Hi, my name is Ben and Short-Term Small Business Loans are my specialty. I’ve been in the Small Business financing industry for several years now and have seen many small business owners suffer from bad loans. I consider these tips to be very helpful to new and established small businesses. Today I will share with you the following “Need to Know Facts” about Short-Term Small Business Loans…
When it comes to Short-Term Small Business Loans, your options are slim and can come at a steep price. But when you need fast cash and funding is short, it can at times make or break a company. Funds for Unexpected Emergencies or Amazing Business Opportunities are perfect examples.
So, I will begin by mentioning the Pros and Cons of a short-term small business loan. These should help you make a comparison between other Small Business loan options available…
Pros and Cons – Short Term SBA Loan
Pros of Short-Term Small Business Loan
Above Average Approval – Approval Rates of Short-term loans are higher than average in most cases. Beware of falling into debt traps and only borrow what you can pay back.
Faster Funding – Short-term loans are perfect for Emergency Financing. Banks can deposit the funds, of a short-term loan, into your account within hours.
Helps Improve Credit Score – Your Small Business Credit report will improve with the amount of loans you pay back. So taking more short-term loans can help boost your Small Business Credit Score quicker.
Related – “Check your Personal and Small Business Credit Score for Free”
Don’t allow the Lack of Pros above compared to the Cons below, discourage you. The Pros of a Short-Term Loan may be few but they definitely hold High Value.
Short-term Small Business Loan – Cons
Above Average APR – Interest Rates or APR of any short-term loan can be higher than average. Lenders expect to make their profits in a shorter amount of time. Short-term lenders approve higher risk loans compared to traditional lenders.
More Frequent / Higher Payments – Short-term loans are often associated with Higher and more frequent payments. Payments can be monthly or sometimes even weekly depending on the terms.
Hidden Fees – Reading the Fine Print can be crucial when accepting a short-term small business loan. Hidden Fees, Early Termination and Delinquency can be very costly.
Increased “Default” Risk – With all the fees and increased rates, companies might find themselves in more debt. Taking more loans to pay back other loans can become a huge sinkhole. Only borrow what you can pay back and avoid falling into a Debt Trap.
Lower Small Business Credit Score – Over borrowing and taking too many loans can decrease a Small Business credit score. It’s can be an early sign of falling into a Debt Trap. Your Small Business Credit Report will reflect on the lender’s approval decision.
Even with the High Risks of Short-Term Small Business Loans, they are sometimes your only option for fast funds.
How to get a Short-Term Business Loan
You can apply for a Short-term small business loan from the comfort of your own Home/Office. Even Local Banks have online applications that will avoid having you driving around comparing Interest Rates and Loan offers.
Online Lenders
Online Applications – Applying for a loan online can be as easy as ordering a pizza! Well, not that easy, but easier than driving around town jumping from bank to bank.
More Competition – When Lenders compete for your business, you Win! Applying for a Short-term Small Business Loan online can result in a better deal for you. Brick and Mortar banks are very limited depending on your location. Online Lenders can be hundreds of miles away and provide you with the same service.
Hassle Free Quotes – Online Lenders have dedicated personnel to provide online applicants with fast real-time quotes. Online Loan Calculators only provide “projected” quotes. They can be a useful tool for determining the kind of loan you need. Only the final Loan agreement will show the actual amount you will be paying back.
Valuable Time Saving – You can imagine how much time you will save applying online. Keep in mind “Saving Time” might not always mean “Saving Money“.
Local Lenders
Personal Lenders – The Handshake after closing a deal, that’s what some of us live for. The smile we get when you walk out the bank with money in your hands. The tears of joy when we help save the local Mom & Pop shop down the street from closing. – PRICELESS!
Familiar Banks – Most Small business owners open and locate their companies where they grew up and live. They drive by their local banks every day and are on a first-name basis with some bank employees. – TRUST
Fast Funding – Even with an online Short-term small business loan, you will have to use your local bank to access your cash. Depositing the funds into your account can take days. Your Local Bank can fund your loan faster than most online lenders. Your funds can be available within hours after approval. – SPEED
What to Avoid – Small Business Loan
Avoid applying for Short-Term Small Business Loans that contain one or more of the following terms or conditions…
Early Repayment Penalties – The company might fall into some extra cash or the business deal didn’t cost as much. Before signing, you should ask your lender about paying back your loan earlier. Are there any fees for paying back your Short-term loan early? Unless you are positively NOT going to be repaying the Loan before the agreed upon term.
Upfront Fees / Application Fees – There should Never be a fee for you to Apply for ANY type of loan. Beware of Lenders that ask YOU to pay upfront Fees. Here’s a link to the Better Business Bureau. The BBB will have a list of accredited lenders and ones to avoid.
Third Party Lenders – This mostly applies to Online Lenders. Look for a disclaimer that states who the actual Lender is. Try cutting the middleman out and apply directly with the Loan Issuer.
Too Much Money – Some lenders might try to convince you to Borrow more than what you are asking for, or need. Avoid falling into the temptation and borrow only what your business needs. The More you borrow, the more you will be putting back in their Pockets instead of yours.
Related – Click here for the Top 3 Online Loan Scams to Avoid
Conclusion
Finding and making the best decisions for a Short-Term Business Loan, might be tough. I hope the information provided in this article helps you find the loan you are looking for. I will wrap it up with providing you a few Business Loan Providers below.
If you would like to see reviews for specific Small Business lenders, leave a comment below. I will contact them and provide feedback on their company policies that concern small business loans. Feel free to share your company’s loan experiences and provide your recommendations.
