If you’re a small business owner in need of quick funds for an unexpected expense or an individual looking to purchase an expensive item, short term finance loans are available that can assist.
Prior to making a decision, it’s essential to carefully weigh all your options and compare loan offers. Look for lenders with competitive interest rates, manageable repayment terms and other features that meet your requirements.
How it works
Short term finance is a popular solution for businesses when they face temporary cash flow difficulties. It can take many forms, from bank overdrafts and installment loans to business lines of credit.
One option for small businesses is a line of credit, which functions like a business credit card in that you have an amount to draw from and monthly payments are made against it. Plus, most business lines of credit reset to their original limits once paid off – making them one of the least costly and flexible financing options available to entrepreneurs.
Short term finance often has a cost, which is often passed along to businesses through higher interest rates. To minimize this impact, only use short term financing when you know you can afford it and are certain that you’ll have enough funds in the near future to pay it off.
Benefits
Short term finance loans for existing customers are an ideal solution to get the cash flow you need quickly. They’re typically easier to obtain than traditional business loans and provide quick access to funds.
Loans tend to be cheaper than other business financing options due to their shorter repayment terms and more accommodating eligibility criteria. Unfortunately, they may come with higher interest rates which add up quickly and make repayment more challenging.
They can be beneficial for businesses that require quick funding to support growth, boost ROI, or purchase inventory or equipment. Unfortunately, these loans aren’t suitable for long-term projects.
To decide if short-term financing is suitable for your business, take into account the specific needs of your enterprise. From there, you can identify which loan type best suits you. Fortunately, there are various forms of short-term funding available to businesses so there should be a solution that meets all requirements.
Costs
Short-term business loans tend to be more costly than long-term financing due to their higher interest rates and fees, as well as frequent repayment schedules that require larger payments.
Furthermore, debt traps can arise if you fail to make your payments on time. This makes it more challenging to repay what you’ve borrowed, potentially leading to additional fees and interest when refinancing or extending the original loan.
Fortunately, there are options that can provide short-term finance quickly and affordably. These financing solutions typically feature relaxed eligibility requirements, an easy application process, and speedy funding times. They may be the ideal solution for your business if you don’t qualify for traditional bank financing, have a low credit score, or are just starting out in it. It is important to be aware of the associated costs before selecting one for your needs.
Alternatives
Banks and credit unions typically do not lend to businesses outside their usual clientele, even if you possess great qualifications. In such cases, alternative lenders may provide better or similar services at more competitive rates with less stringent eligibility standards. Plus, these companies often have innovative products and services designed specifically to help your business expand.
If you’re still searching for the ideal way to finance your company’s next major project or expansion, there are plenty of other solutions available. When researching which option is best suited to you, do your due diligence and find a company that understands your business and offers something tailored to meet specific requirements. Viva Capital’s team would be more than happy to assist in finding which solution is ideal for both of us.
