Short-term loans have become common and preferred because of the flexibility, easy procedure, quick funding and excellent support that traditional long-term loans do not provide. Small businesses and individuals can gain huge profits in a time of crisis or can expand their business by taking advantage of these loans, which give relief from stress and complicated terms. For important reasons, short-term loans are attractive, as they can help to secure the business in a financial crisis or to take it to the next level. You do not need to be tied with the lender or the borrowing process for years as the duration for a short-term loan is a maximum of 3 to 12 months. However, these loans are financially high because of the high-interest rate which comes with the weekly payments. Like any other loan, short-term loans have some requirements which the applier must fulfill to be able to get the loan. There are a few specifications that the lenders consider when you apply. Let’s discuss what you need to qualify for short-term financing!
Business Cash Flow
To become eligible for the short-term loan, the required revenues are significant. You must have a maintained business cash flow to qualify for the short-term loan as it indicates what the situation of the finance of a business is and whether it is healthy or not. Through this, the lender feels confident about your business having a managed cash flow to deal with the loan obligations responsibly.
Track Record
Your business’ confirmed track record plays a crucial role while determining your eligibility for the short-term loan. When you or your company have the proper track records including the deposit of a certain amount for the last consecutive five months or more, it shows the credibility and strength of your business without having the unpredictable swings in revenues.
Credit History
When applying for short-term loans, the importance of a strong credit history cannot be denied. In almost all the borrowing situations, the borrower must have a decent credit history and credit score.
Stability of a Business
While giving loans to the business owners, lenders consider the current situation or stability of a business in the market. R15,000 is the average balance in a business bank account that qualifies you to take the short-term loan as it indicates the stability of a business. Having this balance also shows that the business is not undercapitalization and the stability of the business is not uncertain.
Low Debt Load
A low debt load brings a positive impact when the lenders go through about your loan application during the approval process. The financial history should also be cleared as any untimely repayments make your situation unsure. Timely repayment debt history and low debt load are helpful for the borrower when applying for a short-term loan.
Friendly Finance offers excellent short-term loan services to individuals and business owners with the convenience of an easy process so that urgent financial needs can be fulfilled quickly. After qualifying for the loan, Friendly Finance short-term loan lenders offer some of the best loan options for all businesses to handle a crisis, explore new opportunities and to accomplish other needs without any stress.
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