If you’re like most businesses, you probably have periods where you are short on cash. This is typical of large and small businesses alike. Many businesses have certain times of year where they are busier and slower periods where cash might slow down. In these scenarios, companies need money fast. They don’t generally have time to wait on traditional loans. If you’re considering a cash flow loan, here are three of the most common questions answered.
What Is it?
This type of loan is generally a short-term loan that assists you when you need cash. It’s easy to get and relatively immediate. You don’t have to worry about putting your assets at risk and you can expect to be approved faster than you would with traditional bank loans. Now, these types of financing options are not supposed to help you carry your business. In fact, you don’t want to build your business with this type of loan. However, it will help you stay afloat in a time of need.
What Is the Difference?
There’s a difference between cash flow loans and business loans. Here are some of those differences:
- Usually it’s for a short duration and won’t be secured
- You aren’t required to use your home or personal assets to lay down collateral
- Your business health determines your loan qualifications not your assets
- These loans are faster and are easier to achieve
- It helps with temporary issues
Business loans tend to have longer terms and are more likely to be used to keep your business afloat, rather than just a temporary solution.
Who Needs It?
There are a few circumstances where you might find yourself in need of this type of loan. If you fit into any of these scenarios then you may need it:
- You need funds fast when you have cash coming soon
- You have temporary staff for an event or busy time of year
- You’re expanding into a new market and are experiencing a higher demand
- You are meeting a new business demand and need new equipment
- You’re buying bulk stock at a discount
If any of this applies to you, then you probably should consider a loan to help your cash.
If you’re a business in need of quick cash, then a cash flow loan might work for you. Keep in mind that this type of financing is a temporary solution when you need immediate cash. This type of financing helps with shortages when you don’t want to get a traditional loan.