Finance & Lending

 

01 15 2015

Short Term Business Loans vs Long Term Business Loans

01 15 2015

Short-term vs Long-term Business Loans

What’s the difference between short- and long-term business loans?

A short-term business loan provides a company with quick access to capital, sometimes in as little as 24 hours. A long-term business loan involves multi-year repayment terms following a detailed application process.

Whether it’s working capital, a merchant cash advance or some other type of business loan, how much money you plan to borrow is probably the single most important factor for you as a business owner.

However, there are plenty of other loan components to consider, including term length.

Whether your loan features short or long terms can impact everything from how much interest you pay over time to how much money you can ultimately borrow.

Short-term loans

For most business owners, a short-term loan will be the way to go. These types of loans can provide you the funds you need fast, sometimes in as few as 24 hours.

And with more alternative lending choices available now than ever before, it’s become that much easier for business owners to skip the restrictive loan requirements of traditional banks and obtain the money they need from elsewhere.

“Most times, small to medium size businesses don’t need long-term financing …,” said National Funding founder and CEO David Gilbert. “Alternative lending options, like working capital loans, merchant cash advances or small ticket equipment leasing, offer the flexibility and quick turnaround needed for owners to keep their businesses running smoothly.”

Essentially, short-term loans are an easier way for business owners to get liquidity and overcome financial setbacks, as opposed to taking on larger, more long-term debt.

Long-term loans

On the other hand, long-term loans may be necessary for some businesses. This type of financing involves multiyear repayment terms that can sometimes last for decades.

Whereas short-term loans may have higher interest rates at first, business owners who take on long-term financing typically end up paying more in interest. This is because the long term length allows interest to build up over time.

It is also generally more difficult for a business owner to obtain long-term financing. This is because they will need to go through more traditional lending channels in most cases, and contend with the strict qualifying standards put in place by larger banks.

While an alternative lender such as National Funding has bad-credit loans in place to help business owners with less-than-perfect credit histories, many traditional financial institutions do not.

Which is best?

Ultimately, which type of funding option is best depends on your specific business needs. For most small business owners, a short-term loan will likely be more suitable. However, sometimes long-term financing may be necessary.

Either way, it’s important to work with a lender who understands the workings of small businesses and can tailor your loan to support your success.

National Funding financing for small businesses

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Terms & Conditions

General Acceptance

Any applications submitted electronically shall have the same force and effect as if the application bore an inked original signature(s). The above information, together with any accompanying financial statements, schedules, or other materials, is submitted for the purpose of obtaining credit and is warranted to be true, correct, and complete.

 

US Patriot Act:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person and business that seeks a business loan. What this means for you: When you apply for a loan, we will ask for your business name, address, and Tax Identification Number. We will also ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

 

For Loan/Merchant Services:

The Merchant and Owner(s)/Officer(s) identified in the application (individually, an “Applicant”) each represents, acknowledges and agrees that (1) all information and documents provided to National Funding, Inc. (“NF”) including credit card processor statements are true, accurate and complete, (2) Applicant will immediately notify NF of any change in such information or financial condition, (3) Applicant authorizes NF to disclose all information and documents that NF may obtain including credit reports to other persons or entities (collectively, “Assignees”) that may be involved with or acquire commercial loans having daily repayment features and/or Merchant Cash Advance transactions, including without limitation the application therefor (collectively, “Transactions”) and each Assignee is authorized to use such information and documents, and share such information and documents with other Assignees, in connection with potential Transactions, (4) each Assignee will rely upon the accuracy and completeness of such information and documents, (5) NF, Assignees, and each of their representatives, successors, assigns and designees (collectively, “Recipients”) are authorized to request and receive any investigative reports, credit reports, statements from creditors or financial institutions, verification of information, or any other information that a Recipient deems necessary, (6) Applicant waives and releases any claims against Recipients and any information-providers arising from any act or omission relating to the requesting, receiving or release of information, and (7) each Owner/Officer represents that he or she is authorized to sign this form on behalf of Merchant.(8) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (9) this request is for business and not for consumer purposes.

 

For Equipment Services:

I hereby certify: (1) the information provided is true and correct, (2) you are hereby authorized to investigate all bank, credit, and trade references, and said references are hereby authorized to release any requested information to you or your nominee, (3) such authorization shall extend to obtaining personal credit profile in considering this application and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account, (4) this information may be transmitted by us to you and by you to underwriter(s) for the purpose of granting me credit, either electronically or manually, and that by submitting this application, I take full responsibility for transmission thereof, (5) I am over 18 years of age, (6) I acknowledge my rights under the Fair Credit Reporting Act, (7) I consent to receive direct mail, faxes, text-messages, and e-mails sent by National Funding and its affiliates for the purposes of transmitting account updates, requests for information and notices, and (8) this request is for business and not for consumer purposes.

 

Text Messaging:

By providing my wireless phone number to National Funding, Inc., I agree and acknowledge that National Funding, Inc. may send text and multimedia messages to my wireless phone number for any purpose. I agree that these text or multimedia messages may be regarding the products and/or services that I have previously purchased and products and/or services that National Funding, Inc. may market to me. I acknowledge that this consent may be removed at my request but that until such consent is revoked, I may receive text or multimedia messages from National Funding, Inc to my wireless phone number.

  
The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status or age (provided the applicant has the capacity to enter into the binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. If for any reason your application for business credit is denied, you have the right to a written statement of the specific reasons for the denial. To obtain the statement, please write to National Funding Inc., 9820 Towne Centre Drive, San Diego, California 92121. Funding amount and credit approval is subject to a full credit profile review.