Are you worried about your business cash flow situation?
Is it getting difficult to pay your suppliers on time?
There is nothing as bad as watching your business collapse due to lack of running funds.
And to run a smooth business you need cash in hand.
Either you sell your liquid assets or you get a short-term loan.
So, in this article, I will tell you what a short-term loan is and 6 tips to find short-term loan lenders.
What is a Short-Term Loan?
As the name says, a short term loan is a loan that is scheduled for repayment within 1 year or in some cases not more than 2 years. A lump sum certain amount is given upfront and then the borrower pays the sum on weekly or monthly basis within a given time period. The fees of such short-term loans are higher than other types of loan.
Why Short-Term Loans?
Short term loans processing are easier than and can be processed within one day through reputable online lenders. If you have good credit history and you need money urgently then short-term loans are great for you. Some lenders might look at the cash flow history then credit history when assessing a short-term loan application. But when deciding the rate of interest, your credit history will have an influence.
Pros and Cons of Short Term Loans
- Get the loan quickly.
- Even with low credit rating, high chances of acceptance for the approval of loan. Quick funding times.
- Less paperwork required for the application process.
- Short processing time of application.
- Higher interest rate.
- Weekly payments can be difficult to pay if the company does not have regular revenue streams.
How Do Online Short-Term Loans Work?
If you are looking for short-term loans and you don’t want to go in the hassle of bank then you can check Slick Cash Loan. You need to first fill out a loan application online. Slick Cash Loan will match your loan application with the relevant lender. Then selected lender will verify your information and once the lender approves your loan request, you will receive a loan contract. It is important that you read the contract thoroughly as it contains all the information about the loan and repayment. The full amount you will owe, and the date your repayment dues will be mentioned in the contract. If you agree with the terms, you can then sign the contract electronically. Within 24 hours you will get the loan amount in your bank account. For repayment, you need to deposit the due amount in your bank account and it will be deducted on the due date.
6 Tips to Find Short-Term Loan Lenders
Following are the six tips to help you determine which online lender will be a financial fit:
1. Gather your records
To get the short-term loan you first need to provide the information about your business and credit history. So, gather your documents to avoid unnecessary delays. Take a look at your cash flow and your business plan in order to know how much money do you need to borrow? Which types of payments can you afford?
2. Eliminate your bad debt
It is important to have a good credit history to get quick short-term loan approval. If you are stuck in a debt trap because of high interest rate then it is better to refinance it by getting a short-term loan and clear it.
3. Research your loan provider options
Google search engine is a great tool to get the maximum information available online. There are many fishy websites that offer short-term loans with low interest rates. And as I have mentioned above that short-term are relatively expensive. Therefore, it is important that as a small business owner, you perform due diligence. Look out for transparent lender that offers single-digit interest rates, good customer service, and verified online security. Read reviews and testimonials about the lender.
4. Beware for teaser rate offers
Legitimate lending companies offer real loans with reasonable and transparent terms. To attract more borrowers, lending companies advertises teaser rates but when you get the contract, the real interest rate charged is way higher than what was promised. Don’t get lured by such offers. It is better to go for the rate and lending company that offers a reasonable rate and you won’t end up paying more than what was offered initially.
5. Determine the APR
Most of the lenders don’t publish the breakup of their pricing. They don’t publish a true Annual Percentage Rate (APR) and hide their pricing under a vague term, “cost.” The true APR has three main components; interest rate, fees, and the loan term. Make sure you check the APR in order to have a better comparison with other lending companies. If a company is not telling you their APR then it is a sign of caution.
6. Check the fees charged and other costs
If the lending company does not provide the breakup of fees accurately then you won’t be able to calculate the APR and determine whether the loan is a good deal. They might even charge processing fees, application fees, and other costs. Do your calculation so that you know much money will be deposited into your account after fees are paid. Also know the penalty amount if you repay loan early. Many lenders also offer to refinance your loan before the end of the term. In this way you actually end up with an early-payoff penalty on your first loan. Also you will be charged fees related with refinancing. And eventually you will end up having an APR that is in triple digits.
Now you know the important tips for finding a reliable and transparent short-term loan lender. Make sure you thoroughly read and agree to the terms of contract before signing any legal contract. You don’t want to get stuck for long in something for just a small amount of money. And beware of scams and ‘too-good-to-be-true’ offers.