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An emergency, limited-time growth opportunity or other unforeseen business expense can create an urgent need for working capital. Most business loans take weeks to months to be approved and funded, but with fast business loans — typically available through online lenders — you can get the cash you need in less than five days.

In exchange for faster funding, you’ll often receive a higher interest rate, so it may not be a good fit for all situations.

When to consider a fast business loan

Quick funding is the main draw of fast business loans. A situation may arise where you need cash immediately, and waiting a week or more for a loan to be approved, then even longer on funding, may not be an option.

Understanding when a fast business loan makes sense can help you answer the question: Should I get a fast business loan?

1. The business is in danger of closing

Rent, utilities, payroll and other business expenses add up, and revenue doesn’t always keep pace. You need money to afford your fixed expenses to keep the doors open and give your circumstances a chance to improve. A fast business loan could buy time for business revenue to increase.

2. There is a limited-time growth opportunity

If the chance to expand your business unexpectedly presents itself, you don’t want to miss out. You might want to take advantage of discounted professional marketing services or buy a new office space in an area of town you love.

3. There are unexpected expenses

Business operation costs can be unpredictable. Small businesses often run into various unforeseen expenses, such as increased utilities or supplier costs or equipment breakdowns. You may need to address these costs immediately to avoid impacting daily business operations. If you don’t have cash on hand, a fast loan could save the day.

4. The business is not eligible for other types of business financing

Lending criteria for traditional business loans may not be as accommodating as what you’ll find for fast business loans, which are often offered by alternative lenders. Since credit score, time in operation and annual revenue are major factors that impact approval, anyone with bad credit or just starting a business may not be eligible to secure a traditional business loan.

5. You don’t want to wait to start your business

You have a great business idea and a business plan in place, but you don’t have the finances to get your company off the ground. A fast business loan can provide the capital you need to hit the ground running.

When not to take out a fast business loan

While fast business loans can provide quick access to capital, they’re not always the best choice.

If you’re looking for lower interest rates, longer repayment terms and larger loan amounts, an SBA loan might be a better option. Although SBA loans take longer to process — up to 90 days — they’re backed by the government and offer some of the most competitive terms available to small businesses.

Fast business loans are often more expensive than traditional financing. They can come with high interest rates, short repayment terms and daily or weekly payments, which can strain your cash flow. If the cost of borrowing outweighs the potential return on investment, or if repayment could put your business at risk, it’s wise to explore other alternatives.

Before committing to a fast business loan, weigh the pros and cons to determine if it makes sense for your small business or if another option would better suit your needs.

The bottom line

When you need immediate access to working capital, a fast loan may be the answer. You can get cash in your hands in less than five days, but you still want to consider the benefits and drawbacks before applying for a fast business loan. Other financing options might be a better fit for your situation.

Frequently asked questions

• How fast can you receive a business loan?
  

  Most business loans are approved within 30 to 90 days, but fast business loan lenders can approve a loan in as little as 24 hours. Additionally, fast business loan funds are often dispersed within one to five business days.

• What should you consider when taking out a business loan?
  

  When taking out a business loan, you should consider the amount you need, what you intend to use it for, and most importantly, how much you can afford to pay back, including the interest that will accrue over the course of the loan.

• When would a business need a short-term business loan?
  

  Businesses use short-term business loans to cover a gap in cash flow, support an expansion in operations, address an unexpected emergency expense and purchase products, among other purposes.