Do you run a small business? Do you ever experience periods in the month where you need extra cash available? Do you need capital for a new business opportunity? The chances are that you have tried to get some financing from the bank and they have turned you down. Relax, it’s a common occurrence. Most small businesses have no permanent credit track record. This fact means that banks are unwilling to loan small businesses money without some form of collateral. Most small businesses are unable to fulfill the surety requirements, so what do they do to gain finance?
Short term loans from sites like Shelter are a great way for small businesses and startups to gain the access they need to necessary working capital to prop up their cash flow when they need it. However, it is not all roses and champagne; you will still need to repay the loan and the interest. Here are some benefits of short term loans and tips that you can use when you apply.
#1 Cover Your Cash Flow
Does your business rely on cash flow to survive? Small business rate available cash flows cash as its number one bottleneck regarding being able to carry out business operations efficiently. A short term loan can help small businesses through their waning cash flow period when they have creditors to pay and supplies to order.
#2 Create Opportunity
Small businesses come across new opportunities all the time. Some may require cash available to take advantage of the situation. A short term loan is approved in mutes and gives small businesses and startups the financial tools they need to leverage opportunity.
#3 Improve Your Credit Rating
Has the bank turned down your loan because you have no credit score and no collateral? Don’t worry; you are not alone, it is a common problem that affects thousands of businesses. However, a short term micro lender may be a viable solution to your cash problems. Taking a loan from a micro lender requires no credit check and is accessible quickly. By taking a loan, you build your credit profile with the banks, allowing you to create a track record that you can use for further institutional finance deals as your business grows.
#4 A Short Term Loan Cannot Rescue Your Business
IF your business is going under, a short term loan will not turn things around. The chances are that it will just add to the debt load and turn the screws of liquidation faster. Avoid taking a loan that you cannot repay.
#5 Make Sure You Know Your Numbers
Before you sign the loan agreement, make sure that you understand the numbers and what is required to make the payments every month/. Seek advice from your accountant and lawyer if you are unsure of what to do. Work with the best short term loan professionals like Cashfloat and solve your cash crisis.
The Final Thought
Short term loans are a viable way for small businesses to get instant access to cash. However, be diligent with your credit and make sure that you understand all of the loan parameters before you sign the loan agreement.