Short term finance option is suitable for your business if you are in need of funds urgently in order to meet up with immediate financial needs. You can obtain working capital aside from what’s offered by traditional financial institutions. If you are considering taking up a short term business loan with the aim of improving cash flow, consider these options.
1. Short term loan
This is a business loan that requires repayment over a set term. These loans have fixed rates, with borrowing limits. A short term loan could assist you to cover working capital needs. Most times, short term loans are repaid within a year or less.
2. Merchant cash advance
Merchant cash advances provide you with an avenue to get working capital for businesses with an average credit score. This type of financing is suitable for startups that lack strong credit. Merchant cash advances can be more expensive than other types of short term business financing.
3. Accounts receivable financing
Accounts receivable financing gives businesses an opportunity to utilize their outstanding receivables for a loan. This type of financing can work in two ways. Firstly, the accounts receivable financing company could give out monies based on the value of a business outstanding invoices. During repayment of loan, you must pay it along with a fee.
4. Inventory financing
This type of financing provides you with working capital to purchase inventory. This inventory serves as collateral for the loan. Alternatively, you could utilize inventory financing to stock up for the busy season when cash flow is slower.
5. A business line of credit
This business loan can come in handy if you only want to pay interest on the amount of credit you’re using. In order to obtain a business line of credit, a good credit score is a pre-requisite. Your credit score determines the interest rate you get.