Key Factors to Look at When Applying for a Short Term Loan
Businesses fail to proceed as planned due to some enforceable circumstances, when this has happened, you may need to get some funding to generate more revenues for your business. When you looking for a quick loan for your business which you don’t want its repayment period to extend for more than 12 months, then you should consider going for a short term loan. Short term business loans are those types of funding that a business receives and is required to repay it within 3 to 12 months. Before you decide to go for a short term loan, there are several factors that you need to look at. Here is a discussion of some of the factors to put into consideration when going for a short term loan.
Before borrowing a short term loan, you should know the type of loan. When it comes to short terms you have two options to go for either the secured one or unsecured type. Secured short term loans mean that the business owner has pledged their assets to the lender as a guarantee of paying back the loan, this qualifies the borrower to a small interest repayment plan of the loan. An unsecured loan doesn’t need the business owner to promise any asset as security for the loan, however, you’ll have to prove ownership of an operating business by also providing bank statements for the business, here the interest rate is high.
You need to factor in the interest charge on the short term loan you looking to borrow. You should consider knowing the cost of borrowing the short term loans from different lending organizations before settling for any lender, this will give you the best repayment interest rate. The amount of money that you are likely to be charged as the interest rate will be determined by your credit history, poor credit history will lead to a higher charge rate on the interest.
Before borrowing short term loan, you need to understand the terms and conditions of the lender. Since most business owners are looking for a short term loan with the best repayment conditions, you should check the EMI of the different lending institution and settle for the one you find comfortable dealing with.
You should factor in the loan repayment plans. You need to lay down a plan on how you will be repaying the loan otherwise the short term loan may bring you more challenges than how you were before. A short term loan may have a higher EMI which requires that you as the borrower understands how you going to pay for it without having any difficulties.