LONG TERM & SHORT TERM LOANS
Competitive Short Term & Long Term Business Loans for Florida Businesses
No matter how much planning and preparation you do, owning a business is simply full of surprises. And although traditional business loans may cover your needs for some circumstances, there are plenty of other instances where waiting around for the weeks-long loan processes simply don’t make the cut. Sometimes, speed is everything and it’s all that’s keeping you from closing up shop or keeping your competitors at bay.
In these instances, Maven Financial offers various short term and long term business loans that can get you the financing you need—in as little as 24 hours.
Short Term Loans vs. Long Term Loans: Key Differences
Short term business loans allow for very fast funding so you get a lump sum of cash with a predetermined payment term. These usually can only last for a few months up to a year. Given that, the amount that you can borrow is going to be lesser than what you can borrow with a long-term loan.
Unlike long term loans, the repayment structure is different from short-term loans. Instead of your traditional monthly payment, lenders would typically require daily, weekly or bi-weekly payments.
On the other hand, long term business loans are often the smartest and most affordable ways to fund large expenses. What distinguishes it from other loans is that it usually has a fixed maturity of 3-10 years. In some cases and with some bank loans, this can even stretch out as far as 20 years. The term length of the loan can vary depending on several factors including the policies of the lender, the amount of the loan, and how it will be used. These loans often start at $25 000 and can go up to $200 000.
These loans are usually paid in increments by the company’s cash flow over the life of the loan. In some cases, it’s paid for by a certain percentage of profits that is set aside solely just for that purpose. When it comes to interest, rates can vary by lender, the amount of the loan, or by the creditworthiness of the borrower.
Long term business loans usually require collateral commonly in the form of the company’s assets. In addition to that, these loans often have a certain list of rules regarding what the company can financially do or not do in the life of the loan.
So What Are the Benefits of Short Term & Long Term Business Loans?
The primary benefits of short term loans are the speed and convenience of acquiring it. These loans can quickly get you out of a bind. They can help you cover unexpected costs, finance a short term project, survive a slump, and even look into new business growth opportunities. Compared to traditional financing options, it’s also relatively easier to qualify for short term business loans since requirements would be less strict.
Meanwhile, long term business loans don't place such a huge strain on you and your business. Regardless of the amount, it can be broken down into smaller, affordable, and more manageable amounts since you have a longer time to pay it back. Shorter-term loans, on the other hand, can put too much strain on your company’s cash flow to be sustainable. Along with smaller monthly payments are low-interest rates. Usually, borrowers with high credit scores are charged with interest lower than 5%.
Qualifying for Business Loans
SHORT TERM BUSINESS LOANS — Having a good personal credit score is a plus. Lenders would also often look at your debt-to-income ratio to assess risk. The higher your cash flow and income and the lower your debt, the better your chances are of getting a loan. Other factors lenders might look into would be your industry and the age of your business. Some lenders only lend to businesses that are at least two years old. Some industries are also easier to get loans in than others.
LONG TERM BUSINESS LOANS — Long term loans are notoriously hard to obtain. It depends on many factors including your choice of lender, the health of the economy, and the financial strength of your company. For small businesses, it can be more difficult to obtain. More often than not, established businesses with some years of financial success are approved for these loans.
In order for you to qualify, you have to be ready with a history of your financial statements and your business plan. It also pays to prepare a forecasted financial statement to prove that you can pay the loan. Most banks would also look at the 5C’s of creditworthiness to assess the risk of your company. The higher the amount you need, the more rigorous the approval process is.