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Short Term Business Loan

If you’re dealing with a sudden cash flow gap, you may want to address the issue with short-term business funding

Short Term Business Funding

When you’re making a long-term investment, you use traditional-term business funding. For unexpected, short-term expenses, short-term funding can be a better option. Short-term business financing works best with businesses that have a solid financial history but need to manage a sudden cash flow gap.

Short-Term Funding at a Glance

Your lender will set the repayment terms and principal value of your funding. This will be based partially on your request, as well as other variables. Here are the main points:

  • Your funding amount can vary. That makes short-term business funding a solid option for companies that need a smaller dollar amount, since many other small business funding types don’t go as low.
  • The term will vary by lender and situation. The term could be as short as three months or as long as five years, although short-term funding options tend to be on the shorter side.
  • The fees can fluctuate a lot based on the lender and your financial situation. We’ve seen low fees, but they can be high depending on your risk factor.

Short-term business funding is primarily for businesses with at least a two-year financial history. As long as you’ve been around at least that long – and have a solid financial history – there’s a good chance that you will qualify for this type of funding. It should be noted that short-term funding is not the same as startup funding. If you need working capital for your new business, you should apply for startup funding instead, which does not require you to have a financial history. But, your provider will expect you to have an impressive business model.

Main Advantages

If you are approved for short-term business funding, you could get your money in two days to four weeks. This type of business financing can be funded faster than other type because the reason for acquiring short-term funding is usually more urgent than with other types of funding.

Traditional-term funding requires a lot of paperwork. That’s usually not the case with short-term funding.

Disadvantages

Depending on your credit score and your company’s financial history, you might end up with high fees when you apply for short-term funding. A good way to estimate how high your rates will be is to add up the number of alternative options you have. If that number is low, then you will likely pay higher fees.

Besides higher fees, a lender might also require you to provide collateral. In many cases, the collateral would be your automobile. If the funding amount is worth more than your car, then the collateral will probably need to be something else.

Short-Term Business Funding Wrap-Up

Short-term business funding is not just for financial emergencies. If you don’t want to pass on a great business deal but you lack the funds to make it happen, a short-term funding option can be a viable solution. Short-term business funding can work for any company that’s willing to pay higher fees in order to get relatively fast access to working capital.

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