Emergency business finance options

In an ideal world, every business owner could plan the year ahead, and everything from cash flow to financial planning would go smoothly without any unforeseen events. The reality of the situation is that customer payments get delayed, machinery breaks, stock gets damaged, which might mean that you will need the support of a short-term business loan to see you through.

Emergency business finance options

While you might not be able to plan for an unexpected incident that negatively affects your business, you can familiarise yourself with the emergency business loans on the market from alternative finance to cash flow products like invoice finance and merchant cash advances. Cash flow problems are the bane of small businesses with many stating that their cash reserves would run out after just three months. 

Lending for short-term purposes can inject a much-needed shot of cash into a business’s working capital. The three main types of working capital loans are:

• Overdrafts

• Invoice discounting

• Business credit cards

For longer-term funding, the most relevant forms of finance are:

• Asset finance, which covers finance leasing and hire purchase

• Term loans

Seasonal trading businesses

There might be times throughout the year when your business has off-season trading, placing a strain on cash flow. In cases where your business needs a leg up, it might be worth talking to a credit broker or a lending platform to see what business loans are available to you, this includes asset-backed finance for businesses that need a boost to working capital and term loans that use accounts receivable, inventory, plant and machinery or real estate as collateral. It is basically any type of business finance that is secured by company assets.

My business is operating at a loss

Growing debt is a serious issue, especially if there is no clear path back out of the red. However, there are specialist lenders who take a holistic look at a business and will work out a tailored plan for getting you out of debt, while also providing you with the necessary funding to keep your business afloat. Most often, in the case of a business with significant debt, a lender will only offer a secured business loan with a personal guarantee and assets as collateral. The interest rates for unsecured business loans tend to be much higher than for secured business loans.

Are you running out of options?

Have you tried everything and still feel like your business situation is hopeless? At this point, you need to make an extremely challenging decision about whether to keep trading or close the business. If you are confident that you can turn the ship around you might want to consider going for a company voluntary arrangement (CVA) to address your outstanding liabilities. If your limited company is insolvent, it can use a CVA to pay creditors over an agreed timeframe. If your creditors agree to the terms and conditions, your company can continue trading.

How to get a business loan fast?

In an emergency situation, for example, your biggest customer just went out of business, and payroll is only around the corner. If you need emergency cash for your business there are lenders who will facilitate you. You’ll have a much better chance if you have your ducks in a row with regards to the following:

How can I use an emergency business loan?

An emergency business loan can be used when your business has been negatively affected by an unforeseen event. Lenders will provide a loan for the following reasons — if they can be convinced that you will adhere to the agreed repayment timeline.

• Short-term marketing or advertising costs

• To support operating expenses (staff wages, bills, rent)

• To help seasonal businesses, you could use an emergency business loan to fill gaps caused by cyclical trading periods

• To cover unexpected expenses from legal obligations to insurance payouts  

Understand your options

Many business owners don't realise that within 24 hours, despite a complex financial situation, you can get a loan even if you've got bad credit, a CCJ or other signs of trading problems in the past. If your business is in an urgent situation, the best thing you can do is to talk to a lending expert, who knows the market and the range of products, as in most cases, you won’t be eligible for an off-the-shelf loan from a high street bank, but there are specialised lenders who in return for higher interest rates will provide emergency loans to struggling companies in the UK. They will even help you with the application process and will advise on any loan schemes that are still in operation.