Is It Time to Consider a Short Term Loan for Your Business?

Do you have an urgent business opportunity that needs instant cash? A short term loan might be the financial vehicle that you have been searching for to solve your problems. Short term loans are a viable financing model that allows any business an immediate financing solution to improve their cash flow position. Most businesses can benefit from a short term loan for a variety of reasons. However, there are those times in business where a shot term loan may harm you as well. Here are the top five reasons why you should and shouldn’t take on a short term loan.

#1 Leverage a Loan for a New Business Opportunity

New business opportunity happens all the time. If you are stuck for instant capital to expand your business, turn to a short term loan provider for help. Loans can be processed in minutes and require very little paperwork to get the ball rolling, and your company paid out.

#2 Short term Loans for Bridge Finance

Do you have a business that relies on a high cash flow position? FMCG companies often feel a cash flow pinch during the middle of the month when they have to pay suppliers and buy new goods to keep their store’s shelves full. A short term loan can help you navigate your monthly cash flow expenses and keep your business running smoothly.

#3 Short Term Loans Help You Build Your Credit Score

Start-ups have a hard time seeking new loans from traditional banking institutions. Big banks do not like to make loans to small businesses as they view it as a high risk for default. New ventures can build their credit score by taking short term loans and repaying them within the contract terms. This strategy helps businesses strengthen their credit profile and opens the door for potential institutional loan applications in the future.

#4 Don’t Loan Moe Than You Can Afford to Repay

Always make sure that your business can afford the loan repayment. Work out your number thoroughly before going to the loan officer. Speak to your accountant and lawyer to get their opinion on taking out a loan.

#5 Don’t Get a Loan If Your Business Has Financial Problems

If your business is close to failing and you need extra cash to help you pay your expenses and employees, do not take out a short term loan. Taking on more debt when you do not have the capacity to repay it is a recipe for disaster. It is a better idea to liquidate the business and start a new venture instead.

Wrapping Up
Acquiring a short term loan is an excellent way to access cash straight away for any business elated expense. However, make sure that you have analyzed the risk carefully before you sign the loan agreement. Failing to repay the loan could cost you a lot more money than you expect and could hurt your credit score. Speak to the consulting professionals at Buddy Loans and ask them if a short term loan is right for your business.

Join the discussion