Running a startup requires a lot of dedication and perseverance, especially in the first few years after starting said business. There are lot of things you need to help support your business and a steady flow of income is a no-brainer. Most startups run on funding but after some time, the funds fall short and you need some extra money on the side till your profit can cover up all other costs.
This is where short-term business loans come in; they give you a steady influx of cash and only last for a limited period of time (6-12 months at most). Timely repayments of these types of commercial loans also help improve your credit score, making you eligible for long-term business loans in the long run.
When it comes to actually taking the business loan, you are presented with two options; you either go for a standard commercial bank or you go for alternative lenders. We will be elaborating on the two below.
If you are looking towards conventional banks, you might not face as many problems since government is liable for the SBA loan, taking off a lot of risk from the lender. So, a number of banks offer short-term business loans. However, there is a lot of paperwork that needs to be done, along with a long period of waiting before you are approved and provided funds. There is also a strict screening process to go through. If you fail in meeting any of the criteria regardless of how minor it may be, the chances of your loan application being rejected is relatively high even when it comes to commercial loans.
Alternative lenders work differently than conventional banks. Examples include companies like BizFi, Biz2Credit, Fundation etc. They normally have online applications where your approval is given in 24 hours and funds are provided in 7-10 days. However, there are a restrictions on what you can spend the funds on and the interest rates are higher than conventional banks.