- Emma Anderson
- August 10, 2019
If you are running a small business or a start-up at some point, you need funds to maintain the cash flow. And it is not easy to find money and it becomes more difficult if you have a less-than-stellar credit score. You may approach mainstream lenders and they sometimes ignore your application because of poor credit history.
In this situation, short-term business loans can be the ideal way to get enough money that you needed. There are many online lenders in the UK providing loans without going through your credit score. This means there is a high chance of getting funds and you can use those funds to grow your business or want to buy new equipment. You can use that money on many other purposes which are mentioned in this blog.
If you heard this loan first time then read here to understand why it is the best way to finance a small business.
What are short-term business loans?
This loan is specifically designed to provide the funds to small businesses when they need. This type of funding can help you to cover immediate expenses or you can use that money to raise your business. The time of repayment is varying from one lender to another.
There is one limitation on borrowing amount, the lender will provide amount after study how your business is going. If they find that you can repay the amount easily then the lender may provide you with a large amount.
Advantage of Short-Term Loan
This plays an important role in those businesses that require a line of funding but they do not want to pay for years. Many online lenders in the UK offer fixed repayment term; it may vary from one month to five years. There is an option named as a revenue-based repayment plan; this is the best means for those who run a seasonal business. This allows them to repay the fewer amount in slower months and high in a seasonal month.
Few lenders provide extra benefits such as repayment holiday and top-ups to those who repay the loan early.
Short term business loans for all purposes
You can use this loan for various purposes. You read above that funds can be used over buying some equipment or for business growth. But there are a few more things where you can spend the borrowed money. Let’s have a look at them:
- Maintain the cash flow
- For recruitment
- VAT payments
- New contracts
- Corporate tax and many more
You can see where you can utilise those funds. Make sure you are spending only to raise the business.
How to select the best short term business loan?
Once you decided to apply for short term loan then you should consider the below-mentioned factors to get the best one:
How much you need: The amount is fixed by the loan providers; they set the minimum and maximum amount. Make sure the amount you borrow falls in this range.
How long you want to borrow the money: If you choose the loan for the long term then it may happen you have to repay more money but if you take for a short time then you can easily repay the loan on the given schedule.
APR: This one is an important factor. Lenders provide different interest rate but you have to choose that one who is ready to provide you with less interest rate.
Early Repayment: As we discussed earlier that many lenders provide additional benefits to those, who pay the loan early. And if you fail to find someone that makes sure the loan provider is not charging any extra fees in case of early repayment.
You can see there is an immense benefit of business loans. If you are one who is running a small business or start-ups then you should apply for this loan to maintain cash flow. But you have to remember a few points mentioned earlier before applying for a loan. Find the lender who is ready to provide you required money with the best interest rate and no hidden fees.