What are Short Term Business Loans and Why do You Need It?

What are Short Term Business Loans and Why do You Need It?
  • Opening Intro -

    Before we answer what is a short term business loan, let's ask another question. What is a loan?


A loan is given by a financial institution to the borrower for a certain period of time and is supposed to be paid back in regular installments. It can be used for personal needs as well as business needs.

We divide a loan into 3 subcategories:

  • Long-Term Loan
  • Midterm Loan
  • Short Term Loan

Term loans can be secured or unsecured. In a secured way, the borrower needs to submit some collateral for the loan. The borrower can use their land, property, Business premises and machinery as collateral to apply for term loans. Whether in unsecured term loans, the borrower doesn’t need to submit any collateral for that particular loan amount.

A long-term loan can help the borrower in setting up their office, to buy commercial carriers or in upgrading business equipment. The maximum tenure for this loan is 10-15 years in general.

And in general, midterm loans are unsecured loans. The maximum loan tenure for midterm loans is 1-5 years.

Short-Term Business Loans

This can help a borrower cover operational needs of their enterprises. It also helps the borrower to expand and diversify their enterprise too. Using Short-term loans, a Borrower can cover major expenses of their business like employee’s salary, vendor’s payments and increase inventory or equipment etc.

Apart from all of this, the borrower can deal with unexpected needs of the fund for their business and also can maintain the cash flow of business. This helps the Borrower to take advantage of new business opportunities.

Where can I get Short Term Business loan?

A borrower can apply for the short-term Business loan with the maximum tenure of 1 Year. The short-term business loan is obtained to fulfill the requirements of the Business. Sources for short-term Business loans are as follows:

  • Public Deposits
  • Advances from Customers
  • Loans from Commercial Banks
  • Factoring
  • Bank Overdraft and Cash Credit
  • Trade Credit
  • Accrual Accounts
  • Discounting Bills of Exchange
  • Advantages of Short-Term Business loan

The tenure of the short-term Business loan is quite shorter than the traditional loans. Some of the best advantages of short-term Business loans are as follows:

  • 1. Bad credit OK

    This is the best advantage of the short-term Business loan. Most of the lenders are not so stringent about the credit history for the short-term business loan. This makes the application process easy to get the loan.

  • 2. Flexibility

    Like traditional and long-term business loans, Short-term business loans are not subject to restrictions. A borrower can use this for a variety of business purposes.

  • 3. Faster Approval

    The approval process for a short-term business loan is very easy and fast compared to the traditional/long-term business loan approval process.

    Short-term business loans help people with operating businesses get a loan which will help them and their businesses.

Give your information on the benefits of this type of loan and how to apply online, share this information with your friends on Facebook and enlighten your friends.

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