One of the most common types of finance available today is the short term loan. Like any loan, this is when the bank will give you some money and you will have to pay them back over a certain period of time at a certain rate. Additionally, you will have to pay interest in the loan which is additional to the amount loaned to you. This is so that the banks get paid for their services. However, a short term loan is usually defined as short because it must be repaid within a few months. The most common reasons for taking out a loan like this is if you run a business and you have an established income. This will convince the bank that you can make the repayments in a short period of time, making them happy to lend you the money.
However, in order for them to approve the loan you must prove that you have a primary and secondary form of income. There are two types of short term loans, read on to find out more.
The first type of short term loan is a time loan. This is a type of finance which must be repaid during a particular time of the year. The time of repayment is decided depending on when the person requesting the loan is predicted to have the money. This is a common and popular choice for anyone running a seasonal business. If someone only makes money in the summer months, then the loan is arranged to be repaid during the summer months whenever the business has flowing capital. The strange thing about this type of loan is that the inventory of the business is considered for how much cash it is worth before the loan is given.
The second type of short term loan is a line of credit. This is a type of finance which allow you to get a loan using pre-approved vehicles which permits the borrower to access credit at anytime according to certain rules. This means that the money can be borrowed and repaid according to how much cash is flowing through at the time. This type of loan is set up using a contract which defines the rules under which the operation will take place. This option is popular with those who use self liquidating purchases or that use their inventory to pay off their expenses.
So if you are looking for a short term loan. Then one of these types of finance is for you. What you need depends on what you are buying and what your circumstances are. If you are not sure what it is that you need, then you should contact your bank and they will be bale to assist you.