How to access emergency business funding

What is emergency business funding and which products are available?

In an ideal world, you could foresee the financial problems coming your way and plan accordingly. However, as every business owner knows, that’s rarely how it works. Customers go bust, equipment fails and stock gets damaged, leaving you with an immediate requirement for funding so you can ride out the storm.

When you’re up against it, emergency business funding provides a quick cash injection so you can pay your bills and carry on trading. Several funding options are available, from business loans with a streamlined application and approval process to merchant cash advances and invoice finance. 

What is emergency business funding?

Emergency business funding is any form of short-term commercial finance you can access quickly. Providing you meet the lending conditions and have the paperwork in order, various products can give you the money you need within 24 to 48 hours. 

The right option for you will depend on the following factors:

• How much you want to borrow
• How long you need to pay it back
• Your credit rating
• Whether you have assets you can use as security
• The stability of your cash flow
• Whether you sell B2B or B2C

What are my emergency business funding options?

Emergency business loans

Unlike traditional bank loans, which can take one month or more to secure, emergency loans, also known as working capital loans, can provide a vital cash flow injection in as little as 24 hours. 

You will typically pay higher interest rates for the speed and convenience of this type of loan. Emergency business loans can be secured or unsecured and you may have to sign a personal guarantee. 

Bank overdrafts

In emergencies, a bank overdraft can provide a useful buffer when your cash outflows temporarily exceed your inflows. They tend to be expensive and are best suited to short-term use. 

There’s a big difference between an arranged overdraft, which you set up in advance, and an unarranged overdraft. An unarranged overdraft occurs when you don’t have an overdraft facility in place and your account goes below £0. It usually attracts additional fees and interest rates and is best to avoid. You must apply for an arranged overdraft, which can take time, so it’s best to set one up in advance.

Merchant cash advances

If you receive customer credit card payments, a merchant cash advance allows you to convert future credit card sales into an upfront payment. That can be a good option for retail, hospitality and leisure businesses that take a lot of payments through card transactions. 

The benefit of this form of emergency funding is that you can arrange a cash advance facility with a provider in as little as 24 hours. However, the fees tend to be quite high.  

Invoice finance

This emergency funding method allows you to use the invoices you issue to business customers to generate a short-term cash injection. An invoice finance provider will pay you up to 90% of the invoice’s value within 24 hours of sending it to the customer so you don’t have to wait 30 or 60 days for payment. When the customer finally pays the invoice, the provider will pay you the remaining 10% minus their fee. 

One of the benefits of invoice finance is that the reliability of your customers is more important than your credit rating when getting approved. That can make it a good option for businesses with a less-than-perfect credit rating. 

Accessing emergency business funding

Before you apply for emergency business funding, think about how long you need the money for, how much you can afford to repay every month and how you’ll repay it - for example, do you have assets you can sell or will you use trade income? 

You should also consider what assets you could provide as security if required and whether you’re willing to sign a personal guarantee. 

There are a few documents you’ll usually need when applying for emergency business funding, including:

• Company accounts
• Bank statements
• Cash flow statements
• And potentially your VAT returns

Let us do the hard work for you

Once you understand your funding requirements, get in touch for a free consultation and we’ll do the hard work for you. We’ll discuss your circumstances and requirements before exploring the whole market to find you the right product at the best price - and our assistance won’t cost you a penny.