Short-term or longer-term financing?
A short term concentrates repayment over a brief period; a longer term spreads it out. The lender sets the term, the repayment schedule and the cost, in its written offer.
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- What is the difference between short-term and longer-term financing?
- The term is the length of time set for repayment. For the same sum, a short term concentrates the payments over a brief period and a longer term spreads them out; the cost of each is written in the lender’s offer.
- When does one or the other come up?
- A short term matches a need that resolves by itself, such as seasonal inventory or an invoice waiting to be paid. A longer term matches an asset that serves for a long while, such as equipment.
- What does each one ask of the business?
- A short term asks for revenue that can carry closely spaced payments, which the lender reads in your deposits. A longer term usually asks for more time in business and a fuller file; each lender sets its thresholds.
- Short term or longer term: which one for my business?
- It depends on what the money finances and on the payment your revenue can carry without squeezing running expenses. The lender proposes a term in its written offer: read the repayment schedule and the total cost there before deciding.
What the lender looks at
- Actual deposits, month by month
- The payment, whatever the term, is compared with what the business takes in.
- Trend over the period
- The longer the term, the more the stability of revenue counts in the reading.
- Days in overdraft
- An account often below zero leaves little room for closely spaced payments.
- How long the business has been operating
- A longer term usually asks for more time in business.
$0 upfront · 7% only if funded
An intermediary, not a lender.
The lender sets the final amount and its cost in its written offer.
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