approval: Within one working day

Can I repay early? Yes

Iwoca can give loans to all businesses, no matter the age or sector. It’s open to sole traders, partnerships and limited companies. It also has a two-minute eligibility check – and the whole application process takes five minutes.

Accounts come with an account manager.

If you go for a flexi-loan (repayment up to 24 months) then there are no extra fees and charges. If you go for a business loan, there will be a 6 per cent funding charge spread out over the first few repayments.

You’ll need bank statements from the past year in order to apply (or you can link your account via Open Banking). The other documents required will vary based on the type and size of loan, but could include VAT returns or company accounts.   

Loan rates start at 2 per cent and there are no fees for repaying early.

With the flexi-loan option, you can apply for a top-up once you’ve paid back a third of your original credit limit. Updated information about your business will be required at the time of topping up.   

Capify

Loan limit: £5,000 to £500,000

Repayment term: Repay weekly

Type of finance: Secured business loans and merchant cash advance

Time taken for approval: Receive your provisional decision within 60 seconds

Can I repay early? Yes

Capify will take a small percentage from your business bank account each day rather than a lump sum.

Merchants will typically receive up to 130 per cent of monthly their gross sales. You must have been in business for at least 12 months with minimum gross sales of £10,000 a month and no open bankruptcies.

To apply, you must have six months’ worth of bank statements, copy of void check and photo ID.

For the merchant cash advance you need to take at least £6,000 a month in card payments and have six months of trading history.

Your application will need to be filled out by 51 per cent or more of your business ownership, you also need four months recent credit/debit card processing statements and your most recent monthly bank statement.

365 Business Finance

Loan limit: £10,000 – £300,000

Repayment term: Dependent on debit and credit card payments

Type of finance: Merchant cash advance

Time taken for approval: Within 24 hours

Can I repay early? N/A

365 Business Finance has no fixed monthly payments. Instead, you pay back a percentage of your debit and credit card sales. This means that when your sales are up, you’ll be able to pay more of your loan balance and when sales are low, you pay less.

To be eligible, you must have been trading for at least 12 months and have an average monthly credit and debit card turnover of £10,000.

Love Finance

Loan limit: £5,000 – £500,000

Repayment term: Up to five years

Type of finance: Unsecured loan

Time taken for approval: Minimum four hours

Can I repay early? Yes

Love Finance offers a completely automated service with interest rates as low as 2.9 per cent. Funds in as little as four hours. However, you can speak to someone on the phone if there is an issue.

Must have been trading for a minimum of three months and have a £35,000 minimum annual turnover.

You can repay early without penalty.

Merchant Money

Loan limit: Up to 500,000. Regulated business loans for sole traders up to £25,000.

Repayment term: Six months to five years

Type of finance: Unsecured loans, merchant cash advance

Time taken for approval: 24-hour approval

Can I repay early? Yes

Merchant Money is a member of the Federation of Small Business (FSB) and a patron of the National Association of Commercial Finance Brokers (NACFB).

You have the choice of financing through a loan or through a merchant cash advance. To apply, you must ensure that your current debt obligations are “affordable”. You must have a minimum of one year’s accounts or six months trading time with a card terminal for a cash advance. You’ll have a  minimum annual turnover of £100,000, or £5,000 per month for a cash advance.

Fleximize

Loan Limit: £5,000-£500,000

Repayment term: 12-48 months on Flexiloan; 3-12 months on Flexiloan Lite

Type of finance: Unsecured or secured loans

Time taken for approval: Within 24 hours

Can I repay early? Yes

Fleximize offers both secured and unsecured lending options for both of its loans.

Flexiloan is available for businesses that have been trading for 12+ months. It’s good for those who want flexible, affordable finance for up to four years. It has terms of 12-48 months.

Flexiloan Lite is geared at businesses trading 6+ months, with terms of 3-12 months. It’s best for businesses in early-stage growth phase who need quick access to capital, though more established businesses can also use it as a business loan.

You can apply if you’re a limited company or limited liability partnership with at least four partners, are UK-based with one director living in the UK, you’ve been trading for at least six months and you have a minimum monthly turnover of at least £5,000.

If you’re a sole trader or a non-limited partnership with fewer than four partners, you can apply if you want more than £25,000.  

Funding Circle

Loan limit: £10,000-£500,000

Repayment term: Two to six years

Type of finance: Unsecured loans

Time take for approval: Typically within 24 hours but can be as little as five.

Can I repay early? Yes

Interest rates starting at 3.9 per cent per year with Funding Circle.

You must have a minimum two years of trading history to get finance with Funding Circle. To apply, you may also need business bank statements for up to eight months and your latest full unabbreviated accounts – profit and loss, detailed profit and loss, balance sheet information.

There are no fees for early repayment.

I’m still not sure if fast business funding is for me

Before you decide on fast business funding, read over some other options, as linked below:

Borrowing money to pay for stock: inventory finance, credit cards, loans and more

Best small business loans in the UK

The benefits of invoice finance

How to choose the right finance option for your SME

Related Topics

Business Finance