Short-term Business Loan is considered to be the “Swiss Army Knife” of loans because of its usefulness and flexibility. Instead of pulling cash from other areas of a business’s revenue, tapping into personal savings or home equity, businesses can leverage short-term loans to cover expenses while maintaining daily accounts payable.
A short-term business loan, otherwise known as a short-term commercial loan, provides businesses an opportunity to obtain needed capital, for any reason quickly, usually within 48 hours.
This type of loan is considered the “Swiss Army Knife” of loans because of its usefulness and flexibility. Instead of pulling cash from other areas of a business’s revenue, tapping into personal savings or home equity, businesses can leverage short-term loans to cover expenses while maintaining daily accounts payable.
Short-term business financing can come in several forms, such as an installment loan, a line of credit, revenue based financing like a cash advance, or an invoice factoring. The typical structure is laid out below.
Many of these loans can be applied for and received very quickly (same day in some cases), and there are many providers to choose from. You simply submit your application (usually online), business bank statements or other credit information. Then the company reviews it and gives you an offer of the terms of the loan including the amount, interest rates, fees and repayment schedule. If you agree, you sign the contract and get your money the same or next day, often in as little as 24 hours.
There are few guidelines on how the funds must be used. Regardless of whether the business is looking to fill a gap in its cash flow, capitalize on an exciting opportunity or pay off an emergency expense, a short-term business loan can provide the business with an easy and quick solution to obtain the financing it requires.
Since short-term business loans have a quick funding timeframe, they tend to have a higher interest rate than other financing options. If payments are paid on time whether it is on a daily, weekly or monthly basis, the business can boost its credit score so long as the lender selected reports good payment history to the credit agencies (Experian, Payment, Dun and Bradstreet).
This type of debt is a lot more lenient than a traditional bank loan when it comes to eligibility requirements. For example, it will be easier for business owners to qualify if they have a low credit score, shorter history of business or lower annual revenue.
Companies may consider short-term business loans for a variety of circumstances:
Overall, a short-term business loan is a terrific option, especially for new and small businesses that won’t qualify for traditional financing and need cash fast.
There are certain circumstances where companies should avoid using short-term business loans. For instance:
There isn’t a standard process for getting a short-term business loan because it depends on the lender and the type of financing. That said, below are the general steps to follow to obtain a short-term business loan.
Determine the business’s borrowing needs
Check credit score
Submit an application
With Lendzero, applying for a business term loan is easy.
Step 1: Click on the Get Approved button above and answer a few basic questions about your business. We will inform you about your best options and how many exist (this will set your expectations).
Step 2: After this is complete, you will be asked to create a username and password to begin your electronic loan application. This process normally takes about 6 – 7 minutes (if you have all your documents easily accessible and ready).
To complete the loan application, here is what you will need to have handy:
Step 3: Once the application process is complete, we will send you the completed loan application for you to review and sign. Once you have signed for your application, the process is complete. You have officially applied and started your journey to receiving pre-negotiated short term business loan offers. Your Lendzero funding specialist will reach out to you to guide you through the remaining steps of the process, and provide the necessary guidance and support needed with the goal of successfully obtaining the proper loan.