It is estimated that around 29% of start-ups fail because of a cash crisis (Time). This can be brought about by a wide range of factors, from high overheads to inefficiencies in production. But most of the time, it's just because entrepreneurs are cash-poor and blow through their funding without a back-up.

It is normal in the world of investment for start-ups to seek funding through a lender as that back-up. Lenders don't ask for a share in the business and they can release funds within days. A near immediate cash injection can unlock the doors on a start-up business and keep everything ticking over while it finds its feet.

Start-up loans

Start-up loans are also a lifeline for many aspiring entrepreneurs. So-called "cash poor" entrepreneurs can avert a cash crisis by borrowing, and by securing credit before you need it, you can avert disruption to your operations.

So, yes, borrowing is convenient and accessible. Perhaps more so than outside investment and crowdfunding. The key benefit to borrowing and start-up loans, however, is our previous point about cash injection. Quite simply, no other funding method gives you cash in the bank as quickly and that's an important point.

Need fast funding?

How fast is it? Some lenders release funds within 24-hours and provide a decision on applications within 2-hours. That means you can apply for funding while you eat breakfast and have the funding you need the very next morning.

Perhaps a more standard timeframe is 24-48-hours for a start-up loan to reach your account. High-street banks are often slower than this. They can take over 72-hours to just make a loan decision (never mind wiring the money over). The fastest loan arrangements are normally provided by independent lenders. Many independents also have the advantage of considering loan applications in person, as opposed to by computer.

Factors that can affect loan times

Of course, not all loan applications go smoothly. Yours might hit a snag for a number of reasons and that snag may setback the decision process by a few days. Most applications fail because they contain inaccurate or puzzling information.

We'll briefly cover some of these factors to help you make a better application:

1.     Business plan. Your start-up needs a clear business plan to have any chance of a loan. The lender will want to know the purpose of your business, and your business plan is ultimately the best to sell that.

2.     Financial forecasts: Lenders want to see financial estimates to help identify your capability of repayment. Unclear forecasts or omitted data could setback the loan process, so make sure yours are correct.

3.     Incorrect director information: You'd be surprised by how many loan applications have incorrect director information. The names, dates of birth and home addresses of all directors / business owners need to be supplied.

If you take the time to submit that information correctly, a lender will normally have everything they need to make an initial decision.