Many entrepreneurs have a love-hate relationship with business financing, so they often overlook short-term loans. Interest and other charges can put a bad taste in your mouth. You might feel like the loan has only made things harder financially.
On the other hand, loans are often a necessity. Small business lending and approval rates have been picking up recently, based on industry research. This means more people will have the capital to pursue their entrepreneurial dreams. That’s a good thing.
Unfortunately, despite a more favorable business lending environment, it still might be too difficult to get approval for a long-term loan or SBA loan. If that’s the case, don’t be disappointed. You can find other types of funding.
Read on to learn about three options for short-term loans, along with the benefits and requirements for each.
1. Short-term loans from an online lender
The digital age has made it possible to apply for and get a short-term loan from an online-based lender in as little as one day. Functioning much like a traditional term loan, payments are typically made daily or weekly with short-term loans, along with interest.
Requirements for approval generally are:
- At least one year in business.
- A decent credit score.
- At least $50,000 in annual revenue.
Typically, you could get anywhere from $2,500 to $250,000 through short-term loans, with the term ranging from three to 18 months. Interest rates tend to start at about 10 percent.
The speed in which the funds arrive is a major advantage, as short-term loans could help you out of a cash flow issue immediately. There’s limited paperwork (always a blessing). Also, the funds can be used any way you see fit, from meeting payroll to buying seasonal inventory.