Running a business as SME, requires a substantial amount of cash for operations, marketing, payroll, and others. are short term and long-term financing for businesses, and many options under each, suited to cater to the nature of the business. The reason why these loans exist is to ensure that the cash flow is always steady. Currently, more SMEs are looking for online financing to finance their business needs. Before getting into what online financing is and its advantages, here are a few things that you should know:
What is short term-financing?
Usually aligned with an enterprise’s operational needs, short term financing for business has a shorter maturity time, which is suited to compensate for fluctuations in working capital and other operational expenses. They are usually provided by banks, with a floating interest rate.
What is long-term financing?
Long term financing for businesses with an extended maturity period, is usually given to enterprises that want to extend or layer out their refinancing obligations. They have fixed interest rates and are usually given by institutional investors that have the capacity to lend on a longer term.
Why is cash flow important to a small business?
In any business, having a positive cash flow allows them to react better to challenges and opportunities. When a critical situation arises, they are able to react instantly, pay for what they need, and recover. Another reason why cash flow management is important is that it can greatly help SMEs reinvest into their business and pay down the existing debts that they have. This allows them to stay steady on their feet faster and focus on their growth.
How online financing is the new way to go
As online lending becomes more popular these days, many SMEs are turning to online financing to meet their business needs. Online financing is a working capital loan that may help you develop your business while also increasing your cash flow. The use of technology greatly eases processing compared to traditional methods. Both short term and long-term financing for business are available.
Among the benefits of online financing are:
- Fast and easy
Banks tend to have an exorbitant amount of paperwork and application processes. With online financing, the lenders have the means to access a business’ transactions and cash flow, as well as other data available digitally in order to evaluate the borrower’s credit health. This allows them to determine the status of applications faster.
- Flexible tenure
Many online financiers allow flexible loan tenures, which can help many small businesses determine their loan repayment term at the capacity they are able to repay, in terms of days, months, or years, without compromising their cash flow.
- No collateral
Many small businesses do not have collateral security to offer to financiers. Online financiers typically look at a business’s cash flow, management, industry, credit score, and net worth to determine the amount they can afford to borrow.
- Minimal documents to register
Online financing institutions need a few key information, such as KWSP number, Business ID, Business bank account information, and financial statements. Basically, every other information they need can be accessed online, and they have the technological means to gather the information they need.
Since there are no mountains of paperwork involved in online financing, your company’s confidentiality is protected.
Online financiers are more concerned with your capacity to repay, so if you have the ability to, this is one of the options that you may want to consider. Before committing to anything, always investigate a number of firms and pick the lender who suits your needs the best. For more information on online financing, click here.
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