Chat with us, powered by LiveChat

There are lots of myths related to short-term business loans. Some of them are due to scare-mongering while others are perpetuated by the companies promoting long-term options. Whatever your reason for looking at small business loans, it’s important to get clarity on what’s right for your needs. So, if you’re looking at short-term financing options, then this article will help you to separate fact from fiction.

#1 – A Near Perfect Credit History Is Required

Many small business owners think that a near-perfect credit history is required to secure short-term business loans. However, the truth is that loans are available to people with a wide range of credit scores, so you needn’t miss out if you’ve had issues in the past.

It’s true that traditional financial institutions tend to have strict rules about who they lend to. But you’ll also find that there are alternative lenders who take a more flexible approach to credit scores and consider other factors too. If you’re finding it tough to qualify for a loan with a traditional bank, then these could be a more practical option.

Alternative lenders tend to look at the overall business opportunity instead of your credit score alone. They are often more flexible around requirements such as collateral or trading history if you can meet their revenue minimums. Whereas traditional banks may require 3 years of trading, an alternative lender will consider applications from small businesses that have been around for 6+ months.

#2 – The Application Process Is Long & Complex

This one may be true for traditional lenders but it’s not the case for online or alternative funding companies. Old-school financial institutions often have time-consuming application processes that can take months to work through. But newer companies have established themselves on digital platforms that streamline the entire process, making it a lot faster.

There are two aspects of the traditional process that make it time-consuming. The first is completing the application forms which are often long and require lots of supporting documentation. The second is waiting for the banks to review the information and then come to a decision. The combination of these two factors is what causes the lengthy process, but there are faster options out there.

Alternative lenders will usually get you a decision within days instead of weeks or months. At Strategic Capital, we can inform you in as little as one hour and get you the funds within a day. The application process is also much simpler because we focus on your future revenue potential instead of historical information. This is one of the reasons that alternative lending in the USA has increased by 23% in the last year and is now a mainstream option for small businesses.

#3 – Short-Term Business Loans Are Expensive

This myth has its roots in the fact that long-term loans tend to have lower interest rates. It therefore stands to reason that short-term business loans must be more expensive. That is until you take into account the costs that a short-term option enables you to avoid. If you calculate these along with the opportunity cost of not having the funds, you may be surprised by the result.

Although some short-term business loans do come with high interest rates, shopping around will enable you to find the best lender offers. Just like you’d research the best bank account or credit cards, it pays to look around for the most competitive deal. It’s also important to calculate the total amount of interest you’ll pay over the life of the loan. Although the interest rate may be higher, you may find that the total is much less than you’d repay on a long-term loan amount.

Something that people often forget to consider is the cost of not taking out a loan. If you need short-term financing to cover cash flow gaps, then not securing the cash could have serious consequences for your business. Likewise, if you need funds to hire staff for a big project, then you’ll miss out on a lot of revenue if you don’t go for it. There’s no hard and fast answer since every business is different but it’s important to weigh up the cost of inaction against the cost of short-term business loans.

#4 – Loans Aren’t Appropriate Short-Term Solutions

Some people assume that loans are only appropriate for long-term needs but this isn’t actually true. There are many situations where short-term business loans are a more practical or cost-effective solution. In fact, it’s worth looking at all loan types before ruling anything out.

Business financing can be used to meet a wide range of needs, from seasonal cash flow gaps to emergency equipment repairs. If your funding needs are only short-term, then it makes sense to secure a loan to match. Otherwise, you may end up paying unnecessary interest or being charged an early repayment fee on a long-term loan.

How We Can Help

Strategic Capital offers short-term business loans that support organizations across the USA. We don’t require capital which means that your personal and business assets aren’t part of the equation. If you’re in need of short-term financing, then we can help. Whether it’s to pay for emergency repairs or investing in expansion we offer small business loans without the need for collateral. Best of all, you’ll benefit from competitive repayment terms and low interest rates, so you have more money to reinvest in your business.

Transparency, innovation, and expertise are the driving factors behind everything we do. With a talented team of advisors, a plethora of funding partners, and the best technology available -we go above and beyond to help our clients receive their capital rapidly with the industry’s most competitive repayment options and interest rates. We want to break speed records, not bank accounts.

Upon submitting your application, it’s reviewed by a dedicated Capital Advisor. We generate the best rates and terms at lightning speed through our funding matrix and robust lender network. Yep… it’s that simple. Learn more about our small business loans here.

Checking for pre-approval will not affect your credit score.