What Are The Top 5 Urgent Business Loans in Australia?
Every business requires a loan at some point or the other. Looking for a business loan does not always mean that you are failing, sometimes it is necessary for the company’s growth. As a small business owner, you may find managing cash flow difficult. Emergency funding is often needed to bring a business back on track.
Are you in urgent need of a business loan? Keep reading as we will be discussing five urgent business loans in Australia in this article. We will discuss the advantages and disadvantages of all business loans to help you make a wise decision.
Top 5 urgent business loans in Australia
Below we have mentioned the top 5 loans available for Australian businesses.
Use a business credit card
Are you struggling to regulate the cash flow of your business? Using a business credit card is one of the best short-term funding solution. It will help you meet emergency costs. If you do not have enough cash to buy stock for the next month and your payments are pending, a business credit card will give you immediate capital. A small business owner often also struggles with a bad credit score that can be a hurdle for massive loan approval in the future. Using this finance option, you can improve your credit score. Pay monthly payments regularly and clear all your debt on time.
Credit cards are an easy funding option, but the interest rates are high. If you do not pay off monthly, the credit will keep on increasing. Some credit cards also take additional operational charges. Month by month, payments will get expensive if not paid off on time.
One of the fastest ways of accessing emergency funding is invoice finance. Here, your outstanding sales invoices are used as collateral to get loan approval. Financing the loan will give you up to 95% of the invoice value upfront as cash in advance. When the invoice is paid the finance company is repaid and you get the advantage of getting the money immediately rather than waiting for the invoice to be paid. You can ease the pressure of late-paying customers by invoice financing with no difficulty. The average payment times of invoices have doubled during the Covid-19 pandemic, this makes invoice finance an attractive alternative.
One of the largest advantages of invoice financing is its easy and quick approval. It is not long-term debt. You can save yourself from any new loans by releasing the capital tied up in your invoices.
A business line of credit
Another business finance option is a business line of credit, and its working is quite similar to business credit cards. Use it to get cash whenever required and pay interest only on the amount drawn down. You are again eligible to get funds when you pay off any balance outstanding. The interest rate that you are required to pay off is less than that charged in the case of a business credit card. However, the application process in the business line of credit takes time. On top of it, you need a good credit score and real estate collateral to qualify.
It is a flexible way of financing your urgent business requirements. Use this facility whenever you have to overcome an unexpected payment or cash requirement. You have to pay off the interest on the money drawn by you. The cons involve an extended application process and tricky criteria to qualify.
It is a way to generate capital from within the business rather than taking a new mortgage. Use assets like machinery, vehicles, and other equipment that your company owns to get loan approval. You are raising capital from the assets that your business already owns. Your assets will first get evaluated by the finance provider, based on this valuation, you will be approved for finance. The funder will take a charge over your asset so you would not be able to sell the equipment without repaying the loan, once the debt is paid the charge is released. The assets you use to secure the loan can still be used by your business during the loan term.
The enormous advantage is that you get immediate funding and still can use that asset. The process of valuation can be time consuming and if you fail to repay, you may lose the asset as the lender would take possession and sell it.
Merchant Cash Advance
A merchant cash advance is another short-term business loan option. You get secure funding based on your past merchant sales. The financing company will use the value of card sales to provide cash in advance. You will have to repay the loan amount plus the interest through a percentage of your business’s future sales. The loan amount that you get is determined based on historical card sales revenue. Although this is a fast funding option, interest rates are high in comparison to invoice finance. The qualifying criterion for a merchant cash advance is quite flexible and easy to pass, unlike invoice finances.
These are some of the urgent business loans in Australia that you can consider. To get the funding quickly and easily ensure your accounts and financial statements are up to date. Also, maintain a good transaction history record. Finally, select a loan type that suits your needs and will help your business thrive and not only survive.