Does your business need cash quickly? It may be worth looking into short term loans – if you know how to use them. This guide tells you how to take advantage.
Maybe you’re a brand new business that needs to pay your start-up costs.
Or maybe you have a gap between the money coming in for work you’ve done and the money you need to pay out.
A short term loan might provide the answer! Read on to discover 5 ways that you can use them to help your business.
1) Meet seasonal demand
You may not have any major problems with cash flow.
But you’ll know when the busy periods are in your business. You want to stock up beforehand and you need the funds to pay for it.
A short term loan is repayable within 90-120 days, and they can also help to cover wages if you hire temporary staff on a seasonal basis.
Once the busy season is over, you can repay the loan and continue as normal.
2) Manage cash flow
If you’re a new business you might struggle to pay supplier bills, or even your taxes.
You can use a short-term loan instead of a credit card to keep yourself going.
Short term loans can certainly keep you out of long-term debt. The loans usually mature within a year, you know it’s not a long-term commitment.
They’re also a limited funding source, so you won’t splash the cash and make the problem worse.
3) Expand your business
Loans aren’t just used for covering a deficit.
Perhaps you want to expand! You might need another store, or you want to invest in new products or services.
Whatever your plans, you’ll need the funds to carry out your plans. Short term loans provide the instant capital you need.
Your lender will still need to see your cash flow. If it’s a secured loan, you’ll also need some form of collateral in place.
Short term loans are often easier to find. Smaller banks and credit unions can provide them too. So you’re not restricted to large banks.
4) Cover payroll and expenses
We all have unexpected bills that need to be paid. Sometimes things happen that we didn’t account for.
Or maybe you’re waiting for an invoice to be paid for work you’ve done. But you still need to pay wages and meet your own obligations in the mean time.
If we haven’t built up enough funds to cover these payment droughts, then a short term loan may help.
You can use it to cover payroll and satisfy other essential outgoings to keep the business running smoothly. When your customers pay you, you can repay the loan.
5) Improve your credit score
If you’re a new business you might struggle to get credit. After all, no one knows what you’re like at repaying things yet!
Because short term loans are easier to obtain, you might consider taking one out. An unsecured business loan is perfect for new businesses that don’t have many assets yet.
So even if you don’t desperately need the loan, you can repay it within a few months. The prompt repayment boosts your credit score, meaning you can access better interest rates in future.
So if you’re looking at short-term loans, then LittleLoans offers online applications!