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Short-Term Business Loan

Michelle Adams

There are a multitude of reasons that your business may need a short-term loan. Businesses that are currently starting up or experiencing a slow season may need extra-cash flow to help them meet their payment commitments. Having working capital on-hand is crucial to almost any business’s survival — short-term loans are meant to help companies meet their short-term financial needs, such as relieving cash flow shortages, paying unexpected bills, and taking advantage of unforeseen opportunities. Instead of withdrawing from your current reserves, consider getting a business loan that allows you the flexibility of keeping your accounts payable solidified.

Getting the right loan amount

Many small business owners are hesitant to apply for a short term business loan because they are unsure of how they will be able to make the payments on it. A small business loan that is too large and more than what the business owner actually needs can end up being a huge financial burden. In this way, it is essential to take the time to assess your business’s financial needs and decide on a loan amount that makes financial sense for the needs of your enterprise.

What is the likelihood of receiving a short term loan?

Over $50 million in loans was lent to small and medium-sized businesses in 2013 alone. The Small Business Administration makes it simple for alternative lenders and banks nationwide to provide funding to small businesses. Lenders are ready and willing to assist businesses of all types with getting the funding they need. They do this by offering flexible terms and smaller loan amounts than were previously available in years past. For this reason, it is very likely that your small business will be able to obtain a small business loan. The only way to know for sure is to take the first step by filling out an online application with Business Line of Credit Hub.

How Long Does The Short Term Loan Approval Process Take?

If you are wondering how long the approval process takes, the good news is that with online applications, applicants can find out the results within minutes. This takes a lot of the pressure away that is typically associated with applying for a loan. In the past, banks were the primary funding source for small businesses and required lots of paperwork, revenue proof, balance sheets, profit and loss statements, and many more types of related paperwork. Gathering and sending all of these documents sometimes required liaising with other business professionals such as accountants and lawyers. These days with the advent of online funding, the process is much less lengthy and involved and is much more likely to result in a smooth and seamless approval.

Short-Term Business Loan

Should My Business Get a Short-Term Loan?

There are many reasons your business should get a short-term loan. If you have just started your company you may want to consider getting a short-term loan to help set up your business. In addition, if you’re trying to grow your business over a determined period of time, a short-term loan may be a great way to help spur growth. Either way, you should have a strong business plan in place that indicates how much revenue you can expect in return for your investment. You want to make sure that you will be able to pay off your loan and its interest quickly. Some of the ways borrowers use short-term loans to benefit their enterprises are as follows:

Emergencies: If you have a crucial piece of equipment or technology that breaks, getting a short-term loan can help you make repairs so you don’t miss out on much-needed revenue.
Short-Term Costs: Perhaps Christmas is coming around and your storefront needs to hire additional staff to help deal with the increase in demand, a short-term loan can be a great way to help pay seasonal expenses.
Gaps In Cash Flow: If you have gaps in your cash flow you can get a short-term loan to help cover costs.

These are a handful of different ways that a short-term loan can help fund your business. Have a think about the ways that additional working capital could help your operations and you’re sure to realize how helpful financing can be within your enterprise.

The Top Reasons to Get a Short Term Business Loan

Managing the day to day operational costs of your business can quickly become overwhelming. From paying upfront costs like utilities and payrolls to managing inventory and ordering supplies, there is a lot of money that needs to go into keeping your business afloat. For this reason, many businesses turn to a small business loan to help them navigate their expenses. From the initial stages of your business, until your company reaches a point of maturity, it is critical to have a resource amount in place to help with everything from the basics to emergencies. Although many business owners balk at the idea of taking on debt, it can actually be the best business decision you will make. This is especially true when changes in your business result in a high return on investment and increased profit and growth.

Maintaining adequate inventory

One of the primary reasons that business owners seek out a small business loan is to maintain adequate amounts of inventory. Inventory is one of the largest and most challenging expenses to manage as the demand and supply are always changing. One of the hurdles to managing inventory is that it is necessary to invest in the products prior to customers actually purchasing them. In addition, on most occasions, you will need to make large, bulk purchases so that you can find a way to take advantage of wholesale pricing and discounts to make your purchases more effective. These larger purchases require a significant amount of capital. Once the business is fully operational, it will need to keep up with the demand. By taking out a short-term business loan for inventory, you can be well prepared to manage seasonal fluctuations and to supply the items and products your customers will buy.

Purchasing equipment

Purchasing equipment and even software and hardware is essential to the operation and functionality of many different businesses. Whether a business needs machinery or office equipment, having the funds to make the required purchases is essential. This is one of the primary reasons that small business owners take out loans to assist with the costs. Additional costs related to equipment include maintenance and repair costs which are sometimes unforeseen. Being prepared for emergencies in the maintenance and repair of company equipment is another important reason to consider taking out a small business loan.

Spurring business expansion

Every business seeks to expand and this depends heavily on a variety of different factors. Some factors are within a business owner’s control and others can’t be predicted such as the popularity of a certain product. To ensure continued business growth even in the face of temporary slows in product demand, a business owner must think ahead. One of the ways to be prepared and to spur continued growth is by taking out a small business loan. The loan can be used for marketing, advertising, new property acquisition, hiring new employees, building renovations, and many more expansion expenses.

Short-Term Business Loan

Small Business Line of Credit Loans

In addition to obtaining a small business loan that is a term loan, small business owners in need of funding can also take out a line of credit. A business line of credit is a very useful source of funding that every small business owner should consider. It helps with safeguarding against stalled cash flow as well as protecting a business against unforeseen emergencies. A business line of credit short term loan can be used for the purpose of buying inventory, paying for operating costs and working capital, and managing the daily operational costs of a business. They are not usually intended for large purchases such as buying real estate or equipment.

A business line of credit loan can best be understood as a short-term revolving loan. The credit line is available and does not incur any interest until it is actually used. Once it has been used, it can then be paid back in full and a new amount can be extended as needed. One of the benefits of taking out a business line of credit is that it usually carries the lowest interest rates compared to any other type of small business loan. This is due to the fact that a business line of credit is usually viewed as being very low risk.

The terms on a business line of credit vary depending on the lender but in general, the business line of credit usually requires interest payments to be made monthly and the principal can be paid off at the business owners convenience. However, it is a good idea to pay for the principal as often as possible. The majority of business line of credit loans are written for a period of a year or two years. Following this time period, they are then renewed usually automatically and then for the same annual fee as specified in the original loan terms. Most lenders issuing a line of credit business loan will want the credit line to be paid in full for between seven to thirty days of each contract year.

Should your business get a business line of credit?

A business line of credit is often a great option for small businesses that are looking for a stead emergency fund. If your business is looking for funds to purchase real estate, large equipment, or company vehicles, then a business line of credit probably isn't the best option for you. By comparing your business short and long-term financial goals, you can decide whether or not to obtain this type of funding or to explore alternative types of short term business loans.

Alternative Loan Types

In addition to a business line of credit, there are alternative loan types you can investigate if your needs stretch beyond short-term cash and emergency funding. Some of the options beyond a business line of credit include installment loans, balloon loans, interim loans, secured, and unsecured loans. By taking the time to research each loan option, small business owners can decide whether or not a term loan, business line of credit, interim loan, or secured loan can best meet their needs.

What’s the Process?

The process of obtaining a loan through traditional lenders can be both tedious and lengthy. Many traditional lenders will require extensive documents to prove certain aspects of your business’s functionality and profit ratios. This can be extremely hard for a young business to produce as you may not have enough financial information on your business.

We don’t require the same types of documentation, we make our decisions based off of basic financial information instead. With a line of credit, you can draw from the available capital as much as you want, as long as you don’t exceed the predetermined limit. In addition, you don’t have to pay interest or fees on the money that you don’t access. Unlike a credit card, a line of credit gives you access to cash which makes it one of the most flexible financing options on the market. So what are you waiting for? Apply through our online portal today!