Short-term loans are essentially provided for a period of less than a year and can extend up to three years. These are usually one-time loans and act as a savior when your business does not qualify for a long-term loan or if there is an emergency. Short-term loans are usually provided by private lenders or banks and are usually an unsecured type of loan.
Short-term loans have a set of features which distinguish it from long-term loans such as
- You can apply for a short-term loan as an individual or as a company.
- Credit history does not play a major role in the approval of your short-term loan. Even if you have a bad credit history, your loan will mostly get approved.
- It is possible to apply for these loans with the minimal paperwork involved and the loans can get approved and issued in a day's time depending on the respective company policy.
- Some banks offer short-term loans with a repayment period varying from 60 to 120 days, which is approximately 4 months.
Why do entrepreneurs need short-term loans?
An entrepreneur may need a short-term loan at any instant during or after the establishment of his/her business. A short-term loan is definitely not an ideal choice for a large business, but for a small business, the short-term loan might end up being just the thing the business needs to flourish.
- Cash crunches: If your business has an uneven sales structure, the short-term loan might be able to resolve the cash crunch for your company.
- Seasonal Trends: Many businesses require extra preparations during the holiday season. A short-term loan can help a business to build up its inventories and manage extra workers salary while business continues to thrive in the holiday rush.
- Expansion of the Project: Whether you are opening a second store, expanding your product or service line, capital investment is required at the earliest. At such times, short-term loans can come in handy.
- Emergencies: At some moment, every business faces an emergency situation no matter how well planned it is. The short-term loan will be an ideal choice at such times for a person to keep the business moving forward.
Although there are drawbacks like high-interest rate and increased spending, the advantages outweigh the drawbacks anytime provided the drawbacks are also taken into consideration while making decisions.
Banks or Private Lenders-
Short-term loans can be taken from a bank or a private lender. Both have their own merits and demerits. Let's consider the operation of these two.
- Interest Rates: Banks usually have a cheaper interest rate as compared to private lenders. The difference between interest rates can go as high as 2000% per annum.
- Easy Approval: If the person applying for a short-term loan does not have a strong credit history, a bank might reject the application. While private lenders will approve the request, at a higher interest rate probably.
- Fast Loans: The paperwork done in case of a short-term loan is minimal and you can get access to cash faster when applied through a private lender as compared to a short-term loan applied from a bank.
- Regulations: Banks tend to have strict regulations whereas, with private lenders, leniency is provided if the connections are maintained properly.
Even though payday loans have their own merits, they must only be used as a last resort. If needed, make sure that you take only the amount that you need and no more.
To apply for a short-term loan from a bank, you can either go directly to the bank or follow the long tedious procedure to get the loan sorted out after putting a lot of efforts. Or, you can use Cash Kitty. Cash kitty is a web application which is designed in order to save the efforts you will have to make to get the ball rolling. With Cash kitty, all you have to do is fill one simple form and leave the rest into Cash kitty's hand.
Cash kitty takes the need of the applicant into consideration by searching and comparing multiple lenders and brokers for the best possible loan for them and their requirements. They have an excellent relationship with multiple lenders and work hard in getting the short-term loan approved for the applicant. Personal details provided to Cash kitty are absolutely secure and is never disclosed anywhere.
Best of all, Cash kitty is free! You won't even have to pay any fees and still get your stuff sorted out into your platter! Amazing, isn't it?
If you listen to what people have to say about Cash kitty just once, you will find out that people really love it! Reason being,
- Cash kitty is very upfront and honest about all the charges associated with the loan. Also, they can tailor every loan exactly to your needs so that you don't end up pulling all the weight of interest piled up.
- Very competitive rates. You will most probably be getting the best deal in the industry for short-term loans from Cash kitty.
- The loan application is a very user-friendly and simple procedure to allow the customers to apply for a short-term loan as easily as possible.
- Also, the time duration between loan approval and cash withdrawal is very quick! All the more reason to think about Cash Kitty!
Eligibility for a Short-Term Loan-
Eligibility in a general sense can sum up to 4-5 points as follows:
- The applicant needs to be salaried or self-employed.
- You will need to have a salary above a certain amount depending upon the company's policy.
- You need to be between 21 years to 60 years of age.
- The approval of bank will also depend on your ability to provide all the required documents.
For companies, they may need past relationships with the bank. Also, the company should have been making money or must be in operation for the past two years or so.
Short-term loans are beneficial for the financial success of a business keeping in consideration the amount of interest that must be paid. One way to go for a short-term loan is Cash kitty which definitely smooths out the process of loan approval from banks by a large margin.