The Benefits of Short-Term Financing
Short term financing provides a solution for small businesses in need of financing that might not be eligible for small business loans and other forms of traditional funding. The rise of this type of financing makes it easier for struggling small businesses to get the money they need to thrive and grow, in exchange for higher interest rates and accelerated repayment terms. If you’re having trouble getting a conventional business loan, here are a few benefits that a shorter-term financing option provides.
You Don’t Need Perfect Credit for Approval
One of the biggest hurdles to getting a conventional business loan (especially through traditional banks) is that they require good to excellent credit. Even slightly subpar credit can hurt your chances of approval. Alternative lenders help businesses with less than perfect credit by extending financing despite your history. One thing to keep in mind, however, is that they tend to have much higher interest rates to minimize their risk.
Get the Money You Need More Quickly
While traditional business loans have the most favorable rates and terms, loans take a long time to fund. You could be waiting for weeks (or even months) before getting approved and receiving the money in your account. Sometimes, you don’t have the time to wait. Lenders offering short-term financing have less stringent requirements and ask for fewer documents. They don’t spend weeks digging through your financial history and business plan. As such, the approval process is much quicker, helping you to get the money you need right away.
Even Young Businesses Can Get Financing
A major hurdle for new small businesses is that they don’t have the time in business to qualify for a conventional business loan. Most banks require at least two years in operation (in addition to good credit and adequate annual revenue).
Alternative lenders tend to accept businesses with less than a year in business, and their other requirements are less strict, as well. If you’re a fairly new business, this type of financing solution can help you to start building your credit history, which can help to pave the way for longer-term financing solutions in the future.
If you’re in need of fast financing and don’t qualify for conventional business loans, short-term financing may be a viable solution. If you can manage higher interest rates and a shorter repayment term, you can get the funds you need to grow your business and succeed.