Monday, August 13, 2018

Short Term Loans to Expand Your Scope During Financial Crisis



A short-term business loan is a right choice for a businessperson who wants needs some funds for their business. With too many loan options available on today’s market, you may feel hard to know the right type of short term loans for your business. 

Therefore, you need to know the different terms and conditions of the most popular f short-term business loans to make the process a bit easier. Short term loans are the secured loans and you need to mortgage some of your assets to avail such loans. 

Apart from that, these loans come with short tenure and you need to replay the amount within the deadline provided by the lender. 

Types of short term loans:

We all generally know more information about the short-term business loans. The short-term loan options will further categorize into four main types. Let’s take a quick glance at how your business benefits from these funding options.

1. Merchant cash advances: 


It is not a loan but an advance. The merchant cash advances are the most widespread and accessible type of short term loans. If you have credit cards, then you can avail such short term loans on your card. You just need to pay the EMIs to your credit card account and you will be offered some top-ups after certain period of repayment by the lenders. 

Merits:
  • Flexible to change service providers 
  • Comes with a higher fee compared to traditional loans 

Everyday deductions of your credit card receipts would seriously reduce cash flow, but you can also choose some monthly repayment system and convert your loan into personal loan in future. 

2. Lines of Credit:


This is like credit card loan and you would get a credit limit up to which you can spend as per your requirements and then repay the money you spent gradually. This type of funding often deals in cash without rewards such as travel miles or cash back. Moreover, the accessible APR is also lower in contrast to a business credit card.


Merits:

  • feasibility of tapping the capital at any time 
  • Just pay interest on the money you spent 
  • Available for lower personal credits 

Build your credits and you will get the flexibility for your repayment.



3. Invoice Financing:


This form of short-term loan aims to offer a solution to a financial conundrum. With the help of invoice financing, the lenders would advance you a high percentage of your outstanding invoice. The interest rate is relatively very low. These short term loans are the most reasonable and easiest option, as you do not need to submit any collateral rather than your outstanding invoice.

Merits:

  • No need to put any assets as your invoice will be the collateral 
  • The credit of invoice business decides the loan rates and approval 
  • Immediate access to your invoice value 

4. Short-term business loans:


As the name suggests, short term loans are the most simple and straightforward loan option available for you. As like the condensed version of traditional loans, your business receives a huge amount of cash that you would pay off along with the interest based on a predetermined payment schedule. But in that case, you need to mortgage some of your assets to avail such loans. Or else, you can also apply for some short term business loan as project loans.


Merits:

  • Fixed payment structure 
  • Instant funding 
  • No or less paperwork required 
  • Available for lower personal credit scores 
  • a variety of business expenditure 

Low cost of capital is the most notable perk of short-term funding. Usually, short-term funding accumulates interest for a limited period while paying off. Hurry up to choose one among the four styles of short term loans that exactly suit your business needs.

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