How it Works
Selecting the right business finance for your needs is important - not everything should be solved with a five-year unsecured loan! At Clifton Private Finance, we’re experts in the realm of short-term business loans - let us share some of that experience.
What Makes a Short-Term Business Loan ‘Short-Term’?
In business terms, a short-term loan is one that is repaid in twelve months or less.
What Is a Short-Term Business Loan For?
There are many uses of a short-term business loan. Some of the most typical include:
1. Cash Flow Finance
Cash flow is by far the most frequent reason for businesses to look to short-term financing. Finding that you are just a little short one month and need something to tide you over until business picks up, or an invoice from a major client is paid, is not an unusual situation - so don’t panic if you’re in exactly that place.
There are a range of short-term business loans developed to ease cash flow crises, including:
Perfect for B2B businesses who are struggling while clients sit back on 30-day or longer invoice terms. Invoice finance unlocks the value of your accounts receivable, getting you the money today for a reasonable fee.
There are even longer-term solutions if you find that your customers are regularly delaying payments, with invoice discounting lines of credit an option to speed up the process in the future, or invoice factoring contracts that will give you the power to hand off invoices to a factoring company and get your hands on the cash fast!
B2C businesses that do a majority of their business through credit and debit card transactions can leverage expected future card sales to get the money early. A merchant cash advance is perfect for boosting your cash flow and smoothing over seasonal business dips.
Credit cards and overdrafts offer cash flow help on an ongoing basis, providing you with the ability to dip in and dip out as you need to balance slower months with healthier times.
A modern online banking system that functions in a similar way to invoice finance, buy now, pay later (BNPL) providers operate subscription-based accounts that will give your business customers the option to spread the cost of your goods or service in a way that suits them, meaning you get your invoices paid immediately without fuss. B2B BNPL is cash flow finance that helps both you and your customers.
B2C buy now, pay later
Business-to-consumer companies are not left behind in the BNPL sector, with finance providers offering consumers buy now, pay later systems that can boost sales and ensure your cash flow never suffers. More on B2b Buy Now Pay Later.
The traditional and established loan. Based on your business credit score and providing cash in the bank that can immediately help with your cash flow, short-term unsecured loans can be applied for easily and processed swiftly for near-instant cash support.
2. Bridging Finance
Called ‘bridging’ because it bridges the gap between your current situation and an influx of cash, business bridging finance represents a powerful short-term loan option that allows your business to take advantage of opportunities as soon as they come up.
Bridging loans provide substantial capital at short notice, giving you the power to expand your business. Use them to:
Purchase property - When the perfect property comes up you don’t want to miss out, long term business loans, such as commercial mortgages, can take weeks to set up and have limiting criteria that can mean deals fall through as you wait for the application to process. A bridging loan will enable you to swoop in and buy the premises without waiting, with an exit strategy of replacing the short-term loan with a mortgage once the slower paperwork is processed. Perfect for property auctions.
Expand the team - If your company is in the position of bidding for a considerable project but you don’t (yet) have the manpower or other resources to undertake the work, don’t let the opportunity slip away. Bridging finance enables you to quickly fund an expansion if a speculative tender is successful, its exit strategy is based on the payment stages of the project milestones.
Obtain large assets - If you need to quickly purchase a significant asset, perhaps some plant machinery or niche technology, and there’s no time to negotiate longer-term asset finance, then look to an extremely short-term bridging loan to ensure operations can continue in the meantime. Using replacement long-term asset finance to pay off the bridging loan gives you the exit strategy you need to secure short-term financing. Bridging loans of this nature can be obtained for just a few weeks if necessary.
Making it to the next pit stop - Sometimes, cash flow finance and bridging finance mix. You can see the money coming in over the horizon if only you can make it through the immediate future. Bridging finance can be obtained based on tangible future income, giving you the capital power you need to make it through.
3. Capital Injections with Minimal Interest
When you pay your loan off quickly, you limit the amount of interest the loan accrues, clearing the debt before it has time to build.
Can I Get Short-Term Business Loans with Bad Credit?
There are plenty of lenders who will consider a short-term business loan for a company that’s struggling with its credit rating, but you may have to accept a higher rate of interest than would be available if your credit history was in better health.
One key piece of advice, however, is to stop applying for loans before you’ve spoken to your advisor. Each full application will make a mark on your credit report, and too many in a short space of time will make you look desperate. Hold back and get the help you need.
How Fast Can a Short-Term Business Loan Be Obtained?
If you are paying it off quickly, you don’t expect long lead times on getting the money in the first place - and lenders agree. With ever-improving technology, the application time for a short-term business loan is getting faster each year.
Even complicated loans with multiple credit and history checks can be smooth when working with an experienced finance advisor.
If you are facing an immediate need for some short-term business finance, give us a call at Clifton Private Finance. Our broker relationships mean we can scour the whole UK marketplace for the right lenders and get you the money you need without delay.
