Running a business is tough, and unexpected expenses often come at the most inopportune moments. Vehicle repair when there’s no petty cash in the account, an early invoice when your customers haven’t paid theirs. We’ve all been there and while there are plenty of ways to make a little extra cash on the side (renting out your extra office space for example) none of these offer that quick injection of cash that you so desperately need.
And that’s where short-term loans come into the equation. They provide a quick solution your business may need without upsetting your suppliers or customers.
What is a short-term loan?
A short-term loan is when a financier lends you a sum of money which you agree to repay over a short period of time. The repayment term could be anything from a week to a few months. They are an ideal option for financing short-term capital needs.
What’s so great about them?
As we mentioned earlier, the short-term loan offers a quick solution to unexpected expenses giving you access to funds before your customers pay their invoices. Better yet, quite often these types of loans are approved instantly. This is because lenders such as Spotter Loans will ignore your financial history or credit score.
As you can imagine, this is a great help for business owners. This is especially true for those who may have overextended themselves on previous occasions. Who hasn’t had a forgotten bill go unpaid or found themselves overdrawn on their business account?
Are they better than an overdraft?
An overdraft can be an expensive add-on to your bank account especially given that once it’s available, we tend to make full use of it. The tendency then is to not pay it off as soon as we should or could. The short-term loan, on the other hand, places the onus on you to pay off your debt as soon as possible. And strange as it may seem, this added pressure to pay can push you to make better financial decisions in the future.
So what’s the catch?
In all honesty, there is no real catch to the short-term loan. Of course, as with all financial products, there are penalties involved should you miss your payment. But as we said, this can work in your favour, encouraging you to pay your debt on time.
When taking out a short-term loan, be careful to pay close attention to the terms and conditions of the package. Most penalties are reasonable enough but if you feel that they are too high or make unfair requests, move along to the next lender. You should be 100% comfortable with the terms, or there’s simply no point in moving forward with the loan.
So if you find yourself in a spot of hot water and have no cash funds on hand to deal with the issue, consider a short-term loan. But take care only to borrow what you can realistically afford to repay. And above all else, read that small print. While you shouldn’t incur any penalties, it’s common sense to know what could happen if you fail to make a payment.
