Beginner’s Guide: How to Get Emergency Loans When You Need Them
Almost overnight, the novel coronavirus has nearly shut down the global economy. No one would have predicted that COVID-19 would have such a devastating socioeconomic effect. Almost every sector of the economy is affected.
With the hope of stopping the spread of COVID-19, businesses were forced to close abruptly, causing small businesses to struggle and others to shut down completely. Nearly 30 million businesses are in financial turmoil. Over 50% of that number blame the revenue decline on the pandemic.
Each state is trying to approve emergency funding to aid small businesses and companies to keep their doors open. The hope is that the situation is temporary and not the “new” normal.
The million-dollar question is, where can small businesses get a lifeline? The loan agency in Bexley, OH, can be an excellent place to start. Loan agencies are lifesavers and are good even when you need a small business acquisition loan.
Knowing that you will get an emergency loan from finance companies near you can help keep your business alive in these uncertain times.
The challenge that a small business owner will face is qualifying for an unplanned loan. Here are some nuggets of wisdom that you can apply to make the process a bit simpler.
Know Your Options
When you are in a tight spot, it is natural for you to look for the easier way out. You will notice that there are different forms of emergency loans that you have to choose from. Here are some of the options:
- Emergency Personal Loans
Since personal loans do not have many restrictions, people tend to run to this option. This is because when your business is in danger, you will do almost anything to it afloat.
The problem is that a personal loan can be hard to repay if the business doesn’t pull through as expected. The loan will not be tied to the company but directly to you. So, it is always better to look for business loans.
- SBA Loans
Due to the pandemic, through the Small Business Administration (SBA), the government is working to provide disaster assistance loans to help many companies recover. The beauty of getting an SBA loan is that the interest rate is very low.
- Merchant Cash Advances (MCA)
With this option, a merchant capital company will give you a cash lump sum. Then the daily business credit card sales will be used to pay the merchant capital company.
- Short-Term Loans
These loans are just like any regular loan, but the difference is that they get funded much faster. Conventional loans can take weeks before they get approved, but a short-term loan can get approved in a maximum of two days.
They are appropriate for handling one-off problems to help your business get back on its feet.
Know What You Need
You might learn soon enough if you haven’t already, is that shopping for emergency loans and regular business loans is very different.
With regular loans, you borrow intending to get more than what you need, so as you cover unanticipated costs. You have the option of having extra cash.
On the other hand, with emergency loans, you only borrow enough to cover the emergency. When you are realistic about what your business can borrow, you will not bite more than you can chew.
It would help if you critically looked at your business to know the maximum amount of money that your business can borrow and repay each month.
You can be in a tight spot, but always take your time to exhaust all available options. This means that you are not forced to go with the first lender who approves your loan.
If you do not shop around, there are some sweet deals that you might miss.
Check Your Documentation
The lack of proper documentation has made many people miss out on excellent opportunities. At times, you might get the loan, but it might take longer than usual to get approved.
With emergencies, everything is time-sensitive, so being prepared will go a long way. The more information the lenders have, the better. It will be a massive plus if you have all your documents with you as you head to your first meeting.
The documents that will be needed, in most cases will be:
- Personal credit score
- Bank statements
- Statement of use for the loan
Most of the time, if you have all the important stuff, your loan might be approved. However, if you do not have a recovery plan in mind, some lenders might deny your application of the emergency loan.
If you have any questions about emergency loans or loans in general, call us today. At Heritage Financing, we would love to help your business in any way we can.