What is a Short-Term Loan?
A short-term loan is a type of business capital loan that can provide your company with quick working capital. Like most other bank loans, you’ll receive a lump sum of cash upfront which is repaid to your short-term lender over a set period of time 3 to 18 months. In addition to the principal amount you borrowed, your payments also include any lender fees and interest as part of the total cost of the loan. The right short-term financing can make or break a company. According to a study conducted by the National Small Business Association, 19% of small business owners cite lack of available capital as the biggest challenge in their future growth and 82% of businesses fail because of cash flow management issues. A short-term loan could help circumvent these issues before they become a real problem for your business. Short-term business loans are great for reasons that produce a fast return on investment as the cost of capital is high vs using the funds for something that will take time to earn a return.
Get Your Paperwork Started Now
Start off by pulling together commonly required documentation. Most lenders request personal identification, a voided business check, personal tax returns, proof of ownership, and bank statements. The more organized you are, the better. By preparing your information in advance, you won’t slow down the approval time trying to dig up old records. This is especially important if you’re using the loan funds for something time-sensitive.
Demonstrate Ability to Pay
When evaluating your loan application, a short-term lender will pay close attention to your revenue numbers. They likely want to see at least $7,000 regularly deposited into your business account each month. But they won’t just look at the last month or two; regularity is also a factor. You’ll need to meet their revenue standards for at least the five months leading up to your application. They also consider your financial stability and look for a positive account balance to ensure you’re able to make your payments on time. While lenders do allow for negative account balances, they limit the number you can have to get approved.
Have an OK Credit Score
Although lenders do check your personal credit score, the required minimum can be as low as a 550 check your score at www.nav.com. Of course, the better your credit score, the better short-term loan interest rate you’ll qualify for so it’s still important to maintain a healthy credit history.
Keep Credit Utilization Low
In addition to your credit score, however, the lender also looks at both your personal and business debt load. If either one is already too high, they might be hesitant to extend any new credit.
Finally, in addition to reviewing your financial documents, lenders will also ask about the overall health of your business. When applying for business work capital, it’s best to anticipate the kinds of questions you may be asked and prepare answers ahead of time. For example, a lender might ask whether you could repay the loan if your business failed. Alternately, they might also want to hear your thoughts on the future of your industry. A little preparation goes a long way in the loan application process.
|Start Up Line of Credit||Short Term Loans||Long Term Loans||Business Lines of Credit|
|BitX Funding start-up financing program connects entrepreneurs and business owners with $25,000 – $150,000+ in unsecured business lines of credit. This program can provide you with funding in as little as 10 days and is typically offered with 0% interest financing for the first 6-18 months.||Designed to help meet short-term needs, such as unexpected events, or to take advantage of a great deal. Typically, most small business owners qualify.||BitX Funding offers true long-term business loans with automatic monthly payments. If you are looking to Fund larger projects that pay back over a longer term with rates as low as 5.49% this option may be right for you?||Business lines of credit allow you to draw funds whenever you need. Funds will be deposited directly into your bank account. Repay via automated weekly debits over six months. Your available balance replenishes as payments clear. Lines of credit can go as high as $100,000 with interest rates averaging around 13%.|
BitX Funding is the online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and we are passionate about helping your company reach its full potential.
You can reach a loan specialist by toll-free at 1-800-824-2407, or email at firstname.lastname@example.org or applying online here and we can guide you on which loan is the best fit for your business.