In today’s business financing world, many business owners are turning to non-traditional, short term lenders to fund their business needs. Just like with traditional bank loans, there are a variety of lenders and types of loans available to help cover those business expenses. Here are just some of the benefits of short-term financing.
Traditional, long-term business loans are usually financed through banks, but taking out a short-term loan opens up your options to many other types of lenders. For a short term loan, you can seek funding from crowdsourcing or peer-to-peer lenders in addition to regular financial institutions.
Traditional bank loan applications are often lengthy and require extensive documentation. Short-term loans, on the other hand, can be much easier to apply for. Many short-term loan applications can be filled out and submitted digitally, with much quicker processing time. Loans can be approved in days or even hours instead of the weeks or months often seen with bank loans.
Less Strict Requirements
Short term lenders often have fewer and more lenient requirements than traditional banks. Sometimes with as little as proof of ownership and a bank statement you can be approved for a business loan. Many short-term lenders don’t require collateral to be approved for a loan either. They also tend to be more forgiving of lower credit scores than banks, meaning new businesses with no established credit may find it easier to be approved for short-term business financing.
Less Time in Debt
The length of time for repayment with traditional loans usually starts at three years. Short-term loans are generally repaid in 12 months or less. Fewer months in repayment means less interest paid over the life of the loan. Making these payments on time and paying off the loan can help to improve your business credit score quickly.
Finally, short term loans are the best way to get cash for your business fast. Sometimes cash is needed to cover immediate expense such as payroll or inventory, and the length of time from application to money in hand can be as short as just a few hours with some short-term lenders. Fast processing is one of the number one reasons small business owners turn to short-term loans.
There are many options when it comes to business financing, and short-term loans are one of them. With easy applications, less strict requirements, less time in debt and fast funding, the benefits of a short-term loan make them worth considering.