Credits for short-term loans
Loans to short-term companies are one of the great needs. Its main characteristic is that the loans are at most one year old. The importance of financing companies in the short term is should not be ignored, since it is what will allow them to continue counting on circulating expenses for daily activity.
Traditionally or in general, small and medium enterprises have always resorted to traditional banking to obtain short-term loans, but this situation is currently changing after the birth of alternative financing formulas that offer this type of short-term loans.
We are very aware of the importance of granting loans to companies in the short term, more knowing that after the economic crisis many companies had great difficulties to achieve it, that is why it is one of our main objectives. Our advice also works on individuals who need to get fast money.
First, it must be clarified that it is not possible to finance credit cards in the short term, nor credit policies or lines of credit, since it has to deal with fixed amounts for the subsequent reimbursement to investors.
In the short term, both loans for investment and loans for working capital are financed, but … what are the advantages of short-term loans to companies? Below we list and develop each of them:
Interest rate lower than long-term loans
Granting loans to companies in the short term supposes a lower interest rate than long-term loans, since the shorter the credit term, the lower the risk for the investor.
Agility and ease of obtaining short-term credits
As we can imagine, nothing has to do with the procedures and documentation to be provided by the companies in their work of financing depending on the duration of the credit. That is why it is much more feasible and agile to obtain a short-term loan than in the long term. Especially for those who have a bad credit history, short-term loans can often mean loans for bad credit as they do not have to fix their credit history in advance to obtain a loan.
Understanding the crowlending
As we know, crowlending is a type of funding funded by individuals. This, together with the duration of the credit, makes investors increase confidence when lending their money to projects that want to finance themselves in the short term. Why? The answer is simple: recovering the borrowed capital more quickly makes them feel more secure when lending their money. The proof is that most of the loans that are published in the short term are completed in a matter of hours.
Increase in the ability to deal with payments
One of the problems that companies often have is the ability to cope with different payments, such as payment to suppliers, payroll of workers, expenses derived from the activity, etc. This, that in many occasions does not allow continuing with normality the economic activity, is solved thanks to the short term credits.