Short-term lending has many advantages over long term loans. So, when starting your business and looking for a loan to help do it, consider these factors that make a short-term loan the preferable choice.
1: Ease of access
With a long-term loan, you will have to consult a large bank and apply for the loan. However, there is a myriad of factors and conditions that can render your business unqualified for a long term loan. Short term loans, on the other hand, are much more accessible. Short term loan lenders have fewer restrictions on their loans, making it easier to apply for.
2: Speed of delivery
Short Term Loans make it to you significantly faster than long term. Some even arrive as early as the day after making the deal. For a struggling start up business, this kind of promptness is irresistible, especially if the bank/union lending to you keeps you updated on interests and such.
3: More long-term benefit
The main problem with long term loans is that you’re ultimately spending more money than you ever took out in the first place because of climbing interest rates and how long you’re kept in debt. Long term loan debts can stretch out over several decades. However, short term loans only last between 1-15 years at most, meaning you can be free of debt far sooner. What this means is that, by paying off the debt sooner, your business gets to keep the money you would’ve spent on continuing to repay a long-term debt for more important things.
4: Ideal for small to medium businesses
A large, well-established business doesn’t need to worry about long term debt from large banks because they have the funds and safety nets to handle it. Smaller businesses, though, don’t have that luxury. A bad enough debt from a long term loan can utterly destroy a small business or even a medium one. Short term loans are great for small businesses because they provide a good safety net for when the market dries up or taxes take a bite out of their funds.
Short term loans save you potential thousands in the long run, are quick and easy to obtain, and provide you and your business with more options and flexibility. So when you go to take out a loan to help your new business, ask for a short term loan instead, and watch your business blossom.
