What is an easy business loan?
Easy business loans are broadly considered to offer flexible qualification requirements and fast funding — i.e., they are easier to obtain than loans offered by traditional lenders like banks and credit unions. Lenders who offer easy business loans are typically faster than traditional lenders, using technology to underwrite your application in minutes, and in some cases providing funding within 24 hours. Because of their lenient qualification requirements, they can also be more expensive loans — while bank loans have average business loan interest rates ranging from 6.13% to 12.36%, easy business loan rates can vary anywhere from 6% to 99%.
» MORE: Compare the best same-day business loans
Who should get an easy business loan?
Startups and businesses with bad credit may be able to qualify for easy business loans because online lenders are more likely to have flexible personal credit, time in business and collateral requirements. Easy business loans are also a good option if you need access to capital fast, as many lenders can approve and fund applications within a few days.
Because easy business loans have flexible qualifications and fast funding times, they pose a greater risk to the lenders, meaning they are typically more expensive than traditional types of financing. If your business can qualify for a loan with a traditional lender, you will likely access lower rates and better terms.
How to qualify for an easy business loan
Though each lender is different, easy business loans typically have more lenient qualification requirements when it comes to standard underwriting guidelines. While banks typically require at least two years in business and good credit, for example, some online lenders only require six months in operation, and may accept credit scores as low as 570.
Many traditional loans also require collateral, which can not only make it hard to qualify, but also slow the process if appraisals are required. Conversely, most easy business loans are unsecured, meaning they don’t require physical collateral.
You can apply for many easy business loans online in just minutes, typically by completing a simple form and uploading a few financial documents. You may be asked to provide:
Business financial statements, such as a profit and loss statement.
Business and personal tax returns.
Business and personal bank statements.
In lieu of (or in addition to) this documentation, some lenders will have you connect your bank or other financial accounts directly to their system so that they can evaluate your business more quickly.
Where to get an easy business loan
Most easy business loans are issued by online, or alternative, lenders. Although some traditional lenders may have specific types of loans that are easier to get than others (SBA microloans are usually easier to qualify for than SBA 7(a) loans, for example), online lenders generally offer the greatest flexibility.
When to get an easy business loan
You can’t qualify for other types of financing. If you can’t qualify for a bank or SBA loan, an easy business loan from an online lender might be a good option. Although one of these loans will typically have higher interest rates than more traditional funding options, they can provide the money you need to cover a variety of expenses. And, taking a loan and making timely payments will likely help you qualify for more competitive types of business financing in the future.
You need cash fast. Bank and SBA loans can take several weeks to fund, sometimes longer. If you need capital fast — to cover emergency expenses or to take advantage of a new business opportunity, for example — you might be willing to pay a little more for the speed of an easy business loan.
» MORE: Best fast business loans for quick cash
Alternatives to easy business loans
Bank or SBA loans. If you can qualify for a bank or SBA loan, these loans will likely be the most affordable option for your business, with competitive rates and terms.
Business credit cards. Similar to a business line of credit, a business credit card is a revolving source of funds and can be a quick approval. Though they typically come with higher APRs and fees than loans, they can also reward you for your spending.
Friends and family loans. If you have friends or family members who are willing and able to invest in your business on short notice, this can be a more affordable option than any easy business loan. Make sure you put your agreement in some form of writing to avoid personal disputes.
How to choose the right easy business loan
The best loan for your business will ultimately depend on your individual financing needs and how well you meet lenders’ eligibility requirements.
However, if you think an easy business loan might be a good option, here are some tips to help you choose the right one.
Determine what type of funding is best for you. Easy business loans come in several types, including business lines of credit, term loans, equipment financing and invoice factoring. Consider how much money you need and how you’re going to use it to determine which might be the right fit.
Figure out how much debt you can afford. Easy business loans will likely have higher interest rates and fees than other types of financing. You’ll want to review your business financials to estimate how much additional debt you can manage before taking it on.
Check your qualifications. Review common underwriting criteria — time in business, credit score, annual revenue — so you have a sense of where your business stands before applying.
Research several lenders and their requirements. Although easy business lenders typically don’t require physical collateral, you’ll likely have to sign a personal guarantee. The lender may also take out a general lien on your business assets.
Avoid predatory lenders. Stay away from lenders that promise guaranteed approval or business loans with no credit check. Although there are many reputable online lenders on the market, predatory lenders tend to target small businesses that are having trouble qualifying for financing. If you think a loan offer seems too good to be true, it probably is.
Compare multiple loan offers. You’ll want to make sure that you’re getting the best deal for your business, so consider factors like interest rates, repayment terms, fees and prepayment penalties.
Calculate the total cost of the loan. Certain online lenders quote interest rates in different ways; while some use annual percentage rates, others may use simple interest rates or factor rates. The best way to understand the total cost of your loan is to calculate any interest rate into an APR.
Read your business loan agreement thoroughly. It’s important to ensure that you understand all the terms associated with your loan including interest rates, fees, repayment terms, potential early payment penalties and any personal guarantee requirements that may apply. You can ask your lender for clarification if you have any questions.
