Short-Term Finance Options For Everyone

There comes a time in most people’s lives when they realize that they need to borrow money quickly. However, where you choose to source short-term finance from matters significantly due to interest rates and repayment terms being widely varied. Thus, selecting a source for a short-term loan will have a long-term impact on your finances overall. For those who own a business, you can consider the sources that have been outlined in this article. However, if you are looking for a personal loan then you should look into the plethora of payday loans available in Tennessee.

Short-Term Finance Options

1) Trade Credit

This is undoubtedly one of the cheapest means of getting interest-fee money. This is because whenever you purchase a service or product from another company, they will provide you with a specified time period to make payment without any additional costs.

The longer the period of time that you are provided to pay, the more cash that you will be able to retain within your company in order to fund other areas. The most common terms are 30 days, however, you should consider asking for a longer term if possible.

If you do require more time to make payment, then you should consider asking for an extension prior to the due date. This will ensure that you retain the vendor’s trust while providing you with the opportunity to obtain an extension. 

2) Family and Friends

While asking friends and family for a loan may feel like a personal drawback, obtaining a short-term loan from these sources is informal and far less expensive. These loans will have low interest and your loved ones are more likely to be flexible about repayment.

Prior to obtaining funds from this source, you will need to establish a loan rate and certified repayment plan. This should be stated within a document that has been signed and certified by the borrower and lender in order to manage any expectations. This is necessary insurance that will prevent the loan from damaging any of your personal relationships. 

3) Accounts Receivable Factoring

Receivables factoring transforms customer invoices due into cash with immediacy. Your company will be paid by the accounts receivable factory company. Which is usually around 90% of the outstanding invoices. Then, the customer is required to pay that company instead. Additional fees may vary depending on when the customer makes payment.

4) Bank Overdraft

Numerous institutions will provide you with the opportunity to have an overdraft on an operating account. This ensures that you can draw out more cash than you have in your account. This then becomes a line of credit that requires repayment within a year. This is notably beneficial if your short-term loan is required for 30 days.

5) Charge & Credit Cards

A large number of business owners will leverage their cards in order to satisfy a specified transaction before paying off the balance prior to the due date with no interest. This essentially provides them with a short-term loan of under 30 days to make repayment. Other business owners will use credit cards in order to finance their businesses as the money is incredibly accessible.

However, using credit cards can be incredibly expensive with most interest rates topping 27% APR. You should obtain a credit card from a financial institution that offers a zero-interest balance transfer rate, as these carry lower rates of interest for a certain period of time. This is essentially a short-term loan. 

6) Title Loans

A title loan is a short-term loan where you will be given money for having over the title of your auto as collateral. This is typically for under 30 days. You need to hold a clear title to your car without having any other financial loans on it, and the lender will place a legal lien on the car.

Because your car is collateral, these loans are relatively easy to obtain. They usually carry interest rates of 35-100% APR. If the loan is not paid back within the set period of time, the title lender will own the car outright. 

7) Refund Application Loan

A RAL or Refund Application Loan is a short-term loan that is secured through a taxpayer’s expected tax refund. These are applied for through tax preparation services. Rules stipulated by The Inland Revenue Service prevent basing your fees on the refund, so these costs can vary widely. However, numerous companies do offer this service. 

8) Crowdsourcing

There are numerous platforms that will allow you to post your requirements for short-term finance. Investors can then bid at a certain rate in order to provide your business with funds. Rates can be as little as 7% APR.

9) Online Loan Brokers

There is an abundance of companies that offer short-term loans. Many of these companies operate online and as such, you should ensure that you are loaning from a reputable lender, irrespective of whether your loan is for yourself or your business.

These loans should be applied for like a bank loan as they will require your credit score, profit, and company sales if relevant. The rates of these loans are typically between 10-24% APR. As always, you should engage in extensive and thorough research and shop around prior to deciding on a specific short-term loan from an online broker.

Conclusion

To conclude, this article has outlined numerous options for short-term finance that are viable for yourself or your business activities. I highly recommend that you engage in extensive research prior to settling on one option. You should also take interest rates and repayment schedules into consideration prior to making your decision.

Obtaining short-term finance can feel like a stressful task, especially if you have repayment dates due and you are falling behind with your financial obligations. However, there is a plethora of options available to you and this should set your mind at ease when sourcing short-term finance. I hope that you have found this article to be insightful and informative. Thank you for reading.

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