What Is A Short Term Business Loan?
A short-term business loan is a type of loan that is used to finance a business immediately, such as for working capital or other financial assistance.
Short term business loans are typically intended to be repaid in a short period of time. Short term business loans typically have monthly or quarterly payments with terms ranging from 24 to 36 months.
Types
Business Lines Of Credit
A business line of credit is typically a revolving, flexible form of business credit that charges interest only on the amount you lend. As the name suggests, a line of credit works like a credit card, allowing you to make payments as needed.
Small-Term Business Loans
Unlike a simple line of credit, which provides you with access to the funds you need, small-term business loans work like a traditional installment loan. With this type of financing scenario, you will receive a lump sum of the loan amount and you will be responsible for that amount until it is paid in full.
Invoice Factoring
At its core, invoice factoring is the process of selling your unpaid receivables to a factoring company in exchange for an advance payment. Traditionally, you submit an approved amount to the factoring company and receive an advance of 70% to 90% of the amount owed.
How to Get a Short-Term Business Loan
- Determine Your Loan Payment
Before you apply for a short-term loan, tell yourself why you need it. Once you have a good idea of what you need, you can decide if a short-term loan is the best option for you. Short-term business loans typically require repayment over 24 months or less, with the option to make daily payments.
- Decide how much you can afford to borrow
Short-term business loans come with a variety of repayment terms, with you having to borrow weekly or monthly. It’s important to determine how your business’s cash flow can determine how your business is going to move forward.
- Assessing Your Eligibility
Once you’ve decided what you can afford, you should also consider what you can qualify for and how much business loan you can borrow. Typically, lenders will look at how long you’ve been in business (six months to a year, if not more) and the loan amount. Lenders will also look at the business owner’s personal credit score and credit score when determining eligibility, which can affect the rates you’re offered.
- Contact Lenders
It’s always a good idea to work with lenders to help you find the best rates and lowest fees for your small business short-term loans. Lenders are easy to find and can be done by simply reading reviews on LendingTree, visiting the lender’s website, and asking your network or industry peers.
- Submit an Application
Once you’ve found a lender you want to work with, you’ll need to apply for a business loan. Applications are usually online, and lenders may ask for specific documents, such as a business plan that describes your product or service, along with your personal and business tax returns and a balance sheet that lists all assets. This will show you the application process in action.
Is A Short Term Loan Good For You?
We’ve asked the question, should short-term loans just be something that people need to satisfy illegally? But unless you expect to trade cash, paying off a short-term loan is likely to put you in a sticky situation.
Generally, a short-term loan makes sense for your business in the long term if:
It’s Your Off-Season:
If your cash flow fluctuates throughout the year, a short-term loan can give you the money you need to survive the off-season when your business is waiting to get going.
You’re Time-Sensitive:
If you need money to take advantage of a limited-time opportunity to close your business, you may not be able to afford to wait for traditional financing.
You Don’t Qualify For Other Loans:
Short-term loans are often made by online lenders, who can provide loans. If your business doesn’t qualify for financing with a traditional lender, a short-term loan can be an alternative option.
Alternatives To Short-Term Business Loans
If you’re not sure if a short-term business loan is right for you, other financial strengths include:
Line of Credit: A personal or business line of credit gives you access to a revolving credit line from which you can borrow up to a certain amount based on your needs.
Personal Loan: Another way to finance your business is to use a personal loan, but you may have a higher interest rate and a smaller loan amount than you would with a traditional business loan.
401(k) Loan: Some 401(k) plans require you to put money down as a loan to allow for various demands. There is no penalty for borrowing from your 01(k), however, for you to take out money for retirement.
Crowdfunding: Another short-term business loan alternative Crowdfunding plans can help you raise money for your business by creating a crowdfunding program on a crowdfunding platform like Kickstarter or Indigo.
How We Chose The Best Short-Term Business Loans
• Minimum time in business: We offer loans to both startups and more established businesses, with options ranging from a minimum of one month to two years in business.
• Low credit score: Our minimum credit score for lenders on the list is 60 or lower.
• Interest rates and fees: We prefer lenders that offer competitive interest rates and low fees, with minimal principal and pre-payment penalties.
• Loan amount: Our lenders offer loans to suit a variety of businesses – both large and small. Loan amounts range from $2,000 to $1,500,000.
• Repayment terms: Flexible payment terms, with most lenders offering a minimum of three months’ payment terms.
FAQS
Can you get a short-term business loan?
Short-term business loans are designed to provide working capital to small business owners who need a one-time lump sum of money . Once approved, a lender will send the loan amount to the business’s bank account. From there, the funds can be used as cash for any business need.
Can an LLC get a small business loan?
Yes, you can get a business loan with an LLC. Business lenders provide loans to a variety of business types, including LLCs, sole proprietors and corporations.
How much is the monthly payment for a $100k business loan?
Small Business Term Loans
On average, you can expect a $100,000 loan amount to include loan payments of $8,833.33 per month for 12 months or as low as $883.35 monthly payment for a 10-year business loan at 6% interest. Exact terms will vary based on your credit score, interest rate, lender, and other factors.
Which loan is easy to borrow?
Eazzy Loan is an easy loan to get, No guarantors, No forms, no branch visits. You receive the loan instantly on your phone, saving you valuable time. It offers a flexible repayment period of up to 24 months.
How to get 10k immediately?
Many banks and non-banking financial companies (NBFCs) now offer instant loans of 10,000 rupees or more on your Aadhaar card . You don’t need any other documents, collateral, or guarantor to get this loan. You just need to have a valid Aadhaar card, a PAN card, and a bank account.