Loans for short term

About short term loans 

For a business, securing adequate financial resources to get things rolling is often the most challenging thing. You may have planned everything else right but if you do not secure the money that is needed, you are stuck. The same applies to individuals, without money to finance personal needs you are in a mess too. When in this kind of situation, some people turn to traditional credit facilities for assistance. However, due to loads of requirements that characterize these loans, they may not qualify. Instead, a significant number choose to apply for the short-term credit facility. If you are in need of a smaller amount of money within a relatively quick period, a short-term loan can be an optimal choice for individuals and businesses. In this article, we will be exploring short-term loans, looking at different types of short-term borrowings, where we can get them as well as talking about how you can get loans for the short term without a credit check.

What is its meaning?

Short-term loans just like their name suggest requiring quick repayment. They are normally taken to finance a temporary business or personal need or emergency. For a business, it is a means to sort out the liquidity issues. If your business is facing cash flow issues, you can borrow money to be repaid within a short time. This credit facility is very attractive to individuals and small businesses which may not yet be eligible to get bigger loans or lines of credit from a financial institution. It is normally considered a viable solution to an emergency or urgent cash need.

One of the main differences between the traditional loan and the short-term borrowing facility is the repayment period. Instead of monthly installments, short-term loan borrowers typically make daily or weekly payments. The shorter repayment installments are so structured as a way of cushioning the lending institution. Given that most of the borrowers of this type of credit are considered relatively riskier, the lending institution would not want to elongate the repayment period as there are higher chances of default.

Factors to consider when taking a short-term loan

If you are considering short term borrowings as a means to bridge a financial gap you need to take into consideration the following factors:

• Which is the lending company of choice? You need to select a lender that is legitimate and offers good terms for this kind of credit. The choice you make as far as the lender is concerned determines the kind of experience you have with this type of loan, therefore carry out adequate research before settling on one.

• Why do you need the loan? Before applying analyze the purpose of the loan. Check whether this is the best option to bridge the existing financial gap. If you can get money from other cheaper sources, rethink your idea as defaulting or violating the terms of this loan can have dire consequences, more so on your credit rating and the future of borrowing.

• What is the cost of taking this loan? You need to consider variables such as interest rates and other charges that are applicable to your loan. While short-term loans can be relatively expensive compared to traditional facilities, you need to shop for a lender who will offer lower short-term loan interest rate and charges. This will ultimately reduce the amount that you are supposed to repay.

• What are the repayment terms? Get a clear understanding of the repayment terms and see whether you can meet them. Look for a lender who is flexible, one that can allow for renegotiations of terms when you are unable to meet your part of the bargain.

 Types of short term loans

There are various types of short-term borrowings each meant to meet some specific purpose for individuals or businesses. These include:

• Merchant cash advance where a lender gets a percentage of the proceeds each time a customer makes a purchase

• Line of credit where a set amount of money is given and a business can draw and repay in installment

• Payday loans where the borrower is required to pay the full amount as advanced when the payday comes

• Online short term loan application, where everything is done online and money is sent to the borrower's bank account or mobile phone

• Invoice finance is a facility that is available to businesses where they can use accounts receivables or basically invoices that are yet to be paid. When an invoice is settled the business should settle the amount advanced 

Sources of short term borrowings

There are several lenders who offer short-term credit in form of business or personal loans even to those who bad credit history. Banks, online lending platforms, large businesses, and even friends and relatives fit in the category of entities that may offer this type of credit. In the Philippines, names such as DiGiDo, MoneyCat, Online Loans Pilipinas, Kviku, UnaCash among others feature among the sources short-term borrowing sources.

Getting a short term loan with no credit check

Given that this type of credit does not involve a relatively large amount of money, most lenders do not have a lot of requirements. Although credit checks may affect the terms of the loan, some lenders do not have credit check requirements when making their decision. Whether a business or an individual all that you have to do is demonstrate that you can repay the loan without defaulting. This can be through providing evidence of regular income, and an amount that is adequate to cover the regular installment.

Short-term loans provide individuals and businesses with a lifeline where they can obtain cash when required rather quickly. However, one needs to consider a number of factors such as the purpose of the loan, lenders, and terms that are offered in order to avoid the debt trap.

Frequently asked questions about short term loans

1.  What is the shortest term for a loan?

Short-term loans, as its name denote, need to be paid within a relatively short period. The period may range from one week to five years. Depending on the terms, a lender may require the amount advanced to be paid for as short as one week.

2. What is the best option for a short-term loan?

The best option for a short borrowing term is one that has flexible terms and relatively low charges and fees. A borrower should select a credit facility that attracts lower interest rates and charges as well as one that offers flexibility in terms of repayment.

3. How long are short-term loans usually for?

A short-term loan can have a repayment period of up to five years. This is the longest period that a borrower can get. The duration of the loan will vary from one lender to another and it is also influenced by the amount that has been borrowed.

4. What should I consider when taking a short-term loan?

You need to factor in the need for a loan, the terms and conditions, the interest charged on loan, the applicable fees, and the repayment period.