Many entrepreneurs have a relationship of love and hatred
with the financing of a business, so they often leave short-term loans short.
Interest and other accusations can cause an unpleasant taste in the mouth. You
may feel that the loan has not only complicated financially.
On the other hand, loans are often a necessity. Based on
industry research, interest rates on loans and approval for small businesses
have recently increased. This means that more people will have the capital to
pursue their entrepreneurial dreams. This is a good thing.
Unfortunately, despite a more favorable business environment
for loans, it may still be difficult to get permission for a long-term loan or
SBA loan. If so, do not be disappointed. You can find other types of funding.
Read on to find out the three options for short-term loans
as well as the benefits and requirements for each.
1. Short-term loans from an online lender
Digital age allowed to apply and obtain a short-term loan from
an online lender in one day. Operating in the same way as a traditional loan,
payments are usually made on a daily or weekly basis, with short-term loans as
well as interest.
Requirements for approval, as a rule:
- At least one year in business.
- decent credit rating.
- Annual revenue of at least $ 50,000.
As a rule, you can get from 2500 to 250,000 US dollars by
short-term loans for a period of three to 18 months. Interest rates usually
start at 10%.
The speed with which funds are received is a major asset
because short-term loans can help you immediately avoid cash flow problems.
There is limited documentation (always a blessing). In addition, funds can be
used at your discretion, from wages to the purchase of seasonal goods.
2. The business credit line
Cash flow problems remain one of the biggest problems faced
by small business owners. And about 84% say they can not get all the funding
they need.
If there was a way to access money at all times? This will
surely solve some money problems, especially daily needs.
This is exactly how a business credit line can benefit you.
This can make sure you always have money to pay for utilities, suppliers and employees.
This money can even be used for marketing campaigns to expand your business,
pay for other debt, improve your office or store - and more.
The good news is that obtaining a loan for a business line
can be much easier than traditional loans. Qualifications usually include the
following:
- At least six months in business.
- $ 50,000 + revenue annually.
Your credit limit is likely to be between $ 10,000 and $ 1
million. USA, depending on your needs and the financial situation of your
company. Interest rates typically range from 7 to 25%, which means you can get
comparable rates even for long-term loans.
Another useful thing for a business credit line is that it
gives you access to working capital, which means that the credit limit returns
to the initial amount after reimbursement.
For example, if you use a $ 100,000 credit limit, the
available credit will be $ 80,000. If you return to these $ 20,000 next month,
the available credit will return to $ 100,000.
In addition, you pay interest only for withdrawals. This is
good because you can use funds as needed. So, if your credit line has a US $
50,000 limit and you will charge a $ 10,000 fee, interest is calculated only on
those $ 10,000.
3. Financing equipment
Most businesses need some kind of equipment, whether they
are computers or mobile phones for cars and vehicles. If you have a restaurant,
think about how kitchen equipment is necessary for the success of your
business.
Here is the image of equipment financing.
Equipment financing is the money you have been able to buy
equipment directly. This can be a key form of financing for your business. The
good news is that equipment loans are quite affordable.
There is no need to pay a deposit because the equipment
itself offers a loan. Other typical requirements may include:
- At least 11 months in business.
- decent credit rating.
- About $ 100,000 in annual revenue.
The amount of the loan may be up to 100% of the cost of the
equipment, and interest rates typically range from 8 to 30%. The term loan is
the expected life of the equipment (which can make it a "long term"
loan, depending on the equipment).
Responsible management of loans and short-term promotion
Obviously, there are many advantages to getting short-term
loans. In fact, this may be exactly what your business needs to move forward.
In order to avoid deficiencies - such as the possibility of
falling into a debt trap or in reasonable terms of appreciation - it is
important to understand how short-term loans can help and how to choose, use
them and return. Always count numbers, compare options, and use the loan that
has the most financial value for your current business situation and future
goals. Also, review your payment schedule to make sure you can handle it.
In addition to the benefits of money injection in your
business offers, short-term loans can also be a bridge to more profitable loans
such as the SBA Loan Coveted. By returning your credit in time, your credit
assessment should be improved and you can move on to better credit products.
This means that you can get a long-term loan that will give your business a
steady growth for many years.
