Short Term Business Loans: Yes or No?
When you’re starting a new business, sometimes the best way to get things moving is with a cash injection.
Getting a business loan is something most entrepreneurs have to do at some point in their professional lives. Unless you’re independently wealthy, you’re going to need to raise money to get your plan from an idea to a full-fledged business.
The fastest way to do that is through a business loan. Today, we’re going to discuss business loans and more specifically, short term business loans, to determine whether or not this is the right move for you and your new business.
What Is a Short Term Business Loan?
Short term business loans are a great source for young business owners to have quick access to working capital. With this capital, you can handle any financial issues that arise over the course of getting your company off the ground.
These types of loans are the same as other business loans in that you get a lump sum of money when you’re approved, but they involve much shorter terms – usually between 3 months and 3 years. Like other short term loans, they usually have higher APR but less accrued interest because of the length of the loan term.
There are numerous circumstances where a short term business loan could be the right move for you. Among them are startup costs, bridging the gap between busy seasons, and covering emergency costs.
How to Get Approved for One
Different lenders have different requirements for their applicants. In general, a short term business loan, like short-term personal loans, are easier to get with fewer hoops to jump through.
That being said, you should have the following prepared when you go to apply:
- A business tax ID number.
- Your personal credit score, as well as your business credit profile.
- Your business bank account and 3 months of bank statements.
- Other business information, like revenues, a business plan, etc.
Should You Get One?
Determining whether or not a short term business loan is the right move for you comes down to what you need the money for. It’s important to understand exactly how much you need to apply for and equally important to position yourself to pay the money back within the length of the term. Getting caught defaulting on your loan payments will quickly end your business before it has the chance to get off the ground.
In situations where you know that you need a small amount of money to solve a quick problem or purchase extra inventory, short term business loans can be a huge help.
Get Your Short Term Business Loan Today
Now that you know more about short term business loans, you can make the decision to apply for one or choose a different type of financing. Most businesses need financial assistance at various points throughout their growth, so don’t feel like you’re failing by applying for a short term loan. As long as you’re able to use the money for the right reasons and pay it back quickly, you’ll be in good shape.
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