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How to Get Approved for an Instant Approval Small Business Loan
October 29, 2021
Our Guide to Small Business Loan Instant Approvals

How to Get Approved for an Instant Approval Small Business Loan

Under a strict definition of the term “instant,” there’s no such thing as small business loan instant approvals. However, there are small business loans that you can apply for that come with very fast approval times. In some cases, you can get approved for a loan on the same day you apply for it.

In the face of a crisis, small business loan fast approval can be your saving grace. Similarly, if an unexpected opportunity arises, fast approval may help you capitalize on it.

Of course, quick approval has its downsides too; in some cases, there may be alternatives that meet your needs better. Regardless of your financial situation, this post will help you navigate the subject of small business loan instant approvals. After reading, you will:

  • Learn the pros and cons of lenders that offer instant approval.
  • Know how to get quick business loans
  • Understand your instant approval financing options.

The Pros and Cons of Instant Approval Loans

The Pros of Instant Approval

1. Ideal for timely opportunities or emergencies

In the world of small business financing, timing is everything. For instance, if you need to make payroll before month’s end, you need financing that puts funds in your pocket right away. Even the best, most affordable loan won’t alleviate a payroll emergency if the funds are a few days late. For scenarios where time is of the essence, instant approval can be a key differentiator.

2. Less paperwork intensive than traditional loans

For many small business owners, the fact that business loans require an extensive application process is a major obstacle to financing.

If you apply for small business loans with fast approval times, paperwork is significantly reduced. As a result, you can get approved for necessary financing with minimal disruption to your work routine.

The Cons of Instant Approval 

1. Higher interest rates

Generally, small business lenders who offer fast approval also charge higher interest rates. This is because loans with fast approval tend to be for shorter terms. With a shorter term, the loan has less time to accumulate interest, so lenders compensate by charging higher rates.

The more lenient qualification criteria of fast approval loans is also a factor in lenders’ higher interest rates. This is because applicants for fast approval loans tend to be more significant credit risks. To compensate for that risk, lenders charge higher rates and additional fees.

2. Less regulated compared to traditional banks

Part of the reason certain lenders can offer fast loans is because they’re not a traditional bank. Banks have strict regulations they must follow or risk losing their charter. Fast approval loan lenders are considered alternative lenders and so face much less regulatory scrutiny.

This makes it especially important to seek out reputable, competent lenders when seeking a fast approval loan.
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How to Get a Quick Business Loan

If you need a quick business loan, you should apply for additional working capital from an online lender. Traditional brick-and-mortar lenders, such as a bank or credit union, simply take too long.

Before you start looking for lenders, though, you should compile some basic financial information. Even for fast business loans, you’re going to be asked for (at least) the following documents:

  1. Your business and personal credit report
  2. Bank account statements
  3. Tax returns
  4. Income statement
  5. Balance sheet
  6. Budget and future cash flow projections

If you can prepare these documents before you apply for a loan, the process will be far faster. Once you’ve compiled this paperwork, just fill out the online application that your chosen lender provides.

Instant Approval Financing Alternatives

Any time you’re considering financing, you should evaluate your alternatives. When it comes to fast approval loans, there are four main alternatives, including:

Business line of credit: This works like a credit card except you withdraw cash when you need it rather than buying on credit. Just like a loan, you can spend your line of credit funds on any business-related expense. Look for a line of credit from an online lender to ensure fast approval.

Business credit card: While business credit card rates can be high, they enable you to capitalize on no-interest periods for quick, short-term financing. Of course, the amount of funds you can access depends on your credit limit.

Invoice factoring: Also called accounts receivable financing, invoice factoring advances you a portion of your outstanding invoices. How much you receive depends on the percentage (called a “factor”) that the factoring company sets.

Merchant cash advance: Another kind of advance, the merchant cash advance provides quick cash in exchange for a percentage of your future credit or debit card sales. Your repayment term depends on your sales, more sales leads to faster repayment, and vice versa.

Is a Small Business Loan Instant Approval Right for You?

The main downside of instant approval loans is the high cost. However, cost is relative. Yes, instant approval lenders tend to charge higher rates. Yet you must also consider the cost of not getting financing or getting it too late.

For instance, let’s say you need $250,000 to capitalize on a $2,000,000 opportunity by the first of next month. To get these funds in time, you’ll need to receive a fast approval.

To illustrate the point, let’s say a slow approval loan has a rate of 7 percent. The fast approval loan’s rate is double that: 14 percent. Over one year, that rate increases your loan cost by $17,5000.

While you save $17,500 with the more traditional loan, you lose the $2,000,000 opportunity. Therefore, the question is: which business loan is truly more expensive?

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].