Are business owners turning to short term business loans to manage their working capital requirements as an alternative to the traditional loans and sources of finance?
More SME businesses do seem to be turning their back on the traditional sources of business finance such as bank overdrafts, stocking loans, long term asset-backed loans and commercial bank loans securing more flexible short term business loans that are now available in the market place.
There has been much reported in the press over the last few years on the involvement of the banking sector in the credit crunch and as the economy starts to grow companies are finding it harder to secure loans from banks.
Why is that?
They are finding that banks have tightened up the process of applying for business loans. It is now considered to be more thorough, the credit checks are more detailed and the outcome is often unpredictable.
Banks do tend to allocate their funds that they have available to lend by industry and if a particular sector has used up its lending allocation, businesses can get turned down for reasons not related to their own business or its financial position. Also, new regulations from the banking regulators have impacted the internal processes of banks and the amount of the assets that they are required to retain against the amount they are able to lend.
The knock-on effect of the tightening up of the process of applying for a bank loan is that it has also led to some delay in getting a response to your business loan application. Banks take into account the credit history of your business and typically want to see your business plan. This generally needs to include your previous years’ statutory accounts and monthly or quarterly management accounts and the business plan needs to be supported by profit forecasts and cash flows demonstrating the business’ ability to repay the business loan.
The bank may also require security in the form of a charge over the assets of the business or a personal guarantee from a director to provide additional protection for the bank.
Some business owners are reluctant to go to the expense of preparing detailed business plans or simply do not have the time to do so especially if it is an immediate short term cash requirement and so business owners are looking to alternative sources of short term business finance.
What are the advantages of short term business loans?
- Speed of loan
- Cheaper in the long run
- No underwriters
- Simple application process
Short term business loans can be instrumental to your survival with the ability to fund new equipment, or provide a quick cash injection to aid expansion, or even a fundamental marketing campaign. Or perhaps your business suffers with seasonaility fluctuations and late paying customers, each of which inhibits your cash flow.
Whatever the situation and reason for requesting finance, by opting for short term business loans you will only have to make repayments for a short period of time. When compared to loan repayments over a longer term you will also usually find yourslef paying less interest.
At Cashsolv, the process of applying for a short term business loan is simple. There are no long-winded application forms and Cashsolv do not need to go to underwriters to approve the loan. Once the paperwork to consider the loan has been received, all loans are considered that day and, if approved, the funds are transferred to your bank account within 24 hours.
If you require more information about a Cashsolv business loan that could help your cash flow, please do contact us.
For further information Download our Guidance Paper on 'How short term business loans can help your business finance problems', or view the following relevant pages:
- Business loans
- A guide to Short term business loans
- Emergency business loans
- Emergency business loan - why not use a bank
- A guide to Small Business Loans
- How quick business loans can encourage business turnaround
- How to get a quick business loan
- The pros and cons of secured business loans
- How to make business finance work for you
- A case study: How we helped a recruitment firm invest for growth
- A case study: Quick business loans could be the answer
- Business loan calculator