Short-term business loans are an important part of the financing mix and are used as a cash injection to help with working capital, cover inventory expenses, or pay for an unexpected bill. In other scenarios, short-term loans can assist in business growth, such as covering supplies for a new customer order.
How does a short-term business loan work?
Short-term business loans are generally approved for a duration up to 2 years. Often unsecured, the finance is ideal as a top up on existing finance structures and suitable for short-term investments. Popular borrowing reasons for short term finance are managing cash-flow, bridging receivables and buying inventory. Many modern lenders offer short-term finance with swift, easy online processes.
Short-term business loans are designed to help your business flourish. They would not exist if they did not have a measurable positive effect on some businesses. However, if your business is struggling to pay outstanding debt or is looking financially unstable, then taking on additional finance would not be advisable. On the other hand, if your company is well established, profitable and will use the finance to grow and improve, potentially a short-term loan could be a good idea.
“These days we are all pretty much ready to jump on a plane at the drop of a hat because the price has come down." Martin Aerospace, a manufacturer of critical parts for Boeing and Airbus engines leverages a Spotcap short term loan to satisfy demand.
Use a short-term loan to help your business flourish
Manage cash flow
Short-term business loans can give your company financial stability in the face of unexpected costs and late payments.
Keeping your finances healthy can get tough. This is especially true when you’re handling seasonal shifts or waiting on outstanding invoices. Relieve the pressure with short-term funding.
Buy additional stock
Refreshing your inventory before a busy Christmas period can be a sensible business decision. A short-term loan can supply the working capital you need to restock your inventory and meet customer demand.
Renovate your location
Delight your customers with an atmosphere that will make them want to visit again. With a short-term loan, you can refresh your premises or upgrade to an entirely new look.
The application process for short term business loans is generally entirely online and paperless. The lender will require financial documentation such as bank statements, annual reports, and VAT returns. A team of analysts will assess the application and return with a decision generally within a couple of days, sometimes even one working day. In many cases, the finance is immediately accessible after approval. Depending on the lender, the borrower will repay the short-term loan either in a linear or annuity repayment schedule.
Who is eligible for business loans?
Depending on the lender again, there are generally basic criteria in place to apply for a loan, usually displayed on the lender’s website. Some lenders offer online qualification checks or quickscans to easily review eligibility. To apply for a short-term loan, you must generally be based in the UK and run an established and profitable business. At Spotcap we require a business to be operational for at least three years and with a minimum turnover of £500k.
What are short term business loans used for?
Businesses use short term loans for a plethora of different reasons, ranging from buying inventory to financing renovations. Popular reasons to borrow are managing cash flow and bridging receivables. Short-term loans are ideal for businesses who want to keep their continuity or reach up to their next step.
Find out more
Speak to our client services team on 0203 308 9188 or have a look at our brochure.