Short term loans are ideal for those who have a temporary funding need for personal/business purposes. For more information about this type of business financing and an exceptional provider, keep on reading the lines below.
Short Term Loan Definition
If you need to obtain this type of credit, be aware you’ll be required to pay it back by within a certain period of time (typically a year from getting the funds). This means you must pay back the debt quickly, from where we have the name “short term.” Other loan types with longer terms are known as medium or long term loans.
This type of loans is also called “quick cash” since you can get access to it faster as compared to traditional loans offered by banks. With a short term loan, you can enjoy the following features:
- The borrowing amount is lower
- You must pay a higher annual percentage rate (APR)
- Are typically unsecured, meaning providing collateral isn’t a must.
- You must repay both the interest and the principal in full, meeting the loan term.
- You’ll typically need to repay weekly.
Types of Short Term Loans
Let’s move forward and discover the types of these loans:
- Credit Line or Line of Credit (LOF)
This means you get a business credit card that’ll require you to make installment payments on a monthly basis.
- Invoice Financing
This one requires interest payments based on the number of unpaid invoices.
- Merchant Cash Advance (MCA)
First of all, this isn’t a loan: it’s a sale. So, the provider purchases the expected credit card sales associated with your business, which is like the case with a short term loan. Importantly, when you have a slow month, you can pay less, and when you have more sales, you can pay more.
To get fast and easy access to this highly popular type of financing, consider working with a trustworthy and experienced alternative online lender like FirstAmericanMerchant.com. FAM is a true expert of business funding specializing in the high risk field that boasts an A+ rating with the BBB. FAM can be the best helping hand when it comes to short term loans.
- Installment/Online Loans
This type of quick cash is fine for rent, food and other necessary payments.
- Payday Loans
These are great for emergency situations: the interest is higher as compared to other options.
To sum up, a short term loan requires quick repayment, which is usually a year. Read the types of these loans to find the best fit for your business.