By: Sean Peek, CO- Contributor
Often, one of the most challenging parts of starting a business is securing enough money to get the ball rolling. Even when you’ve carefully planned your budget and reviewed your balance sheets, the most meticulously structured financial plans can still go awry.
When this occurs, many aspiring business owners turn to traditional loans for financial support. However, despite its popularity, this isn’t always the best choice. Instead, many consider researching and applying for a short-term loan.
What are short-term loans?
According to the Corporate Financial Institute, a short-term loan is a type of loan that is obtained to support a temporary personal or business capital need. Short-term loans provide quick cash when your cash flow is lacking, have shorter repayment periods than traditional loans and are an extremely attractive option for small businesses that are not yet eligible to apply for a line of credit from a bank. While the credit limit for short-term loans is lower than a line of credit, short-term loans are viable solutions to alleviate sudden temporary financial trouble.
Short-term loans are named as such because they require quick repayment. The way short-term business loans are repaid differs from typical loans for small businesses. Rather than monthly payments, according to LendGenius, those who borrow short-term loans typically repay them on a daily or weekly basis. Continue reading Applying for a business loan should never be taken lightly