These short term loans are unsecured, so you won’t have to put your property at risk as collateral, but you may need to sign a personal guarantee. This means that failure to pay back as agreed leads to the company director being held liable for repaying the outstanding debt. Sometimes, personal guarantees are viewed as risky. So, you have to be confident that your business will repay what is owed on time before proceeding.
What Are the Advantages of Short Term Business Loans?
When it comes to funding, any single option has its risks. But each has advantages too. Here are the advantages of short term loans for businesses:
Easy to qualify for
Even if a business is just starting out or has weak credit ratings, it can qualify for a short term business loan. That’s because these loans have high rates of approval when compared to other funding options.
Easy to apply
You won’t have to present a load of your business documents. Short term loans take less time to apply for. You may even complete the application process online and contact the lender if you have questions.
Likely to be approved
Your application for short term loans is likely to be approved. The reason why is that the loans are offered for a short period. Therefore, there are higher chances that the lender will grant it to you. This is unlike the case in long term loans where the lender sees them as riskier.
Quick to access
You’ll get your loan approved faster because the lender has less paperwork to work with. It shouldn’t be more than 24 hours or so. This also means that the borrowed funds will show up in your account sooner!
Funding for various business purposes
You get to choose what you want to do with the loan for your business!
Should You Take a Short Term Business Loan?
As already mentioned, short term business loans might require the signing of a personal guarantee. Besides that, these loans may come with high interest rates because of the leniency during application. They also require frequent payments. It can be weekly and even daily in some cases. So, your business needs consistency in income to take care of the repayment. But because of trade credit, you can get a chance to pay at a later date and not too frequently. In short, you can take a short term loan for business if you need funds quickly, but we recommend that your business’s cash flow is good and that you have a solid repayment plan to avoid any surprises.
