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Short Term Business Loan: An Overview

Short term business loan is a quick solution to manage short term business needs via funds. It is a great way to handle urgent business requirements and comes with several benefits. Read more: http://www.sooperarticles.com/finance-articles/loans-articles/short-term-business-loan-overview-1597838.html

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Short Term Business Loan: An Overview

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  1. Short Term Business Loan: An Overview Term loan is a loan that is given by Bank or NBFCs to the borrower for a particular time and must be repaid with regular monthly installments. Term loan can be used for personal needs as well as Business requirements. Term loans are divided into three sub categories: 1.Long Term Loan 2.Midterm Loan 3.Short Term Loan Term loans can be secured or unsecured. In secured Term Loan, borrower needs to submit some collateral for the loan. Borrower can use their land, property, Business premises and machinery as collateral to apply for term loans. Whether in unsecured term loans, Borrower don’t need to submit any collateral for that particular loan amount. A long term Business loan can help the borrower in setting up their office, to buy commercial carriers or in upgrading business equipments. The maximum duration of time for long term Business loans is 10 years

  2. to 15 years in general. In general, midterm loans are unsecured loans. The maximum loan tenure for midterm Business loans is 1 Years to 5 Years. Next is short term business loan. Short Term Business Loans: Short term Business loan helps a borrower to covers operational needs of their business. It also helps borrower to expand and diversify their business too. Using Short term business loans, a Borrower can cover major expanses of their business like employee’ssalary, vendor’s payments and increase inventory or equipments etc. Apart of all of this the borrower can deal with unexpected needs of fund for their business and also can maintain the cash flow of business. This helps the Borrower to taking advantage of new business opportunities. Where can I get Short Term Business loan? A borrower can apply for short term Business loan with the maximum tenure of 1 Year.Short-term business loan is obtained to fulfill the

  3. requirements of the Business. Sources for short term Business loans are as follows: Public Deposits Advances from Customers Loans from Commercial Banks Factoring Bank Overdraft and Cash Credit Trade Credit Accrual Accounts Discounting Bills of Exchange Advantages of Short Term Business loan The loan tenure of short term Business loan is quite shorter than the traditional loans. Some best advantages of short term Business loans are as follows: Bad credit OK Flexibility Faster approval Bad credit OK: Thisis the best advantage of short term Business loan. Most of the lenders are not so stringent about the credit history for short term business loan. This makes the application process easy to get the loan. Flexibility: like traditional and long-term business loans, Short term business loans are not a subject to restrictions. A borrower can use this for variety of purpose as business.

  4. Faster Approval: Approval process of short term business loan is very easy and fast as compared to the traditional or long term business loan approval process. Disadvantagesof Short Term Business loan There are some disadvantages of Short term Business loans, consider it before applying for a short term Business loan: Small Tenure High ROI Daily Payment Small Tenure to repay the loan: Payoff the loan is a good thing but sometimes it can create problem for the borrower. Less tenure can be problematic for some businesses which are not prepared for such faster turnaround. High interest rates (High ROI): The interest rate of Short term business loan is higher as compared to the traditional loans. Daily payment: In short term business loan a borrower need to pay daily for their Short term business loan. Eligibility criteria for short term loans: Eligibility Criteria for short term business loan is depends on the applicant. Criteria are as follows: For individuals The applicants need to be salaried or self-employed. Regular Monthly income( More than Rs. 8,000 per month) Age of applicant lies between 18 to 60 years

  5. The approval of the loan may also depend on the ability of the individual to provide all supporting documents. For companies Good relationship with the bank. Business record of past 2 years. They may also have to be in operation for a specified period of time and have specified annual revenue to qualify for the loans. Short term Business loan comes with many features but these features can vary from one lender to another. So be careful when apply for short term loans. Consult with financial consultancies like Banknomics for better result.

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