Same-day business funding refers to the process of receiving quick access to capital, for example, businesses facing an urgent financial need in the case of an emergency. This typically takes the form of a loan or financing option that allows a business to receive the funds within hours or on the same day of application approval.
These short-term loans are often used to remedy cash flow issues, stock purchases or the repair of equipment.
Throughout this comprehensive guide, we will look in depth at the process of applying for same-day business funding in the UK, and help you make a decision about whether this is the right option for you and your business.
How same-day business funding works
The application process for same-day business funding typically involves a business approaching a lender through an online application, who will require some basic financial information like details of trading history and turnover, for example.
If a business meets eligibility criteria, many lenders will offer an instant decision based on the submitted application. This can be granted within hours, with funds being transferred directly into the business’s bank account the same day if the submission was made early enough in the day. Regarding repayment, such loans are normally unsecured. No collateral is needed for these, but a personal guarantee may be requested in some instances. The repayment terms could be anything with the facility of flexible repayment or repayment in advance without any fees.
Responsible lenders following the FCA Standards of Lending Practice will typically ask for a minimum trading history (e.g. 3-12 months), proof of UK registration and a UK bank account, and a minimum turnover per annum (e.g £10,000).
How is the money sourced?
The majority of same-day business loans are offered by private lenders, alternative finance businesses or specialised banking institutions. Private lenders can lend using their own capital, exempt from the long processing times associated with traditional banking. Merchant cash advances are yet another source of funding for a business, offered on the future credit and debit card sales of a business.
The lender offers an amount initially, which is later paid as a percentage of daily card purchases. This comes in handy with businesses that experience varying revenues.
What are the advantages of same-day business funding?
Same-day business funding can provide numerous benefits for businesses that need immediate support.
Key advantages include:
Speed & efficiency
Funds can be accessed within hours of approval, allowing urgent business needs to be addressed without delay. For comparison, traditional bank loans can take weeks to process.
Flexibility of usage
The funds offered can be used for many different purposes, like covering operational expenses, bills, the purchase of inventory, or even seizing time-sensitive opportunities like taking advantage of discounts.
Simplified application process
Compared to traditional loans, same-day loans have minimal paperwork requirements. Online applications can be completed in minutes, as lenders are prepared to make quick decisions, sometimes with no credit check. Also, most same-day loans are unsecured, so no assets need to be risked.
Cash flow boost
Cash injections help fund natural cash flow lows or seasonal fluctuations, allowing a firm to continue operating uninterrupted. This can reduce overall financial strain, allowing firms to pay their major commitments like paying suppliers or paying for unexpected expenditures.
What are the risks and disadvantages of same-day business funding?
While quick capital is attractive, it comes with several risks and drawbacks that are important to note:
High interest rates
Same-day loans have much higher interest rates than conventional loans since they entail the risk of providing instant, unsecured credit. ‘Factor rates’ rather than standard annual percentage rates (APR) are used by some lenders, and this can work out to effective APRs of as much as 172% for merchant cash advances, for example.
Additional fees
Extra fees for same-day business funding can include origination fees, late payment penalties or administrative fees. This can add up over time, are not always clear when browsing through lenders yourself, and are designed to hedge against the risk of lending to businesses with weaker credit scores.
Short repayment terms
Same-day loans have shorter repayment terms, in the region of 6-24 months typically. This will require businesses to pay back their loans much faster than traditional loans.
This can sometimes be in the form of daily or weekly repayments, which can be in many cases helpful for cash flow for businesses with high transaction rates.
Loans such as merchant cash advances can be particularly risky, due to their high cost and reliance on a repayment structure tied to daily sales. Falling behind on payments can negatively affect a business’s credit score, making it harder to secure future financing.
Limited loan size
Due to the nature of these loans, businesses that are seeking larger sums may need to look elsewhere. These loans are designed for emergencies, rather than long-term investments. Using these loans for extended purposes would be illogical financially.
Predatory lending risks
If attempting to source a lender yourself, you are putting your business at risk of potential predatory lenders. These types of lenders are attracted by the less stringent underwriting procedures, who may hide fees and impose unfavourable terms.
Where can I go to get same-day business funding in the UK?
When looking for lenders to apply for same-day business funding, it is possible to research these yourself, but it can be time-consuming. Furthermore, you open yourself up to the risk of predatory lenders, who operate in an unregulated manner.
Rise Funding offers a better choice than researching individual lenders by acting as a credit broker with access to multiple lenders, including traditional banks, alternative finance providers and niche lenders. The wide portfolio increases your chance of finding a suitable loan tailored to your needs. Even for borrowers with poor credit or unique requirements, Rise Funding’s matching technology improves the likelihood of securing approval for same-day business funding.
Rise funding offers a wide range of financing solutions, including:
- Long-term and short-term business loans
- Cash flow funding
- Invoice finance
- Asset finance
- VAT loans
- Property finance
With a single application, Rise Funding will send your details to multiple lenders, saving time and effort compared to targeting each lender individually. The streamlined process can get you a suitable loan available within 24 hours. You will receive personalised assistance to ensure the process runs smoothly.
Conclusion
Same-day business funding is a valuable tool for businesses that face urgent cash flow challenges. Quick access to capital can be vital in certain situations where traditional financing may not be viable. However, high interest rates, short repayment terms and the risk of predatory lenders must all be considered when choosing a lender. For those seeking a secure and efficient funding option, Rise Funding’s process can improve your chances of securing suitable financing.
If you are looking for a same-day business loan, Rise Funding can help you find the best option for you. Whether it’s this type of loan or others, we’re here to help you make a decision with confidence. Contact us via the form below, or get an instant business quote through our online questionnaire.
