In this day and age, there are many options available to businesses who are looking for financing options. Here at Sunny Loans UK, we’ve noticed how many businesses are looking for a business loan within the same day instead of within a number of months.
If you’re looking for a same day business loan but you’re not sure where to start, we’re here to help. With our guide, we’re certain you’ll know everything there is to know about how same day business loans work.
What Is A Same Day Business Loan?
A same day business loan is a loan where a business will receive the funds they request within 24 hours of putting in their request. Usually, these loans are required when a business needs the money urgently, either due to issues with their cash flow or because of an emergency.
However, it may also be due to the opportunity to expand a business. But how can you get a same day business loan?
How Do You Qualify For A Same Day Business Loan?
Same day business loans are more relaxed, but they typically aren’t run by banks. Banks often have stricter requirements for anyone who wishes to apply for a loan from them, including a strong business plan. However, that doesn’t mean that same day business loans can be given to anyone.
To qualify for a same day loan, you need to have been in business for at least a minimum of one year. You may even need a specific monthly or annual revenue, they may even require a minimum credit score for the business owners when they apply.
We here at Sunny Loans UK are here to help you understand the types of same day business loans available to you. But first, let’s discuss the pros and cons.
Pros And Cons Of Same Day Business Loans
Before you apply for a same day business loan, you need to consider the pros and cons of applying for one.
There’s no doubt that the speed at which you’re approved for a same day business loan is one of the biggest advantages of them. You can access the funds within a day, and it is a relatively easy application process that you can do online.
They offer more flexibility too, which means even a business that isn’t as old as another, or one with a poor credit rating, could still be approved.
The speed is also a drawback at the same time, as they may have higher interest rates and fees included. If the funds are needed urgently, then we’ve noticed that they can become more expensive.
Unfortunately, that means that they may be more difficult to pay back due to the shorter repayment terms that they may be subject to. As the interest is higher, they may become more expensive.
So, if you are applying for a same day business loan, we here at Sunny Loans UK recommend that you complete a personal guarantee to ensure that you can afford your loan.
Secured And Unsecured Business Loans
There are two different types of business loans available in the UK. These are secured business loans and unsecured business loans.
Secured Business Loans
These loans require you to secure the lended money against assets or collateral. Collateral can include property, vehicles, machinery, or even cash.
You may know of these loans as commercial or business mortgages due to their similarities.
Many businesses use the assets they’re buying with the money lent as security, and the lender can take this asset as a secondary source of repayment if you can’t repay the loan with its cash flow.
Secured loans are seen as safer for both parties, and will have a longer repayment profile. Some benefits of getting a secured business loan include a higher, long-term loan with lower interest rates.
Plus, they aren’t relying on the business’ credit history. There are many debt finance options available.
These loans often have a security element as part of checking the eligibility of a business, and allow the lender to assess any risks which may be attached if you can’t repay the loan.
They will also require the lender to take a first charge on the asset that the loan is guaranteed by. This gives the lender priority over any party that has a lower ranking charge on said asset, and priority over other lenders or creditors involved.
Essentially, it’s the legal right for the lender you choose to sell the asset in the event you aren’t able to repay the money owed, whether it is fully or partially.
If needed, you can also take out a second charge loan which is only able to be repaid when the first charge has been repaid. If you do choose this, the lender of the first charge will need to give any consent for this to happen.
Unsecured Business Loans
There are two definitions for unsecured business loans in the industry, completely unsecured lending and lending not backed by tangible assets.
Completely unsecured lending means that the loan isn’t secured by collateral or assets, and is seen as riskier if you can’t repay the loan. If you can’t repay the loan, your business would need to be sold to repay any outstanding debts.
Lending not backed by tangible assets are loans that aren’t secured against tangible assets but they’re secured against the business’s cash flow and loan covenants that have been agreed to.
Unsecured loan providers usually provide lower loans over a shorter period of time, and often come with higher interest rates.
Typically, these two types of loans require both covenants and personal guarantors should you be unable to pay your loan. Then this guarantor will take on any outstanding debt, so that the lender you’re with can mitigate the risk.
We here at Sunny Loans are dedicated to ensuring that you know everything you can about your same day business loan before you commit to anything.