Whenever you borrow funds, the first thing that is necessary to determine is how much money you need for the business. From handling business activities, managing working capital to business expansion, sometimes you might need additional funds.
However, many financing methods are available that can help you meet your fund scarcity including short-term business loans, small business loans from pawnbrokers, long-term business loans and more. To choose an accurate loan type, it is essential to have a correct knowledge of selecting a suitable loan type for your business. Here’s a detailed discussion of short-term and long-term business loans that can help you take a precise decision.
Short-Term Business Loan with its Pros & Cons
For business owners requiring quick cash on hand for their businesses, a short-term business loan is a great option to go with. This financing method is designed to meet immediate fund scarcity. A small business loan is usually taken for less than a year and it is used for paying off small business expenditures such as purchasing inventory, accounts payable and temporary cash flow issues.
In fact, for immediate cash assistance, you can get a short-term loan against your asset from Cash Fast Loans. No matter, if you have a poor credit history, you are eligible to get a short-term business loan from pawnbrokers because no credit check is required when applying for a loan.
- You can get an access to quick funds at the time of financial crises.
- Short-term business loans are easily available with a poor credit score.
- It offers better flexibility and it is for a short period than long-term business loans.
- For business owners with high fund scarcity, a small business loan is not a good option for them.
Long-Term Business Loan with its Pros & Cons
A long-term business loan is a financial method involving multiyear repayment conditions that can even last for more than 5 years. As this type of loan is repaid over an extended time period, there are different terms and condition of the lenders, which are necessary to follow. In fact, the loan amount is based on your credit history, if you have a good credit score, you’re eligible to get a good loan amount and if you’re having a poor credit history, you can get less amount of loan or there are even chances of your loan getting rejected.
Generally, banks and big financial institutions provide long-term business loans to business owners in need of huge financial assistance. As the loan is taken for a longer period, the amount is repaid on a monthly basis. If your business is well established then it is easier to obtain a long-term business loan.
- For businesses with high fund scarcity, a long-term loan is a suitable loan type.
- If you’re ready to pay more amount of down payment then the cost of your loan amount is reduced.
- Long-term business loan charges, low-interest rate than short-term loans.
- If you don’t have anything as a security to give to your bank, you are not qualified to get your long-term loan approved.
- It has a thorough and time-consuming approval procedure.
- To obtain a long-term loan, you need to qualify the rigid standards put in place by the lenders.
The Bottom Line
Ultimately, if you want to select the best funding option, it is important to know your business requirements. If you’re having a small business, a short-term business loan is more appropriate and if you’re having an established and large business, long-term loan sounds great to go with. Both the loan types have their individual benefits; hence, it depends on your business needs that which type of loan is best suitable for you. For alternative funding option, you can trust Cash Fast Loans for assured loan approval against your valuable asset. For more information on short-term business loans, call us on 02 9630 6613 to get an immediate cash assistance.