Fund projects and purchases that drive your business forward.
Sometimes your business just needs extra cash—right away.
A short-term business loan is a special kind of loan made to small business owners to bridge a temporary gap in the cash flow. The terms for these loans can vary, depending upon your needs. For example, the term of the loan can be for 90 days or up to 18 months.
Some of these loans are unsecured, meaning the lender requires no collateral. Because the risk is higher for the lender, the interest rate on unsecured loans may be higher. Some loans do require collateral, in the form of inventory, accounts receivable, equipment or other property. These secured loans generally have a lower rate of interest than unsecured loans.
Short-term business loan can be a tremendous help if you are a small business owner facing a temporary cash flow problem.
Short-Term loans repayment process is straight forward but there are a few key differences in short business loan terms compared to traditional long-term financing you might be more familiar with. First, the repayment period is obviously going to be shorter (hence the name). Short loans may only last a few months or up to a year. As a result, the amount of capital you can borrow is much less than you’d get with a long-term loan.
Even so, you could qualify for a short-term loan of up to $500,000 with lenders like BitX Funding.
The way short term business loans are repaid also differs from typical working capital loans for small businesses. Rather than having a monthly payment, lenders typically require daily or weekly payments based on a factor rate rather than an APR. So, if you take out a $50,000 loan with a factor rate of 1.20, your total amount owed comes to $60,000. A 12-month short term loan contains 264 business days, so if you’re required to make daily or weekly payments, that amount comes to just over $227 each day or $1,135 a week.
Since the application process is much more lenient than alternatives, most short-term business loans have comparatively high interest rates. When compared to loans that are more exclusive or have longer terms, you’ll usually end up paying significantly more in exchange for the same loan amount.
The best way to minimize the total cost of securing additional working capital is to repay your loan as quickly as possible. This can be especially crucial if your financial institution provides an early repayment discount.
You Should Receive Your Loan Quickly
The most obvious benefit of a short-term business loan is that it can provide you with fast capital for your operations. In addition, a short-term business loan application is typically shorter than that of a traditional bank loan and requires less information. This can be incredibly useful if your business has expenses that are due in the immediate future, and you can’t afford to wait on a long approval process.
The Application Process is Simple
As we previously mentioned, the application process for a short-term business loan is fast. In addition, it will likely be easy to complete. These loans require relatively little paperwork and the applications can usually be completed online.
Easy to Qualify for
When compared to more traditional business financing options, most short-term business loans have remarkably high approval ratings. Even if your business has a limited or poor credit history, you’re still very likely to qualify for a short-term loan. The lender will still most likely want to review both your personal credit and business credit scores, but their requirements probably won’t be as stringent.
One of the main concerns people have with short term loans is the costs. How much will you be charged? What are the interest rates? What if you can’t pay my loan back? Many short-term lenders have attempted to be transparent with their fee structures, outlining what you will and might be charged when you decide to take out a loan with them. In this guide, we’ll take you through exactly what you need to know.
Don’t worry—let’s explain with an example.
Short-Term Business Loans & Factor Rates
Short-term business loans come with a higher price tag because:
Simply put, you’re paying the price for speed and convenience: fast cash is expensive cash.
Higher rates and shorter terms can generally offer reduced paperwork and faster funding times than traditional term loans.
But expensive debt can be better than no debt if your business needs the money to take advantage of an opportunity… Assuming you know you can afford to pay it back. Just because they’re pricey, short-term loans don’t need to be a bad investment.
In fact, sometimes a short-term loan is exactly what your business needs to grow.
Plus, short-term business loans can also be refinanced into longer-term products down the road if your business’s financials improve.
BitX Funding is your online marketplace for small business loans. From SBA, start-up lines of credit, short term loans, mid term loans, invoice financing to merchant cash advances and lines of credit, BitX Funding is where lenders compete for your business. Our top-rated lenders focus on real-life business data and cash flow, which means you can qualify for a loan even if your credit score isn’t perfect. What differentiates us from the competition is that with a brief questionnaire our highly trained loan consultant will listen to your needs and match you with the appropriate funding. You can go at it alone and spend hours online trying to find funding for your business or you can have a one stop experience with BitX Funding and our direct connection with the lenders.