Most people are familiar with the ease and quickness with which an individual can get a short term loan. However, it is less common knowledge that small businesses can also qualify for similar short term loans. There are many reasons that a business may want to go with this type of financing as opposed to an actual long term business loan, including the speed with which it is granted. While the specifics vary from company to company, generally speaking, a short term business loan may be the perfect fit for a number of small businesses.
Businesses often need upfront capital. This money may be put toward purchasing stock in bulk. It may be dedicated to the renovation of an old store or the building of a new space. It could be that extra cash is needed in a newer business to improve marketing. The reasons for short term small business loans are limitless.
How They Work
Short term business loans are not as cut and dry or across the board as an individual’s short term loan. You can find lenders that are willing to offer anywhere from £5000 to £1 million depending on the business’s revenue and repayment strategy. Also, repayment guidelines vary. There are the typical monthly payments available where there is a set amount due on the same day of each month. However, there are less traditional methods, as well, and these often draw small businesses.
The alternative payment methods are designed to ease the burden that a monthly payment can bring. A borrower can choose to negotiate with a company who accepts small daily payments. There are even lenders which allow the consumer to repay their loan through percentages of credit and debit sales.
Why Choose a Short Term Loan
There are myriad reasons that small businesses choose to go with short term loans from non-traditional lenders as opposed to long term loans from banks. First off, getting approved for a long term business loan is not easy. Also, even if a business is approved for their money, the whole process could take as long as 90 days. That’s a long time to wait for money that is needed presently.
With short term business loans, a borrower can have their money in as little as 24 hours to 10 ten days. Also, the qualifications which must be met for approval are a little less strict than those of long term bank loans. However, there will be monthly profit guidelines which must be met among other specifics. When you’re considering a short term loan, these are all factors to consider. However, you also want to look closely at interest rates and any hidden fees. Be careful.
Small businesses should know that there are more loans available to them than the traditional long term bank loan. Short term business loans are available more quickly and offer a huge variety of repayment options and loan amounts. They can be excellent financial choices when selected wisely.