The Small Short Term Loans: Characteristics and Types
The small short term loans are loans that are obtained to fulfill all the business capital or personal requirements. It’s a kind of credit that involves repaying back the principle sum along with interest in a year from the time you got the loan.
These small short term loans stand out as a great option for you, especially when you’re running a start-up or a small business that is not eligible for a credit line from the bank. You can borrow between $100 to $100,000.
These short-term loans are not just ideal for businesses. Individuals who are experiencing a bit of fund-related issues can opt for these loans.
The features of the short-term loans
The reason why these loans are known as “short term” is because you have to pay them pretty quickly. In certain situations, you might have to pay off these loans within 6 months to 12 months or within 18 months.
Loans taken much longer term than that are known as “long term” or “medium term” loans. You can easily pay off the long-term loans within 1 year to 25 years.
But you will come across some short-term ones that do not specify a particular due date or a payment schedule. As the borrower, you can pay up the loan amount at your own pace.
The various kinds of short-term loans
You will encounter several kinds of short-term loans. These are:
- Merchant cash advances
This is a short-term loan, which is a cash advance, but it still operates as a loan. The lender will give the amount required by the borrower. The borrower will then pay the loan by enabling the lender to access their credit facility.
Every time a purchase is made by the borrower’s customer, a specific portion of the proceeds gets taken away by the lender. The lender will keep taking a percentage until the entire loan gets repaid.
- The lines of credit
This loan is similar to utilizing a business credit card. The credit limit gets set, and the business can tap right into the line of credit as much as it wants. The loan gets paid through monthly installments against the amount that you borrowed.
But the monthly payments will depend on how many lines of credit got accessed. One benefit of this kind of short-term loan is that it will only charge less APR or Annual Percentage Rate.
- The payday loans
These are short-term emergency loans that you can obtain easily. Payday loans are also provided by high-street lenders. But the only con of this loan is that you have to pay the loan amount along with the interest when your payday arrives.
Repayments take place when the lender takes out the amount from the bank account of the borrower. They obtain the funds through the continuous payment authority. These short-term loans also come with a high-interest rate.
Conclusion
Short-term loans will certainly help you come across the monetary issues you’re experiencing. It will also help you fulfill all your business-related needs. You will surely find many types of short-term loans, but choose the one that will suit your requirements perfectly.
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