1️⃣ What kind of businesses get Short Term Business Loans?
Short term loans are also tailored to customers with bad credit. Shorter terms, in general, carry less risk than long term loans, therefore, lenders have more room for approval and more flexibility. It is very important that short term loans emphasize business cash-flow over credit score when determining whether to approve the customer.
In general, we can say that short business loans are more of revenue based loans rather than credit-based. It gives you an opportunity to get a loan even if your credit score isn’t perfect. However, cash flow fluctuations might be a bad sign for short term lenders.
2️⃣ How does the process work?
We are lucky to have this product is mostly offered online. The process is always simple and doesn’t require anything significantly complicated. Short term business loan application is similar to that of a merchant cash advance. Lenders will look into your bank statements and general financial health to determine how much the loan could possibly be. Lenders are generally able to pre-qualify customers automatically, nevertheless, we at Richie Lending were able to create an even faster system where loans are being processed fully automatically and 200 times faster than anywhere else.
3️⃣ Should I take a merchant cash advance? Is it worth it?
Loan products are extremely diverse therefore the key here is to make sure the purpose of the loan fits your objectives. Each loan type was developed to cater to specific needs, it is not any different for short term loans. The primary purpose of the short term loan is bringing cash flow to the business or covering unexpected expenses or opportunities. Using short term business loan for inventory, for example, isn’t the best idea, a line of credit is the most suitable product for inventory purchase. Therefore whenever you decide that you need a loan, make sure it fits its primary purpose.