What are your thoughts on using a short term loan to improve the financial status of your business? Is this something you are looking into at the present time? Is this something you have used to your advantage in the past?
If you want to apply for a short term loan you are not alone. This is something that many business owners are doing, as they come to find that it’s the perfect financial product for their organization. While there are other ideas to consider – such as a business line of credit and credit card – you should at least learn more about a short term loan.
Once you have a list of pros and cons, you can decide if this is right for your business at the present time. This leads to a very important question: what is the best way to apply for a short term loan?
- Know the Pros and Cons
Before you do anything, you need to understand the pros and cons associated with a short term loan. For example, there is limited paperwork and you won’t be taking on debt over a long term. Conversely, the annual cost of a short term loan is higher than a long term loan. With the pros and cons in front of you, it’s easier to see if this makes sense for your business.
- Compare Lenders
In a perfect world, you wouldn’t have to think about this. Every lender would be the same and that would be that. However, you know that things don’t work out this way in the real world. Instead, every lender is unique in some way, shape, or form. This is why you need to compare a minimum of three lenders.
Tip: with the help of the internet, you’ll find it much easier to compare lenders with one eye toward making a final decision.
- Know What You Want
It’s one thing to say that you want to apply for a short term loan, but another thing entirely to have a clear idea of what you are trying to accomplish by doing so. How much cash do you require? Are you comfortable with the idea of making daily or weekly payments for a period of a few months to a year or two?
You have to go into the process with an idea of what you are hoping to accomplish. If you don’t, you could end up applying for a loan that doesn’t suit your every want and need.
- Can You Qualify?
Now that you’re excited about a short term loan, you need to find out if you qualify. Again, you won’t know the answer to this question until you search around to learn more about eligibility requirements, but it’s worth knowing the basic qualifications before you apply.
Here are a few of the typical requirements:
- A minimum of $50,000 in annual revenue
- A credit score of 550 or above
- A minimum of one year in business
If you don’t qualify for a short term loan right now, don’t give up just yet. Instead, wait for a few months and try again. By then, you may have more revenue and your business will be more established.
Tip: since no two lenders are the same, don’t assume that one denial will lead to another. You may find that one lender turns you down but another is more than willing to do business with you.
These are the types of things you need to think about if you want to apply for a short term loan. Just the same as applying for a credit card, there are things you can do to tip the scales in your favor. This all starts with knowing the ins and outs of a short term loan.
Do you have any experience using a short term loan for your business? Were you happy with the result, or did you end up regretting your decision in the end? Share your thoughts on short term loans – including your personal pros and cons – in the comment section below. Your advice can help other business owners make a confident decision.