Fast, short-term business loans are indeed a lifesaver. They provide your business with immediate funds to — bridge the gaps in your cash-flow, handle emergency expenses, utilise a business opportunity or for other emergency requirements.
You can consider them as business loans, with a short-turnover period. You borrow what you need and pay it back quicker, compared to traditional term loans. Short-term business loans help you meet your emergency cash expenses, without strapping you down in debt. You pay them in a shorter time-frame; thereby you can get back to concentrating on your business, without worrying about managing your debts.
Types Of Quick, Short-Term Business Loans
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As a business owner, you should be aware of the four main types of short-term business loans. This helps you choose the right one based on your specific requirements.
Merchant Cash Advances
Technically, merchant cash advances aren’t a loan, but an advance. Here, you sell a portion of your business’ future card swipe sales to the lender, to receive a lump sum to meet immediate fund requirements.
The loan amount is repaid from your card machine swipes. The lender receives a percentage of your debit/credit card revenues. This happens until you have repaid the loan amount in full.
Also Read: Merchant Capital – A Shot In The Arm To Small Businesses That Require Working Capital
Who is it for?
● Works well for businesses that carry out the majority of customer transactions via credit/debit card swipes.
Line of Credit
This short-term business loan works similar to a business credit card. You receive a regular credit limit, which you can use for meeting your immediate expenses. You repay the loan amount gradually over a period.
Unlike a business credit card, a line of credit doesn’t charge hefty fees for cash advances. Additionally, the approval process for a line of credit is easier and more relaxed compared to the stringent requirements of a line of credit. Also, you only have to pay interest on the funds that you use and not for your entire available credit.
Who is it for?
● Works well for businesses owners who have poor credit ratings and are looking to build their credit score.
Invoice Discounting
Very often, businesses struggle with cash flow because clients take anywhere around 45–90 days to make the payment. For immediate finances, you can raise an invoice with your client and share the invoice details with your lender. The lender then pays you around 90% of the invoice amount, which you can use to meet your immediate expenses. Repay the lender, once the client makes the payment.
Your invoice acts as your collateral, so you don’t have to show any other assets to your lender. Also, you get access to funds immediately, once you raise the client invoice.
Also Read: All That You Need To Know To Successfully Manage Your Cash Flow As A Small Business Owner
Who is it for?
● Ideal for businesses, that has clients taking a long time to pay.
Short-Term Business Loans
As the name implies, this is a straightforward business loan. The only difference is that it’s a condensed version of a traditional business loan. You receive a lump sum, which you can use to fund your business expenses. You then pay off the loan, along with interest, over a short schedule.
Who is it for?
● Works well for businesses that require a large sum of money, compared to the other short-term business financing options.
Meet Your Immediate Business Expenses With The Right Short-Term Business Loans
Unlike regular loans that involve mountains of paperwork and months of waiting, short-term business loans availed at digital lending platforms like Indifi are quick, hassle-free and easy. It has a simpler approval process and can help you access funds within a week, or at times, even within a day.
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