Everything you need to know about emergency business loans in Australia
One of the challenges of running a business anywhere in the world is that life can always throw challenges at you that are impossible to see coming. Making sure that you have access to the cash you need quickly could be crucial to helping your business survive.
The two main ways businesses do this is to have cash in the bank or insurance policies, but there is a third option that sometimes gets overlooked – emergency business loans. Here are the reasons you might need an emergency business loan and what the application process typically requires in Australia.
What are emergency business loans?
Also known as urgent business loans, they are not fundamentally very different from any other loan agreement. A line of credit or a lump sum of cash is provided to a business, and in return the business will pay the money back with interest. What makes it different is really the speedier approval process.
Businesses that are in trouble need money fast, and going to the bank and applying for an ordinary business loan may take too long. Emergency business loan lenders such as Pronto Funds expedite the application process, for example by having it take place entirely online.
When do businesses need emergency loans?
Urgent funding is usually needed for one of the following three reasons:
Cash flow trouble
This is when a business does not have enough income or cash saved to fund its everyday operations. It does not have enough money to pay its staff, rent, and suppliers.
Unexpected costs
These are the types of things that insurance would usually cover, like equipment breaking down and lawsuits. However, sometimes businesses are not insured against these things, or are struck by a natural disaster that is not covered.
Sudden opportunities
When massive opportunities suddenly materialize, companies need to move fast to capitalize on them. It could be a make-or-break moment for a business, and not having the cash to capitalise on it could be devastating.
What is involved in the application process?
You can apply for emergency loans from government agencies, banks, and private lenders. Each will have slightly different requirement, but generally, you can expect to go through the following two-step process:
Preparing documents
Although the requirements are usually less strenuous than for ordinary business loans, lenders still might need to see your company accounts and credit reports.
Submitting the application
This is usually done online and should be straightforward, but it is crucial to read the terms carefully. Ignoring the fine print is a common mistake when seeking a loan. Emergency loans often require collateral in the form of assets such as property, and they command high interest rates to compensate lenders for the risk they are taking. Make sure you know what you are agreeing to.
Conclusion
You will be able to act faster to help your business if you have some idea of how to apply for a business loan quickly. Along with preparing cash reserves and insurance, protect yourself against an uncertain future by knowing in advance who to turn to for emergency financing and what they are likely to ask for.
