How To Qualify for a Short-Term Business Loan
Being one of the fastest ways to get working capital, there are only three key things to keep in mind when applying.
1. Time in Business
New businesses can qualify, but your business should have been operational for at least three to six months. This is a common eligibility requirement, as time in business is a risk assessment signal for lenders. The longer the duration, the lower the risk for lenders to provide you with financing.
2. Average Monthly Revenue
Most lending companies require your business to generate at least $10K a month to qualify for short-term loans. Your current monthly and annual revenue numbers help lenders calculate the maximum loan amount your business qualifies for.
3. Credit Rating
You can secure a term loan with both good and bad credit. Your personal credit history is one of the factors that determines your interest rate. The higher your credit score, the better the annual percentage rate (APR) you’ll receive. As far as credit score requirements, we recommend borrowers have a minimum credit score of 550.
Popular Short-Term Business Loan Uses
Choose how you allocate business funds, whatever your needs. Compared to long-term loans from traditional lenders, which may be used for real estate, this type of financing is a better fit for immediate business needs.
Below are common ways various types of businesses use traditional loans to achieve their goals.
Emergencies
Unplanned costs come up all the time. With the budget set and capital tied up elsewhere, you might not have the cash to pay for an unanticipated business expense. Financing can cover emergency expenses when you’re in a bind.
Fixed Costs
Some small business owners choose to allocate funds toward everyday costs. Working capital can help you cover essential expenses, like rent and payroll.
Cyclic Dips
Cash flow can turn negative during a seasonal slump, straining the business. A short-term loan can provide the capital you need to make it through your slowest months comfortably.
COVID-19 Assistance
During the pandemic, businesses nationwide faced financial hardships related to the novel coronavirus. If revenue has declined or expenses have risen due to COVID-19, we’re here to help.
Equipment Financing
Machinery and equipment allow you to get the job done and take on new business opportunities. Term loans can be used to purchase the resources you need when you need them.
Gaps in Cash Flow
An infusion of working capital can bridge short-term cash flow gaps, ensuring your bills get paid on time and in full. Whether you’re waiting on invoices to be paid or have a pressing need, we have you covered.
