A business owner will always need cash to run his business. There are salaries of employees to pay, more stocks to buy, overhead costs, and expansion. A business owner must find ways to keep his business afloat during hard times, and this is by taking a short term loan. A short term loan is a credit that you can pay back in a maximum period of 12 months or one year. The interest rate is quite high; nevertheless, the short repayment period results in lower cost compared to long-term loans. Business operators in the UK are fortunate to have several lending companies that offer short term loans cater to their financing needs.
Here are the reasons why people in business in the UK prefer short term loans:
Lending companies that offer short term loans do not require many documents. You will only need an identification card, your latest address, and proof of income. Some lenders would ask for your credit rating, but it is not the only deciding factor in granting loans. A poor credit rating does not mean getting a rejection. After the lending company has received your documents, processing and approval of the loan would take less than an hour, and you will have the funds in your bank account within the same day of approval. You do not have to wait long to augment your capital.
Short Term Loans Mean Short Term Debts
One reason why businessmen prefer to take short term loans for their financial needs is the shortness of indebtedness. Even if you are using the money that you borrowed for your business, you cannot get away from feeling worried about debt. Borrowing long term, for example, can make you anxious about how to pay your debts in the years to come. What if your business goes bankrupt? What if you will get sick? With a short term loan, you get rid of worrying about what the coming years would bring. If you take out a short loan today, you will be debt-free after 12 months or less.
Helps Businesses Manage Seasonal Change
Businesses have high seasons or low seasons. High season is the time when the demand for the goods and services that you sell is high. You need to increase your inventory to meet the rising demand, which means more cash to buy products. Getting cash to finance your immediate purchases can be easy with the help of short term lenders. When you can increase your inventory, your profits would also go up.
During the low season or when the demand is low, you will need cash to keep your business afloat. Your daily income might be less than the cost of your daily operation. Getting a short term loan will help you pay your employees and other expenses until the next high season.
Can Save Your Business
Nowadays, businesses face great difficulties because of the impact of the pandemic. Many people lose their jobs or have to content themselves with reduced work hours. Because of no income or low income, their buying power goes down. Some business establishments lose their customers and have to operate on limited hours or totally close down. To keep your business open during the pandemic, funds from a short term loan can be your saviour. When the world enters the new normal, your business is still there, and you can reopen immediately.
Help Your Business Grow
You can use the funds from your short term loan to expand your business. A growing business would require additional employees, additional inventories, and additional overhead expenses. Make use of a short term loan to help your business grow and earn a profit.
If you are having problems with your business capitalisation, find short term lenders that can help you keep your business running despite the odds.