What is a Short-Term Loan and How it Can Help Your Business

July 5, 2023 EC Funding

Interested in jumpstarting your cash flow and embracing new opportunity for your business?

If you’re working on growing your business, it can be difficult to get to the next level. And it can be even harder to keep things going once you do.

One solution is to take out a short-term loan. It can allow you to take charge of your revenue, maybe even show you some new opportunities.

Read on to learn about all the benefits a short-term loan can provide for your business.

1. Directly Addresses Problems with Cash Flow

Many businesses struggle with cash flow issues. Cash flow problems, like uneven profit cycles or swinging market demands, can cripple businesses, particularly smaller ones, and can even cause companies to go belly-up in a hurry.

A short-term loan for your business alleviates cash flow problems by delivering immediate working capital. You’ll be able to pay off bills from suppliers and contractors immediately without having to resort to racking up high credit card balances.

You’ll also be able to maintain payroll and keep your employees working. Lastly, you can pay off any lingering tax balances, eliminating the risk of an IRS audit.

When you have the cash on hand to address cash flow obstacles, you can re-focus your efforts on maximizing revenue, expanding your customer base, and planning for the long term.

2. A Short-Term Loan Can Help with Seasonal Offsets

Many businesses are seasonal, meaning they experience the greatest spike in revenues during specific seasons or holidays. Others may be year around but experience huge declines in revenue during off-season months.

These seasonal offsets can doom smaller businesses because it creates an unpredictable profit cycle. While the bills keep coming, the revenue is not.

A short-term loan will jumpstart your revenues to effectively manage off-season periods. You can cover employee holiday pay, bonuses, and your bills during those times when customers aren’t coming.

3. Finance What You Need to Finance

Every business should consider expansion once it has established its customer base and market niche.

It could be a physical expansion in the form of more office space. It could mean adding on a new department or employee. It may mean introducing a new product line your customers will love.

Whatever expansion opportunity presents itself, you’ll have the power to pursue it with a short-term loan.

Once you’ve been approved, you can fund those strategic investment opportunities that will grow your business over the long term.

4. Experience a Shorter Payoff Period

A short-term loan is short for a reason. These loans don’t take as long to pay off, often times clocking in at three months to nine months after the receipt of funds.

With a shorter repayment period, borrowers won’t be signing up for long-term, accumulative debt.

You may even have the option to pay off your loan in its entirety before the final payoff date, without fees.

5. Have Cash On Hand for Emergencies

It’s always critical to plan for emergencies, no matter what business you own. An unexpected fire, tax audit, or economic recession can cause businesses to suffer in an instant.

Be prepared for whenever emergencies strike by getting a short-term business loan. You can stock that emergency fund to ensure you don’t lose your business in the middle of a crisis.

Learning more about emergency loans and how to get them can prepare your business for those unexpected events.

6. Clear Long Term Debts

Long-term debts can accumulate hefty amounts of interest over time. A high debt burden means sacrificing revenue or missing out on expansion opportunities.

You can clear your long-term debt by applying for a short-term business loan. It’ll leave you with a shorter repayment period and a debt-free future in as little as a year.

7. Boost Your Credit Score

As a business owner, you know too much debt can have a major impact on your credit score. Believe it or not, taking out a shorter term loan and paying it off within the repayment period will boost your credit score.

Higher credit scores can get you approved for future loans easier as well as financial credibility as an institution.

8. Apply For a Loan Easily

Application processes for short-term loans are straightforward and don’t take up too much of your time, unlike long-term loans, which require a lot more paperwork and consultation.

You can often apply online and have funds delivered to you in a short amount of time–even the same day.

The Benefits of a Short-Term Loan for Your Business

Running a business is tricky, especially if you’re strapped for cash or cater to a difficult market. While there are plenty of options out there to help, the best by far is taking out a short-term loan.

Short-term loans can alleviate existing cash flow issues and jumpstart your business during holidays or off-season months.

You can clear long-term debt and pursue those expansion opportunities you’ve always wanted. Getting a shorter term loan will also increase your credit score.

At Express Capital, we understand what it takes to keep your business afloat in a tough market. Our working capital and equipment short-term loans can help you manage your profitability effectively and launch your business into the future.

Reach out to us today to learn more about how our short-term working capital loans can work for you!