This world of business is very unsteady and you cannot always know about the market and its temperament. There are the times, when your business faces emergency financial situations and in these emergency situations, you need short term business loans. These loans are the best tools to take care of the short term monetary problems in your business by providing you instant cash for your business.
Step By Step Guide on Short Term Business Loans
The aim of the short term business loans is to deal with the problems that do not extend more than a few days. These loans help you overcome the monetary crisis till your next payday, in case of any threat that you face in your regular budget. The process of filing for the short term loans is very simple as you just need to fill a simple form, if you are above 18 years of age.
The best thing about these loans is that no credit checks will be carried out. But you may have to fulfill a few requirements such as you:
- Have an active checking account. This account needs to be opened for 90 days at the minimum.
- Must have a regular income.
- Must have either a regular employment or you receive regular cheques on monthly basis, such as social security or pension.
You get these loans for short duration, such as for 14-18 days. Therefore, you must choose a payment date that you are sure to have deposits in the bank. Though you can ask for an extension, but the interest rates will be very high.
Benefits of Short Term Business Loans
There are 4 major benefits of short-term business loans one should keep in mind while comparing it to the rest of the types of loans:
- It helps you prepare for emergency expenses: Businesses sometimes need a huge amount of cash to keep up with the monthly bills and sometimes there is a need of a huge investment to get even bigger returns. For this, cash flow is necessary and that is how a short term business loan helps.
- It helps you to keep the ownership of your company unlike equity investors who demand parts of the ownership of the company shares by helping you out with the needed capital.
- You do not need a collateral for getting the loan approved. Most of the business loans are unsecured. So you don’t have to worry about that.
- These loans get approved quickly. As businesses need quick money, a loan would be useless if you don’t get the access to the amount at the right time or it would be a real big problem if you have to wait around for weeks only to find out your request has been denied. This is where a short term business loan comes in. You get your needed money within a week of applying.
It is an emergency method of dealing with financial shortcomings in your business and you must not complete l\y depend on this. It is better to repay it as soon as possible because the interest rate is very high. Also, avoid taking any other loans until unless you have paid back the first loan. The laws associated with short term loans are very stringent. It is advisable to check the laws of your area before committing to loans of this sort. But most of the lenders are lenient with late payments and can be adjustable.
Problems with Borrowers
The problem is that the borrowers of this type of loan are the young people who have never ever had any experience with loans and may fall into the trap set by a shrewd creditor. So, it is advisable to weigh your pros and cons before actually asking for short term loans for your business because the interest rates are very high and you may find it hard to pay back even small amount. When you cannot pay a debt, it may turn out to be a trap for the borrower. Therefore, before looking at the short term loans, you must look at other choices that are available for you.
It is better to go for this kind of loan, only when you have no other alternatives left for you, such as asking
- Your employer in advance
- A credit union for a small loan
- Checking overdraft protection in the form of emergency loan for short-term.
Having easy access to cash gives you a secure position in any situation at any time. But many times, this is not feasible. You must understand that the situations are not always the same and can change at any point of time and can cause a lot of burden on your funds. This also has to be kept in mind that small debt problems can easily translate to long term problems. Therefore short term loans should be used for your benefit without falling prey to debt cycle.
Related: 5 Quick Short-Term Financial Solutions For Borrowers
Justin Jersey is a journalist, stylist and blogger. He is a aesthetician by heart who often writes about Home, Art, Fashion, decorating and DIY ideas. He loves sparking creativity and giving them ideas for their own spaces.