Short Term Working Capital

Easy Application Process

As indicated above, short term working capital loans are much easier to apply for than a traditional business loan. Most traditional bank loans require in-depth paperwork and documentation, taking weeks or months to get an approval or decline. Because of this, conventional business loans are typically not a viable option when a business is experiencing urgent, unexpected business expenses.

Higher Approval Rates than Traditional Loans

Another advantage of short term business loans is that the underwriting requirements are typically much more relaxed. It easier for businesses to get approved for short term working capital loans as opposed to traditional business loans.

Borrow Smaller Amounts

Another benefit of short term working capital loans is that businesses can borrow smaller amounts of money. Many traditional business loans have minimum loan request requirements meaning that they may have to borrow more money than they need. Or the end up being declined for applying for a loan under the minimum requirement.

Ideal for Short Term Opportunities

Short Term, Working Capital loans can be a great option to get over short term and temporary financial hurdles. Some businesses don't like the idea of being stuck paying off a loan for several years after the first use of funds has passed.

Some Short Term Working Capital Loans can Increase Business Credit

For newer businesses, short term working capital can help improve your business credit score. As a company develops its credit score, it will have an easier time getting approved for more substantial loans in the future. When applying for a short term working capital loan inquire if it will help build business credit. Some funding sources report to the business credit agencies and some do not.

Higher Interest Rates than Traditional Business Loans

The most significant disadvantage to short term working capital loans is that the interest rate is typically higher than the interest rates on a traditional business loan. Also, because of the shorter terms, these loans sometimes have more frequent payments that are daily and weekly. Not all short term working capital loans are daily and weekly payments though, sometimes they have monthly payment options.