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short term loans

When to Consider Short Term Loans

Short term loans are often the answer to the question, “What’s the best way to meet these expenses?!!” Notice the exclamation points? They’re there because it’s not unusual for that question to be asked by an anxious business owner in the midst of a stressful situation, one that a quick infusion of cash would surely help to fix.

Short-term loans are for smaller cash sums that are paid back over a shorter period of time – typically within a year or so (payment on long-term loans, on the other hand, can be stretched out over years, or even decades). In contrast to traditional lenders, like banks, online lenders have made qualifying easier and funding faster for short term loans. And even though these loans typically come with higher interest rates than their long-term cousins, there are times when a short term loan makes a lot of sense for a business.

Short term loans as a solution

Let’s look at a few of the situations that could call for a short-term loan.

Cash-flow conundrums: For whatever reason, when the money coming into the business is less than the money going out, a short-term loan can be called on to handle the shortfall. Use it to keep bills and employees paid while you look ahead to better days and work to get over the hump. And if you’re a new business, a short-term loan could help you get started.

Seasonal ramp-ups: Whether you’re hiring more “elves” for Santa’s in-store workshop or stocking up for Halloween at your costume store, a short-term loan gives you the wherewithal to be ready for the season your livelihood and business largely depend on.

Equipment acquisition: Big equipment purchases usually call for long-term loans with lower rates. But in slow economic times, valuable equipment sometimes becomes available at a huge discount. With the fast funds of a short term loan, you’ll be able to pounce on opportunities like that. The same goes for discontinued or overstocked items. Or, if a certain product you sell is flying off your shelves, with a short-term loan you might be able to get a deep discount on a large-volume purchase. The savings on these kinds of deals – coupled with the extra revenue they’re likely to bring in — can more than make up for the higher interest rate of a short-term loan.

Unexpected emergencies: As a business owner (of a start-up especially) you might not have been able to save for a “rainy day” or for the repairs needed from a 5.5 earthquake or for new computers to replace an office system ruined by malware or for any number of emergencies that have been known to blindside a business.

Because you “just never know,” it’s good to know that a short-term loan can be easily yours from an online lender, even if your credit is less than perfect.