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DIFFERENT TYPES OF SHORT-TERM LOANS IN AUSTRALIA

 


Most entrepreneurs know the horrors of a cash crunch hitting their business. Temporary cash fluctuations or an urgent need for liquid funds can trigger disruptions within a firm. When such an emergency occurs, short-term business loans can come to the rescue! Short-term loans in Australia can support business owners in solving problems related to a shortage of fund. Let's break down the various types of short-term loans your business can get! 

Short-Term Business Loans: Quick Facts

Short-term loans have different terms than regular ones. Their repayment schedules are set on a short-term basis, ranging from daily to monthly options. The interest rates can also be higher than some long-term loan variants. However, these short-term business loans provide the much-needed infusion of cash when your firm needs it the most. Businesses with poor credit scores can also take advantage of these loans. Here are some critical facts that you must remember about short-term enterprise loans:

●      Amount: You can get anywhere between $5000 and $20 million as a short-term loan.

●      Total Term: The term can vary from three months to two years.

●      Time to Get the Loan: You will need two to four hours for the pre-approval formalities. After that, the approval for an unsecured loan can come within one to two days. Secured loans involve lengthy verifications. Hence, secured funds may require three to seven days for complete approval.

●      Interest Rate: The rates begin at 5.5% p.a. and may vary from case-to-case basis.

●      Required Documents: If you need unsecured loans up to $300,000, you can opt for low-doc approvals. You shall need your ATO statements, bank statements for the past six months, and a valid identity document. However, if you need secured loans or more than $300,000, the complexity of documentation can increase. 

Types of Short-Term Loans

The precise type of short-term loan will depend upon your business needs. However, there are two broad categories that you should keep in mind. They are:

●      Secured Short-Term Loans: You can include an asset in your loan agreement as collateral for the lender's security. Including this collateral can reduce the lender's risk and improve the borrower's terms. A secured credit option usually has a lower interest rate than an unsecured one.

●      Unsecured Short-term Loan: If you need cash quickly, you can choose an unsecured loan. Unsecured loans usually have shorter approval windows, helping you handle emergencies with ease. However, the lack of security can translate to higher interest rates or smaller amounts. 

An expert finance broker can advise you about the loan options you should target. They can also help you put your best foot forward as you submit your loan application with the accompanying documents.

 

Short-Term Business Loans: Uses and Advantages

You can use your short-term funding for the following purposes:

●      Buying stock for a seasonal surge in demand

●      Renovating your establishment

●      Clearing rent dues and outstanding wages

●      Business expansion 

Besides these, businesses can have many other uses for such cash infusion. These loans can offer the following benefits:

●      Avoiding severe financial disruptions

●      Improving credit scores of a bad-credit firm by making timely repayments 

Now that you know the short-term borrowing options, reach out to a top finance broker like Broc Finance to figure out your best choice today!

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