As a business owner, there may be a time where you will need cash urgently. The challenge is where you can obtain this short-term loan, and it matters greatly as the repayment terms and interest rates differ greatly among companies. Identifying where to get the loan is crucial as it can have a permanent effect on the business’s success. If you need cash more urgently than what standard loans can provide, consider these five options for short-term loans to remediate your business’s financial situation:
Online Loan Lenders
There are online corporations which can provide short-term loans to individuals or small companies that encounter unexpected financial challenges. Just as when you would apply for a bank loan, they will also ask for your personal and business information, as well as the reason for your loan application.
The advantage of these online loan brokers is that the approval turnaround time is faster than a bank loan. An excellent example of an online company that offers this kind of service is the Cash Stop, and there are many other companies out there that can meet your requirements.
Trade Credit
Trade credit is possibly one of the cheaper avenues where you can get money without interest. This is because when you purchase a service or a product from a particular company, they give you sufficient time for paying off the loan without any extra costs. The merchants will give you enough time to pay. Even better, all this accumulated money is retained by the company to sponsor other essential projects. The standard term for such an agreement is 30 days, but it does not hurt to ask for a bit more time, such as 45 days.
If you need more time to pay the loan, you can ask for extra time before the actual date. You will then have the opportunity to receive an extension to repay the loan while also earning the trust of the merchant.
Bank Overdraft
The majority of financial institutions offer overdrafts on a business functional or operating account. This means that your business can receive more from its cash account, which turns into a credit that you will need to pay off in a year’s time. A bank overdraft is a beneficial type of short-term loan that you can pay after 30 days.
Credit Cards
Many company owners leverage their credit cards for fulfilling a contract and then pay off the remainder of the loan before the last day without any interest. This is an efficient way of obtaining a short-term loan in less than 30 days.
Other company owners will use their credit cards to fund their companies since the money is quickly accessible. This route is quite expensive as the interest rates can be about 27 percent annually. Most financial institutions, on the contrary, provide preliminary transfer rates that carry a lower interest rate of three months to one year.
Family and Friends
Although this may have personal challenges, asking for short-term loans from family and friends can be informal and low-priced. In most cases, you will only incur an interest rate of just 5% or less, or even no rate, and your friends or family may be more understanding and flexible concerning the repayment conditions.
If you reach a point where you need to acquire a money loan, regardless of the kind of short-term loan you prefer, it is recommended that you conduct research and pick your choice wisely. This decision can have a permanent effect on the well-being of your home-based business.
