The 6 Greatest Advantages of Short-Term Loans

Jun 23, 2021

The success of a business relies on its ability to continuously expand. But in order to do that, you need a steady flow of revenue.

Sometimes profits aren't enough and small business owners need capital to give them a boost. You can use it for buying more inventory, hiring additional personnel or opening up more locations.

Borrowing money is the quickest way to get your hands on capital needed for expansion. There are different business loan options to choose from.

However, short term loans are gaining popularity and for good reason. Let's look at some of the reasons why you should consider them as well.

1. Improve Issues with Cash Flow

Slow seasons happen to even the best of us. During these times, small businesses run the risk of shutting down. Careful planning can sometimes help in these instances, but when that's not enough, short term loans can help.

Use the funds to pay off supplier bills and various other operational costs. This will also keep you from running up your credit cards while waiting for things to pick back up.

Then if your slow season is right around tax time, you can use the short-term loan to pay what you owe, so you don't get in trouble with the IRS.

2. Keep Up with Seasonal Trends

Small businesses that witness a hike in sales activity during seasonal periods know the financial difficulties they run into. Trying to keep up with the Joneses requires you to buy more inventory and hire more staff.

Otherwise, your business may not meet the expectations of the market. This can, in turn, cause a loss of revenue as your customers head over to your competition.

So to prevent this from happening, you need extra capital. Short term loans are the perfect solution for this situation. Use it to cover temporary workers' salaries and to prep for the holiday rush.

3. Expand Your Business

There comes a time when a small business owner wants to grow. A few ways to do so include acquiring a larger building, purchasing additional warehouses to hold inventory or opening up new locations.

The expenses associated with expansion are extensive, depending on how you're trying to go about it. Whatever plans you have for your growth, you likely need additional funding. The capital you get from a short-term loan can give you leeway to purchase what you need without worry.

The terms on short term loans are normally reasonable, giving you enough time to repay it.

4. Take Care of Emergencies

Even the best planner can't plan for emergencies. These pop up out of nowhere and can be devastating on the business front. So, the best way to prepare for emergency situations is to have insurance.

Short term loans are exceptional forms of insurance since they are quick to obtain. And in most cases, you can get as little as $5,000 and up to $150,000. This provides plenty of room to get the funding needed to take care of whatever emergencies life throws your way.

Some of the emergencies you can use a loan for include equipment breakdowns and computer crashes and natural disasters.

5. Improve Your Credit Rating

All businesses have a credit rating. By taking out loans and lines of credit, you're helping to build up your credit history. Of course, you will have to pay these on time to ensure your credit rating is on point.

Now, the great thing about short term loans is that they give your credit score a boost. This can be helpful in getting longer-term loans and bigger lines of credit in the future. Small businesses oftentimes struggle with obtaining these because of lack of good credit.

Then once you repay your short-term loan, you can reapply in the future and possibly get a larger line of credit.

6. It's a Short-Term Debt

Locking yourself into long-term debt is never a good idea, especially when things are shaky with your business. The beauty of short term loans is that they are normally between one month and 18 months in length.

Most businesses can handle these terms with ease. Knowing you're not committing to a debt that takes forever to repay gives business owners peace of mind.

Also, the great thing about short term debts is that they have a lower risk of default. The longer you owe a debt, the higher the chance of you running into financial issues that make it difficult to make timely payments.

So it's easier to plan ahead your monthly payments for the short duration of this loan. It's difficult to estimate where your finances will be in the far future.

Analyzing the Advantages of Short Term Loans

Now that you've gone over the advantages of short term loans, it's time to decide whether it's right for you. If you're a business owner in need of quick money, then this could be right for you.

You don't need any collateral to get approved for a short-term loan. With long-term loans, it's difficult to get funded without having valuable assets.

And who wants to put their business assets on the line, anyway? This way, you can get the money you need with less risk.

Then in some cases, you may be able to repay your loan faster. Express Capital offers short term loans don't penalize you for paying your loan in full before the term is over.

So there's a lot for you to mull over, but the pros far outweigh the cons.

Applying for Working Capital

If you've decided to move ahead with applying for a short-term loan, then begin your search with Express Capital. We offer working capital and equipment financing.

So if you're looking to grow your business or get out of a rut, we can help. The pre-approval process is simple and can be done completely online.

As long as your business is at least a year old and brings in $90,000 annually, then you're likely to get approved. Our loans begin at $5,000 and go up to $150K.

Visit our site today to get pre-approved for a short term loan term. And if you have any questions, don't hesitate to contact us! 


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