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Short-Term Business Loans: The How, What, and Where.

By Mary Nebotakis, Managing Director, Natloans, B. Eco, Dip. Financial Services

Short Term Business Loans

How Short Is Short-Term?

In general, when we discuss short-term Business Loans, the life of the loan in question is usually between the range of three, and twelve months. Therefore, right off the bat, it must be understood that such a loan is most suitable for companies which turn over a high income in short periods, so as to be able to keep up with their repayments.

What Kind of Loans Are Best?

Here are a few of the most commonly pursued options:

1. Business Credit Card

We begin our list with the exception to previously outlined rule. This sort of finance option, obviously, is not a loan, and not a thing which is, itself, supposed to be repaid for. Instead, it is the expenditures which are bore by the card that must be eventually repaid, usually, within a certain window, free of interest.

The company credit card is a staple of small business, with roughly 70% of all small businesses in Australia being in possession thereof. It is incredibly useful for the day-to-day expenditures, such as stationary, equipment, and events on short notice.

2. Unsecured Business Loans

For our second type of short-term business loans, we will move on to a more traditional loan solution. An unsecured business loan is simply a business loan wherein one is granted, by their lender, a sum of money which they can spend at their discretion. The loan is not secured against any capital, such as a car, piece of equipment, or building, and hence the name ‘Unsecured Loan’.

These usually have a short life-span (think 3-12 months), and can be supremely useful for a company seeking to expand in some way, and needing funds to cover the costs of a large-scale project.

3. Line of Credit

This a a type of loan, the value of which will be determined based upon your business’s bank statements — typically accrued over the course of the past three months — whereby a average turnover for your business is measured by the lender. Depending on the industry in which you work, a lender could give you about eighty percent of the turnover which they had measured.

Keep in Mind

Short term loans are usually repaid upon a weekly basis, so as to minimise their impact to business cashflow, and usually take course over twelve to twenty-four months.

(Short term loans usually are weekly repay (no impact on cashflow) usually between twelve and twenty four months god thing about that is you’re paying less interest charges)

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