Does Your Business Need a Short Term Loan? |
Posted: September 5, 2017 |
Being in business requires access to capital to expand and continue growing. Short term loans are a viable financial instrument for business owners to control cash flow. However, other business owners would not see any benefit from the credit. There are many different loan products available to business owners, and they have the advantage of injecting short-term capital funds into the firm to better control cash flow requirements. Having cash on hand allows businesses to consider new expansion opportunities and handle any unforeseen cash flow expenses. However, taking a loan could land you in hot water, financially speaking. If you do not have the income and cash flow to make the monthly payments, then you will risk the livelihood of your business and potential liquidation to repay the creditor. Depending on your cash position in your business, you may want to consider when it is the right time to acquire a short-term loan and when it may hurt your business. Let’s take a look at when you should and should not consider taking out a short term loan. When You Should Consider a Short Term Loan If you are an in the business of FMCG, Fast Moving Consumer Goods, then a loan can offer you a form of bridge finance to assist you with any cash shortfalls you may experience in between receiving and shipping orders. A loan can help you buy more stock and plan your sales cycle to avoid lull periods where you may be waiting for cash flow to recover before placing another order to your manufacturers. If you are a business with a poor credit score, receiving a traditional bank loan may be an impossibility. However, small micro lenders such as this site that often create loans for businesses with poor credit scores and they are more flexible on terms. The only drawback is that you pay a higher interest rate to offset the creditor's risk. https://www.buddyloans.com/bad-credit-loans When You Should Not Consider a Short Term Loan
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