Short Term Business Loans

With a short term business loan, which in a lot of cases will be paid back in under a year, the overall cost of borrowing will be less although the monthly repayments could be slightly higher as you pay back the capital or principal sum in bigger amounts.

Business owners should consider several things before deciding on a funding product, a few of which are listed below.

1. Can my cash flow sustain the borrowing?
2. How long do I want to take to pay the loan back?
3. Will the borrowing help me grow my business?
4. Is my business seasonal?
5. Do I have poor credit?
6. Do I have the time to engage in a lengthy application process?
7. How quickly do I need the short rm business loan?

This type of finance can positively impact the long term performance of the business, as business owners are not locked into long term loans with fixed repayment amounts and APRs, whilst at the same time the application process is smooth simple enabling them to focus on running the business.

More flexible solutions to short term business loans are available, these offer the borrower the opportunity to still pay back the borrowed amount over a shorter period but with products like a merchant cash advance the repayments mirror the cash flow of the business. Unlike a typical short term business loan that would have fixed monthly repayment terms a merchant cash advance is repaid as a percentage of the debit and credit card sales of a business. This could take the business as little as six months but would reflect the robustness of the business’s performance. When sales are good, more is repaid than when sales are poor.

Business owners need to be aware that with short term business loans or the alternative business cash advance lenders will consider affordability and the ability to pay back the principal sum over a shorter period. This is one of the primary criteria considerations and as such the business cash advance with a more considered and flexible approach to repayments, where the debit and credit card sales transactions determine the repayment amount is often the preferred solution.

The very nature of a short term business loan often reflects the fact that the funding requirement has come as a surprise and is unplanned. In such cases an uncomplicated application process with a swift funding turn around is often the preferred solution for the business owner.

High street banks will often require, a detailed business plan, security and will in most cases conduct robust credit checking. The application process can drag on for some time and during this period the business owner may struggle to maintain and focus on the key elements of running a successful business.