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IS YOUR BUSINESS BETTER SUITED FOR A SHORT TERM LOAN?

March 14, 2016 10:33 pm Published by Leave your thoughts

A short term loan is a type of business capital loan that can provide your company with quick working capital. Like most other bank loans, you’ll receive a lump sum of cash upfront which is repaid to your short term lender over a set period of time.

Some common examples of short-term debt include: Short-term bank loans. These loans often arise when a company sees an immediate need for operating cash. Short-term bank loans are due within a year.

For most small business owners, a short-term loan will likely be more suitable. However, sometimes long-term financing may be necessary. Regardless of the length of your loan, it’s important to work with a lender who understands the needs and challenges of your business.

Here are examples of four things that might be better suited to a short-term loan:

1. Project start-up costs: There are times when ramping up a new project requires upfront costs that might exceed a business’ ability to cover with cash flow, but will be recouped in 60 or 90 days. In that case, a short-term loan might be a better fit.

2. Overcoming a short-term seasonal cash flow need: Many seasonal businesses sometimes require an additional influx of capital to meet expenses during the downtime.

3. An opportunity to purchase inventory at a discount: A short-term loan could be a good option for purchasing inventory that has the potential to quickly create increased profit.

4. Emergency repairs of critical equipment: When equipment necessary to the operation of your business breaks down, a short-term small business loan can help get operations moving again without a four-year or longer loan obligation.

If you are a business owner looking for funding options contact First Down Funding for short-term funding.  Quick online application and fast funding.

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