Short Term Business Loans

As with any type of term loan, a short-term business loan works by a lender providing a borrower with a fixed
sum of money, that is then repaid over a set period of time in monthly, weekly, or even daily installments,
depending on the loan amount and the lender.

There are a number of reasons why a business may need to take out a short-term loan, all of which fall under an
immediate need:

• to maintain cash flow
• to cover inventory costs
• to hire seasonal staff
• to cover emergency repairs, such as broken equipment
• marketing/advertising
• to cover seasonal income fluctuations
• to build up a good business credit score

A short-term business loan typically lasts anywhere between 3 months and 3 years, depending on the lender and
the loan amount.

Term Loans

This is the type of loan that has been described above. These are generally not offered by traditional lenders,
such as banks, as their repayment terms are much longer, so your best option is to find an online lender.
Depending on your credit score and which lender you decide to go with, interest rates can range anywhere from 8%
to a huge 99%. If you can only qualify for this type of loan with very high interest rates, you will be better
off considering alternative short-term business loan types.

1. Lines of Credit

A line of credit provides you with a sum of money that you can draw from whenever you need to, as long as you
don't exceed the credit amount.
Most lines of credit will come with long repayment terms, but you will find that some online lenders offer a
short-term line of credit if you feel that this is best for your financial needs.
Interest rates for lines of credit range between 8% and 80%, with short-term lines of credit likely to be on the
higher side.

2. Invoice Financing

Invoice financing is a specialized loan type for businesses that use invoices to collect their payments. If you
haven't yet received payment after sending out an invoice, you can use an invoice financing company to receive
an advance for the invoice amount which will then be given back to you, upon payment by the client or customer,
with the financing company's fees deducted.
Interest will be added depending on how long it takes your customer to pay the invoice, the amount of which will
depend on the invoice amount, the lender, and your creditworthiness. Generally, interest rates fall somewhere
between 13% and 60%.

3. Business Credit Card

A business credit card is much like a line of credit, except you pay off the balance you have used every month.
Interest rates tend to be below 30%, but you will be able to find some that offer interest rates of around 15%.
You will even be able to find some that offer introductory promotions of 0% APR so that you can get about a year
of paying off your credit card debt interest-free.
If you are able to make your payments on time and in full, business credit cards are a great way to build up
your credit score for when you apply for better financing options in the future.

Although many lenders will require you to have a credit score of at least 550, you will still be able to qualify
with some online lenders if you have bad credit. You should be aware though, that a bad credit score often means
you are given higher interest rates, so it is best to build your credit as much as you can before applying for
any type of business loan.

You will be able to find short-term business loan calculators on a number of financial sites that will
help you to work out how much a small business loan will cost you, taking into account the loan amount,
the interest rate, any fees, and the repayment terms.

This is a very useful tool for determining whether you can actually afford the total cost of the loan
before submitting applications.

Although most lenders require you to have at least a year in business to qualify for a short time loan
you will find that a handful of online lenders, such as Fundbox, with supply funding to startups as new
as three months old.

The process for applying for a short-term business loan will vary depending on the type of loan and the
lender you choose to work with. With an online lender, you may be able to receive funding in as little
as one day, you just need to ensure that you meet their requirements, including credit score, time in
business, and annual revenue.

Although application processes vary, you can expect to need to present the following:

• annual revenue report
• business bank account details
• business credit profile
• business tax ID number
• personal credit score
• three months of bank statements
• time in business

Generally, yes, as long as you are sure that you will be able to make the frequent repayments. A
short-term loan will allow you to bridge a gap in your cash flow, cover those seasonal expenses, grow
your business? notoriety using clever marketing, and any other immediate expenses.

A short-term loan could be exactly what you need to keep your business afloat during those quiet
business periods. If you are looking to grow your revenue look no further than Acorn Finance. We can
provide contractors with flexible home improvement financing solutions that will help you to close more
sales and greatly increase your cash flow. Simply fill out our short application form to get started
today.

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