As for a small business owner who is considering financing offers, the duration and amount of financing are two factors to be taken into account. To ensure that there’s better cash flow as well as turnaround on credit line, it’s preferable to opt for short term financing. What this mean is, the amount you pay back is already fixed for the said term.
Furthermore, this puts away your business from any risks if mandated to payback a portion of your profits.
Smart Loan Decisions
If you wish to minimize payables, then seeking for long term loans will be wise. However, this is going to compromise the funds you could withdraw and used as working capital since it takes longer to pay back the loan. This is why the “no commitment” and “free early payoff” offered in short term loans are more attractive among SMEs.
Moving over to your credibility with bank loans, you’d do fine given that you are paying on or before due date. On short term loans, it is likely to gain points by simply
- Paying earlier than the expected due date
- Paying more than the payment required or
- Paying on time
These three factors can help big time especially when you seek additional funding before completing your first loan.
Think of short term loan as credit card.
You’ll be given a 10,000 dollars credit line and paying most of it for few months entitles you for an increase.
So let’s say for example that you want to use that money to trade on crypto signal, and you were that good allowing you to get more than half of your ROI in just a short span of time, you can use your profits to pay for your loan and get an increase. This increase will serve as backup whenever you need to add more to your account.
Should Always Be an Open Communication
Another thing to check is the responsiveness of the financing organization. With financing firms offer short term, you’ll get an actual person as point of contact than established banks and larger companies to which most probably, redirect you to their general customer service department.