Starting any new business calls for investment. Investment support is required by a business to get the place of operation, hire people, equipment’s and bear overhead fixed expenditures for few months.
So, in simple words, you require funds. However, not everyone is prosperous by birth. They may still have the dreams and expertise to start and run a profitable business. In such cases opting for a short term business loans can help immensely.
Short term business loans are business capital loans provided by banks and money lenders that are required to be paid back by the borrowers within a specific time span of getting that loan. One of the best parts about getting short term business loans is that they are processed with speed with very few official procedures in between.
Thus, they can be a good option to budding entrepreneurs. You can apply for such loans online and expect the application process to be fast and simple. You just have to however follow the procedure and applied most commonly by online lenders.
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General procedure of getting a short term business loan
Application - First of all, you have to submit your loan application stating the amount you are expecting. This application for short term business loans will contain all your personal information, occupational details and when you asked have to also specify the reason for applying for this loan.
You might have to submit your current or last six month’s income proof as well. In general, there is an eligibility criteria set by the banks which you must fulfill in order to get the loan successfully. However such criteria are varied for each lender banks.
The standard criteria for offering a short term business loan is location For instance, banks located in Australia may only be willing to give short term business loans to businesses set in Australia. It also depends on the annual turnover of the business. If the loan is for a startup, then the banks will require some guarantee of property or personnel in order to be sure about their return.
Documents - The loan applicant is required to attach necessary documents along with their applications like their driver’s license, proof of ownership of the business, bank statements, credit score etc. Short term business loans will be approved only if the necessary documents are received.
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Credit score of past- If you have a poor credit score in the past then, it is likely that the bank may ask you to keep a valuable item or property as collateral. So that they can have something for assurance in case you are not able to pay back the short term business loans you took.
Benefits of short term loans
Firstly, you can use the loan money to start a business. Existing companies can increase the product or service range of their business. The additional profits earned can be used to pay off the loans taken.
Secondly, you can organize promotional campaigns with the money which will raise the reputation of their business in the market. This will help you get better sales in the future and the returns can be satisfactory.
Drawbacks of short term business loans Since these loans are short term, the repayment period is comparatively shorter. The interest rates are also comparatively higher than the general long-term loans. Secondly, the loan amount is limited to denominations and therefore people wanting a larger loan amount cannot get short term business loans.
These days many businesses are increasingly choosing to get these loans in order to enhance their business. Every day there is a plethora of new online lenders offering loans as well.
You are recommended to make a thorough research, enquire about the location of the lender, read their terms and conditions and then decide which one suits your needs the best. If you have a single doubt regarding the loan company and their interests then you must directly communicate with them before applying for the short term business loan.