One of the most important factors in running a business is in deciding how much money to borrow, when to do it, and why. For most small businesses, a short-term loan is a great option for meeting immediate needs.
Here are 5 benefits of a short-term working capital loan for your business.
Repayment of a loan over a shorter period of time accrues less interest.
Immediate funding can cover an overdraft.
The credit score for your business is improved when payments are on-time.
No collateral is required and terms are flexible.
We give discounts – not penalties – for paying the loan off early.
Why a Shorter Term Is the Best Strategy
When dealing with a traditional bank, the only borrowing options are often from 3 to 10 years instead of 1 to 10 months. It involves many years of repayment, a stringent qualification process, and does not always meet the day to day needs of most businesses.
Typically, a shorter period loan in the Express Capital Funding working capital loan program is 1 to 9 months. It may even be paid back from 1 to eighteen months, depending on the needs of the business.
There are a couple options when it comes to a short-term strategy.
Business Line of Credit:
A Business line of credit has more flexibility than a regular loan: you only pay interest on the money you borrow. In other words, you repay funds on the amount you withdraw from the line of credit. However, the typical APR is over 9%, which can be high.
Working Capital Loan:
A working capital loan can be as low as 5.9% - as quoted by Express Capital. Like a line of credit, the funds are readily available, and you borrow only the amount you need. Another benefit is that there are no prepayment penalties, so when your client or customer pays you for the job earlier than expected, you can pay the rest of the loan early and get the rate for the shorter time-period of the loan.
Usage of Funds
A working capital loan is designed to help businesses that experience fluctuations in cash flow due to seasonal trends, expansion plans, or who would like to broaden their product or service line.
Some businesses are best suited for a loan with 1- 9 month terms, especially if they need to fund a specific product or service over a short period and do not require a longer payment plan cycle. Small businesses can benefit from these types of loans in many ways, since the immediate influx of lender funds are:
Ideal for purchasing materials and inventory
Perfect for funding a new business opportunity
Timely for meeting the immediate demands of payroll
An alternative for covering gaps in revenue due to unforeseen events
A reliable source of working capital
Give Your Business What It Needs Right Now
The short-term loan is a smart financial business strategy that can help you manage your immediate cash flow, cover gaps in revenue, and meet unexpected needs. You can borrow from project to project for one-month up to eight months as your clients submit payment for your products and services.
A working capital loan is one resource when in need of extra cash. With more lenient qualification guidelines and funds often available within 24 hours, it can be a great option when funds are necessary within a tight timeframe.
If your business can benefit from this financial move, consider the short-term loan as your opportunity. These are only a few strategies to help your business fill those cash gaps. We would like to hear which strategies worked – or didn’t work – for your business.
If you’d like a personal consultation with one of our specialists to see if the short-term strategy is right for your small business, contact us by email or call 1-800-301-9149. We are here to help you make the smartest decision.
Express Capital Funding is a direct lender specializing in funding for small business, including short-term working capital loans. Approvals are fast and funds are deposited the same day.