May 9, 2022

The Benefits of Short-Term Business Financing

Short-term business financing is something every organization should strongly consider.
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Short-term business financing is something every organization should strongly consider. Even if it’s not right for your company at the present time, it could be just what you need at some point in the future.

There are many forms of short-term business financing, such as business loans. Here’s a passage from a recent Forbes article to set the table for what’s to come in this piece:

Short-term business loans are a type of financing that can help small business owners access cash necessary to cover emergency expenses, fill gaps in cashflow, buy inventory or take advantage of business opportunities.

There are a couple of things to take away from this passage:

  • Short-term business financing is exactly what it sounds like. It’s money you borrow for use in the short-term, generally 12 months or less.
  • Short-term financing for a business can be used for many different expenses, such as buying inventory, expansion, making payroll, and financially managing an emergency.

Now that you understand the basics of short-term business financing, let’s turn our attention to the top five benefits associated with it.

 A person signing a document

1. QUICK FUNDING TIME

One of the primary pitfalls of long-term financing is how long it takes to receive funds. It’s not out of the question to wait several weeks or longer to receive a decision on your application. And when you add that to the time it takes to actually receive your funds, your financial circumstances may have already changed.

Short-term business financing allows you to receive funds quickly, sometimes within one to two business days. And as you know, the sooner you receive funding the sooner you can use it to your advantage.

No matter what type of financing you’re seeking, speak with the lender upfront about how long the process will take. This will help you decide if it makes sense to proceed.

2. LESS MONEY PAID IN INTEREST

Even though the interest rate is generally higher for short-term business financing, when compared to long-term financing, you’ll save money in the end. This is because you’re only paying interest for a short period of time, such as six or 12 months.

When comparing lenders and short-term business financing options, always pay close attention to the interest rate. This will tell you how much you’ll pay in interest each month, as well as over the duration of the loan.

You want to borrow money, but you don’t want to do so if it’ll cost you an overabundant amount in interest. Protect against this by comparing your options and weighing this factor heavily when making a final choice.

3. LESS DEBT-RELATED STRESS

It doesn’t matter what type of debt you take on, it has the potential to cause additional stress and anxiety in your life. And while you’re used to that as a business owner or executive, it doesn’t mean you want to add more to your plate.

With short-term business financing, you typically repay your debt within a period of
12 months or less. When you know you’re carrying debt for a shorter period of time, it’s easier to see the light at the end of the tunnel. And with that, you won’t have nearly as much debt-related stress.

4. SIMPLE APPLICATION PROCESS

Most short-term business financing products have a simple, streamlined application process. It doesn’t take hours on end to complete. In fact, most lenders allow you to complete and submit the application online. There’s no phone call. There’s no meeting with a loan officer in person.

You can save yourself additional time by preparing for the application process in advance. Collect documents such as tax records, business credit reports, balance sheets, cashflow statements, and bank statements.

5. PERFECT FOR EMERGENCIES

You never know when an emergency will pop up. You could lose a key client or find that your office needs repair. While raiding your bank account is an option, it also puts you at greater risk of financial complications down the road.

Short-term business financing is ideal for emergencies. Not only is the application simple to complete, but you can receive funds quickly. There’s no wasting time. You can receive funds and put them to good use right away.

 Close up of a phone’s calculator

TAKE YOUR TIME MAKING A DECISION

Even if you’re in a rush to secure financing, you must take your time when making a decision. Any form of financing — short or long-term — will affect your company. A poor choice could cost you time and money while putting unnecessary financial stress on yourself and your business.

Compare several products from several lenders to ensure that you know what’s available. Read consumer reviews, ask questions, and consult with coworkers about what makes the most sense.

When you take your time during the decision-making process, you’re less likely to look back in the future and wonder if you could have done things differently. And you’re more likely to turn to this form of financing again should the need arise.

SUMMARY

With benefits like these, it’s easy to see why so many companies rely heavily on short-term financing. If you’re interested in this, you should also learn more about invoice factoring. It allows you to receive payment for invoices without delay.

At REV Capital, our entire business is built around invoice factoring. Contact us online or via phone at (855) 489-0310 to learn more or to get started. You may find that invoice factoring is the solution you’ve been seeking.