Small businesses do need access to cash. Without liquid capital, a small business would have an extremely difficult time properly running day-to-day operations. Cash flow and other revenue streams can and do assist greatly with liquidity. Unfortunately, cash flow and revenue pipelines may have their limits. When the proverbial well runs dry, a small business might find itself in a bit of trouble.
An option does exist to get out of a cash crunch scenario. Short-term business loans provide a solution. The better the short-term loan offer is, the better the solution will be.
Short-term business loans are usually procured for the purpose of dealing with an emergency. When a business comes up with unexpected expenses, a short-term loan definitely can assist. A commercial gym, for example, might have to weight until monthly membership fees are charged and deposited by the billing service. If that date arrives on the 23rd and a major plumbing mishap occurs on the 10th, well, a loan would be a solid assist.
The amount of time to repay the loan will vary depending upon different factors. A short-term loan could require repayment in as quick as a few months or as long as three years. Three years is still a relatively short amount of time to repay a loan when comparing the term to other lending options.
Concerns Over Short-Term Loans
Business owners do need to be mindful that short-term loans almost universally come with higher interest payments than long-term ones. Costly interest can — and will — impact the bottom line of a business. In particular, a business with a thin profit margin is could be driven into the red due to interest payments. Thankfully, short-term loans may be paid off ahead of schedule without penalty provided the terms allow for this approach. If so, then less interest ends up being paid.
Small business owners should look into other options for financing if the short-term loan may prove to be too costly. A line of credit drawn from a checking account or even a simple credit card could do the job. Unfortunately, not every business has access to a line or credit. Current credit cards might be maxed out. For those dealing with such issues, a pivot to a special short-term business line of credit financier would be a better strategy.
Three Major Lenders
Kabbage, BlueVine, and Lending Club are three top names in the industry. All three can issue lines of credit for as low as a few thousand dollars and as high as $100,000. The criteria for being approved for a line of credit vary with each company. Bad credit borrowers may be fine with one company, but not approved at another. The speed in which funds are issued will vary as well. Potential borrowers should look over all three lenders to determine the most feasible option.
Interest rates can be very high with all three lenders. As such, borrowing with a clear necessity or viable means of paying the loan back would be ill-advised.