Lendio is an online lending marketplace that offers short term business loans by matching you with the right lender for you.
When you’re running a business, you can encounter cash flow challenges even when your business is thriving and growing. This can happen for a variety of reasons, including unexpected expenses and slow-paying clients. Short term loans provide you with cash now and offer a quicker repayment schedule, depending on your needs. Here’s your guide to short term small business loans and how to easily apply to one through Lendio.
What Is a Short Term Business Loan?
A short term small business loan is a loan that your company pays back in a relatively short period of time, usually between 12 months and 3 years. Some loans of this type might offer a faster or more extended period of time to complete. These loans are designed to put money quickly into a business’s hands when it’s having short-term cash flow issues. You wouldn’t use this type of loan to expand or buy expensive equipment or property.
How Do Short Term Business Loans Work?
Short term business loans work in a variety of ways, depending on the option you choose. Some of these loans use your daily credit card receipts to repay the principal and interest, while others rely on you to make payments. Depending on your company’s creditworthiness, you may be asked to provide something of value as collateral. After completing your application, you’ll see the short term loans and the repayment options available to your company. You can determine which option works best for your company.
How Long Is a Short Term Loan?
Most short term loans offer terms that run between 12 months and three years. However, some may rely on your daily credit card sales, which means that the loan gets repaid within a shorter or longer period of time, depending on your company’s sales. Of course, most loans allow you to pay them off earlier if you have the funds available. If you need a longer period of time to repay a loan, you might consider a long term loan option.
Do Short Term Loans Improve Credit?
Yes, a short-term business loan can improve your company’s credit score, but it can also damage it. This loan is like any other loan, providing you meet the loan terms and repay it on time your credit improves. However, if you fail to meet the terms or pay late, you can damage your credit score. It’s essential that you only secure a loan that you know you can meet its terms.
Why Would a Business Get a Short Term Loan?
A business would secure a short term loan for a variety of reasons. Typically, your company looks for a short-term small business loan when cashflow becomes an issue. This is usually due to circumstances beyond your control. Almost all businesses face this issue at one time or another and need a short-term business loan to bridge the cash flow gap to meet payroll or make their mortgage payments on time.
What Can You Use the Funds For?
Once approved and funded, you can use the funds in a variety of ways. You can use it to meet expenses, such as payroll, rent, utilities, pay suppliers, and repair equipment. You might even use the funds for a move to a new office or facility. In some cases, your company might use a small business short term loan to take advantage of a business opportunity that helps your company grow—for example, buying raw materials to fulfill a large order for a potential long-term client.
How Fast Can You Get One?
Once you fill out the application and upload all the required documents, you can get funding in as little as 24 hours. This is an average, so your situation may differ. Things, such as your credit rating, may slow the process. Of course, you need to sign your loan documents before any funds are released. This type of delay is predicated on your actions. Our goal is always to provide you with funds as quickly as possible to help you meet your needs and fulfill your obligations.
Can You Get a Short Term Loan With Bad Credit?
Yes, there are some short term loans available to companies with bad credit. However, you can expect to place something of value as collateral. You may also pay a higher rate of interest; however, if you maintain the terms and pay on time, it can boost your credit score for future loans.
Do You Need a Credit Check for a Short Term Loan?
Almost all short term small business loans require a credit check. These loans are similar to ones you’d go to a bank to obtain. The lending company needs to know that you’re able to pay the principal and interest back. However, if you have bad credit, some lenders can help you obtain the funds you need.
How to Get a Short Term Business Loan Online With Lendio
If your company has solid credit, and you’ve been in business for more than two years, you stand a good chance of qualifying for a short-term business loan with one of the more than 75 lending partners that work with Lendio. You fill out an online application that takes around 15 minutes to complete.
You need to upload documentation, such as your photo id, banking statements, credit card statements, and other essential paperwork. You can do all of this online. If you qualify, you can get funds in your bank account in around 24 hours.
If a short term business loan is not the right solution for your business, Lendio can also help you explore other funding options like: