Article summary: Picking the right option to fuel growth or accommodate a short-term business initiative can be a challenge. Keep reading to learn more about short-term business loans and when they might be a good option for your business.
Short-Term Business Loans
Funding for small business is evolving with many options to finance cash flow, purchase inventory, buy equipment, hire new employees, and otherwise fuel growth, that didn’t exist before. Online lending, crowdfunding, equity funding, non-profit lending and other alternatives to a bank loan are fast becoming mainstream funding options for small businesses as many business owners look for new ways to infuse capital into their companies to help them grow and thrive.
- Simple: Easy application & fast funding
- Tailored: Funds you need on your terms
- Human: Real, live loan advisors
Some Funding Alternatives Are a Better Fit for Short-Term Capital Needs than Others
If you need capital to take advantage of a special offer on inventory, to overcome a seasonal cash flow bump or meet some other immediate need, you should consider a short-term business loan. And, if you’ve been in business for at least a year, have $100,000 in annual revenues, along with a personal credit score of around 600 or better, you might be a good fit for an OnDeck loan.
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Financing options to help you grow your business
If you’ve ever heard the adage, “It takes money to make money,” you must be a small business owner. Fortunately, there are more small business loan options available today than ever before—you just need to know where to look and what to look for. You don’t need to be a financing expert to build a successful business, but you do need to consider all the business loan options available to determine which one is best to meet your business need.
Unsecured Small Business Loans
An unsecured small business loan is simply a loan from a lender that does not require any form of collateral from a business or a business owner. This is based solely upon the creditworthiness of the applicant.
Many small business owners are interested in a loan for their business but don’t have the specific collateral a bank may require, such as specifically-identified real estate, inventory or other hard assets. Fortunately, there are lenders like OnDeck that do not require that their loans be secured by specific collateral, relying instead on a general lien on the assets of the business. These may be good options for many businesses.
Secured Small Business Loans
Banks generally prefer secured—rather than unsecured—business loans. Secured loans are loans that are backed with some sort of collateral like real estate, equipment, or other valuable business assets the bank can seize and sell if the loan is not repaid.
Banks (or other lenders that require specific collateral) commonly determine what they refer to as the loan-to-value ratio of your collateral based upon the nature of the asset. In other words, your banker may allow you to borrow against 75 percent of the value of appraised real estate or 60 percent to 80 percent of the value of what they call ready-to-go inventory. Because lenders might consider their loan-to-value ratios differently, you’ll need to ask any potential lender how they intend to set that value.
Small Business Loans for Different Industries
As a business owner, your needs may be industry-specific such as ordering kitchen supplies upfront or bridging cash flow while you wait for insurance reimbursement. At OnDeck, we understand and we offer tailored loan options (with multiple loan types, amounts, and repayment terms), so you can get a small business loan best suited for your industry and business. Here are some of the most common industries we work with and the small business financing options available to them.