When it comes to the best short-term business loans, you have a lot of options.
Marketplace competition has prompted the rise of price comparison websites, and those are great—but how do you really know that you’re getting the best loan if you don’t understand what to look for?
Here, we cover the features of the best short-term business loans and how you can appraise a short-term loan for yourself to establish a better understanding.
What are the features of the best short-term business loans?
Interest rates
Interest rates for short-term loans are straightforward, and use a type of interest fittingly referred to as ‘simple interest’. This means your interest will not compound, and you’ll simply pay back the agreed percentage on the amount you borrowed, calculated with the term of the loan in mind.
A lower interest rate means less to repay, so bear this in mind when looking for the best short-term loan for you.
Terms
The term of your loan is how long you’ll be repaying it for (unless you overpay or pay it off early). Since we’re discussing short-term loans, you’ll be expected to pay back the total sum within a couple of years, and the shortest terms are usually three months.
Be wary of loans that present terms too short for you to comfortably pay back your borrowing. If you doubt you’ll be making the right kind of money over the preceding three months, then consider a more appropriate term that suits you.
Borrowing amount
If a lender falls short of the amount you ideally need, it may not be worth borrowing less only to end up needing to borrow more in future. Borrowing once at the right amount is preferable, so while a lender might have favourable terms on a lower amount, it may not be worth your while.
Additionally, having more than one loan to repay can complicate things and easily lead to missed payments.
Requirements and other factors
Borrowing from a bank often comes with more stringent checks and a stricter perspective on ‘risk’ than other kinds of lenders.
This means that bad credit—either business or individual—could prevent you from getting a short-term loan, or at least the more favourable terms of a loan.
Some lenders may also want proof of your business’s financial track record and trade experience.
How do I find the best short-term business loans?
Business Finance House works with more than 80 lenders to find the best short-term business loans for you, weighing the variety of factors that make up your unique situation and finding the answer that’s right for you.
We operate nationally but our business loans in Liverpool and Cheshire allow us to take advantage of local knowledge hopefully giving us a competitive edge.
To find out more about how to get a short-term business loan, short-term business loan bad credit issues, or any other of our professional services and get some financial peace of mind, contact us today.
