Short terms can be long-term solution to a short term problem. Here’s how to take advantage and get the most from what they have to offer.
It’s been said that into each life, a little rain must fall.
But you don’t have to stand naked in a deluge.
Many of us have had the experience of needing money and needing it NOW. Or even yesterday.
And there could be any number of reasons for this, from an oversight in running your business (purchasing a personal Keurig for each of your employees sounded nice at the time) to helping out a political refugee (no joke on that one).
Focusing on the reason isn’t going to get you your needed funds any time soon. But taking a look at your loan options will.
If you need access to money now, your best bet is a short term loan.
So you might be asking, what’s a short term loan and how is it better in my situation than a long term loan?
First of all, a short term loan is defined as “the term in which a loanable amount is payable within one year or less.” So then a long term loan means – you guessed it – paying the debt over an extended amount of time that goes beyond a year or more.
Short term loans are secured, which means you pay lower interest rates – while long term loans are unsecured and have higher interest rates.
Long term loans may also require you to surrender some asset if you don’t pay the agreed amount indicated in the contract. Assets could be things like your home, car, or fingers if your loan source is of the less reputable variety.
So you can see right from the gate that the short term loan is a reasonable choice. Particularly when it comes to keeping your business afloat.
What are some other reasons to apply for a short term loan when you need immediate money for your business? Well, consider these:
It can be used as an emergency fund.
Ah, the joys and woes of running a small business. There are good days and not-so-good days. What all of this translates to is “no consistent cash flow.”
Say you’re running a bakery and you’ve had a few slow weeks. All of the sudden, a surge of regular customers start coming just in time for your oven to break.
Those slow weeks didn’t afford you the ability to buy another. But without it, you aren’t going to keep those customers very long.
A short term loan can be your source for buying equipment or supplies until that capital is regained.
It can serve as capital for operations for your small business.
Imagine that you want to open a yoga studio in the middle of January. In Iceland.
Sound risky? Heating bills will be exorbitant and it’s going to be hard to get any foot traffic during that dark, cold month.
Still, starting a new business wherever you are can be equally risky.
Short-term loans can provide for the immediate needs of the business such as a more efficient furnace, paying the heating bills and keeping your staff employed during quiet times.
It can help you improve your credit score.
Do you have bad credit?
You might have luck with a short term loan then, since they are not subject to credit checks. And once you successfully pay off a short term loan in a timely manner, your credit starts improving.
But be careful this one doesn’t turn around and bite you. Should you fail to repay on time, it may well result in a further battering of your already struggling score.
You can get a short term loan much faster and easier than a long term loan.
Lenders for long term loans are likely to demand more supporting documents. Short term loans are subject to faster processing and fewer requirements.
Generally speaking, applying and getting approved for a short-term loan is easier because the amounts are often much smaller. This means less risk on the lender’s part.
Also, you can do it on the magical internet through reputable sites like LittleLoans.
Pretty much all you need to qualify for a payday loan in South Africa is a steady income, valid I.D Book and a Bank Account. Once you apply, it’s highly likely that you’ll have some cash in less than an hour.
Getting a short term loan is really that easy. And it could be what saves your business.