When unexpected things happen, will your small business be ready?


No matter how prepared you might be, sometimes financial emergencies happen. The good news is that there is help when you need capital fast.



In fact, small business owners today have access to more financing options than ever before; any one of several different types of emergency loans could be right for your business. Here are some of the best options for you to inject money back into your company in the short-term.


Working capital loans: A working capital loan is one that is used to finance a company’s everyday operations on a short-term basis. This can be one of the best options when you are experiencing a cash crunch. With shorter terms and lower amounts, working capital loans are typically used for maintaining day-to-day operations.


The 5 most popular working capital loans are:


  • Short-term loans: Short-term business capital loans can be some of the best for your business, as they give you an opportunity to inject money into your business fast. Usually, these types of loans give your business a lump-sum loan that’s paid back over a shorter period of time.


  • Lines of credit: A line of credit, or LOC, is a type of loan that banks can provide, allowing you to borrow money for your business and giving you access to funds that you can use whenever needed. As such, business lines of credit are a great and flexible option for small business owners.


  • Merchant cash advances: Merchant cash advance companies provide quick money, but usually at a higher price. With a merchant cash advance or MCA, a financing company provides you cash in exchange for a percentage of your daily credit card sales, plus a fee. While this is an easy and quick way to introduce capital back into your business, it tends to be more of a pricey solution.


  • Invoice financing: Also known as factoring, invoice financing is a short-term loan that can help monetize your accounts receivable in order to get quick capital. Through invoice factoring, a company sells an accounts receivable to a “factor” at a discounted rate. The upside is that the factor will pay you that sum immediately, as opposed to the company who owes you the money and who may take months to pay. 


  • SBA 7(a) loans: The U.S. Small Business Administration’s (SBA) primary loan vehicle is known as the 7(a) program. It helps businesses by providing working capital. With low interest rates and high potential capital loaned, these tend to be one of the more sought-after loan options.


Learn more about SBA loans from Bank of America


Family and Friends loan: In many cases, small business owners use this as their first option for a short-term loan, rather than a financial institution. Friends and family can offer very flexible repayment terms and often zero interest.


Although it may be tempting to go this route, you must consider the downside: If it takes you longer than expected to repay, you will create some strained personal relationships. As such, if you do choose to go this route, draw up a formal contract (or another type of written agreement) that outlines the terms of the loan. This can help make the transition from purely personal relationships to working ones smoother and will give your lender some peace of mind.


Related content: Small Business Guide to Raising Capital, Part 2:  How Much is Family Worth to You?


Finally, if something really bad happens…


Disaster loans: Offered by the U.S. Small Business Administration, disaster loans can be tricky and difficult to get. However, if you qualify, you will be rewarded. According to the Federal Emergency Management Agency (FEMA), disaster loans are “the primary source of federal long-term disaster-recovery funds for loss and damage” provided to businesses. When a federal disaster is declared, the SBA is authorized to offer low-interest loans to businesses of all sizes that have sustained damage in a disaster. In a time of crisis, the SBA can provide up to $2 million to help you rebuild your business.


The good news is that when capital starts to run dry, you don’t need to panic; there are many loan options out there for you to help your business weather the storm!


Find the right business loan for you and your business. Get a recommendation from Bank of America.


Learn more about SBA Loans


About Steve Strauss


Steve Strauss Headshot New.pngSteven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss


Web: www.theselfemployed.com or Twitter: @SteveStrauss

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Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice. Bank of America, N.A. Member FDIC.  ©2019 Bank of America Corporation

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