While there are many reasons for a small business to be in need of some quick working capital, short-term financing can be tough to get from traditional lending institutions. In the past, there haven’t been a whole lot of other options but alternative financing companies are currently making it easier for small businesses to get the short-term financing necessary to see them through a rough patch and continue to grow.
Short term financing may not be the solution for some small business challenges but there are many situations where it can be a great benefit. In some cases, short-term financing can be the difference between continued growth and having to close up shop.
Absorb the Impact of Seasonal Sales Trends
Almost every business has one time of year that is busier than others. For true seasonal businesses, such as those in a resort area, the impact of a slow or off-season may be greater. Either way, when sales are down, a small business’s working capital can take a hit.
Short-term financing can be a great solution for a temporary slump in business. It will not only allow you to keep the lights on but to actively continue to cultivate your business.
Business has been going well and it’s time to expand. Even if you’ve been planning financially for this, expansions can be expensive and often involve costs you didn’t plan on. During the actual expansion, sales can falter a little. The reason could be construction reducing business hours, a shift in employee focus, or customers holding off in anticipation of a new product line.
Short-term financing can provide financial support and back-up during business expansion, facilitating the process and reducing any stress involved.
In Case of Emergency
In business, just like in life, things happen that might create an emergency situation that could put the life of your business in jeopardy. It could be the loss of a key employee, an equipment failure or damage from a natural disaster. While your financial plan may have a cushion built in for such emergencies, often it’s just not enough.
Short-term financing can help facilitate recovery, keeping your business on its feet and moving forward.
Advantages of Short Term Financing
A small, short-term loan is typically not the type of loan banks and traditional lending institutions offer and often are all a small business needs. It is to a business owner’s advantage not to commit to unnecessary long-term debt.
Today’s alternative financing options offer smaller amounts with shorter repayment schedules as well as various types of financing. A business owner can choose an option that suits their business and its specific needs at the present time.
Short-term financing can be a great option for a small business with less than perfect credit. Because of current financial technology, also known as FinTech, alternative finance companies can see past a less than perfect credit score and take other factors into consideration when making a determination about financing for a small business.
Once the financing has been repaid in a timely manner, it can be a positive addition to your credit history and may even boost your credit score. It will also create a good relationship with the alternative financing company and help ensure a positive determination should short-term financing be needed in the future.
Use Short-Term Financing Wisely
As with any type of business financing, a small business owner should trust the financing company they work with and use short-term financing only when necessary. In many cases, utilizing financing can be avoided altogether by simply planning ahead, as in the case of a seasonal business. Stockpiling revenue from a strong selling season can often sustain a small business through the off-season.
Even with diligent planning, unforeseen situations can arise for a small business and short-term financing may become necessary. CFG Merchant Solutions can help sustain your business to get through the tough times and continue to grow. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets. With a variety of financing options, we can find the perfect fit for your business. So what are you waiting for? Fuel your business growth with short-term financing.