It’s been estimated that only a quarter of U.S. small businesses stay open for 15 years or more. Though there are a number of factors contributing to early closings of small businesses, financial difficulties are among the most common. That’s where short term business loans can swoop in to save the day. These special loans are designed to bridge temporary cash flow gaps and can have a variety of terms, based on need. For example, terms can range from as little as 90 days to as much as a year.
Short term loans can be secured or unsecured and can offer major assistance for otherwise struggling businesses. Not sure if they’re right for you? Here are five of the most common scenarios that can be resolved with short term loans:
- Start-Up Costs
Startup business loans can be used to finance the initial costs associated with opening a new business. Many small business owners choose this route in order to make up for a lack of startup capital.
- Problems with Receivables
Almost every small business has been in the unenviable position of having fewer accounts receivables than accounts payables. As long as the situation is temporary and your receivables will be coming in quickly, short term business loans can be a real help in this situation.
- Short-Term Operations
Need extra seasonal staff members? Can’t finish a job without a new piece of equipment? Short term business loans are ideal for financing those kinds of needs when they arise.
- Emergency Repairs
In the event of an emergency, the chances that you’ll have saved up extra cash are limited at best. Short term loans are excellent for financing unexpected repairs of equipment or facilities.
- Improving Cash Flow
Because of their brief maturation periods, short term business loans are ideal cash flow solutions. If you don’t have the cash you need, but know that it’s coming soon, a loan could be a great way to fill the need.
Short term loans can be excellent in a pinch, often offering immediate approval. However, they, like all loans, should be used with caution, since they tend to come with higher APRs than other loans. If you feel like you’re in a tight spot that can only be solved by a short term loan, by all means, find a reputable lender and a loan officer you can trust. They’ll help you find the best loan for your business. More on this topic.