Various Short Term Financing Options

Short Term Loans have become a viable tool for most small businesses and entrepreneurs.  This is because they are quite adaptable to small businesses environment in terms of expansion, increased expenses and for those that have seasonal revenue fluctuations. Here are two of the short term financing models that most small businesses usually avail of.

 

Merchant Cash Advances

 

This type of short term loan is very ideal for small and medium scale businesses that have a steady and consistent sales coming from debit and CREDIT card. This type is best for businesses that is short on collateral or have too low of a credit score or rating to qualify for the more traditional and conservative method of BORROWING. The cash advance is usually paid by giving the MONEY LENDER a percentage of the total credit and debit card sales. This continues on until such time that the whole or entire amount including fees and interest has been paid. The setback here is that merchant cash advances tends to be a little expensive but this will depend mostly on the daily sales amount and since payment is attached to the daily sales, if the business revenue for the month is small the payment for the advance will be small as well.

 

Business Lines of Credit

 

This loan system works more like a credit card and is more ideal for businesses that need a continuing source of working capital. They fit businesses that have been in operation for at least a year and have at least a sizable amount of revenue by the end of the year. The way the loan works is for the lender to provide the business a specific amount of credit to be use as they please. The borrowers are to pay the advance by remitting only a small part of the loan each month. This is less expensive because the interest will dip each month considering that the interest is always charged on the outstanding balance. There are several more options of short term solutions for small businesses and though these options have a higher interest rates and fees as compared to long term loans, they are still the best solutions for revenue, expansion expense and inventory problems.

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