Usually, only established businesses with some years of financial success are approved for long-term bank loans. They carry higher interest rates and are to be returned within the period of a payroll cycle. On your behalf and for a fee, your bank promises via the AC to pay the purchase price to a seller or his or her appointed bank if stipulated and highly detailed conditions are met. You might also be prepared to hand over your income statement for the same amount of time if the lender requests it. All lending is strictly for business purposes only. Common Terms for Lines of Credit As you consider a line of credit, you’ll find most fall within these broad categories: Lines are typically offered for renewable periods that range from 90 days to several years. Qualifying for a Short-Term Loan In order to qualify for a short-term loan, you will have to present comprehensive documentation to your lender, whether it is a bank, a credit union, a mutual bank, or some other type of lender.
When many business owners think small business finance lending of business loans, they think of a traditional 5-10 year term loan from their local bank. Short term loans offer immediate relief to a business’ cash flow, allowing a company to pay accounts payable, salaries, expand their business, take on new business and so forth whilst waiting for accounts receivable or for other more conventional finance to be put in place. Types of Bank-Offered Financing Now that your familiar with the most important aspects of bank loans, it’s important to become familiar with the most common types of loans given by banks to start-up and emerging small businesses: working capital lines of credit for the ongoing cash needs of the business credit cards, a form of higher-interest, unsecured revolving credit short-term commercial loans for one to three years longer-term commercial loans generally secured by real estate or other major assets’ equipment leasing for assets you don’t want to purchase outright letters of credit for businesses engaged in international trade Working Lines of Credit and Credit Cards A line of credit sets a maximum amount of funds available from the bank, to be used when needed, for the ongoing working capital or other cash needs of a business. While your property may not be at direct risk, defaulting on a secured loan does carry serious consequences. How Easy is it to Obtain a Long-Term Loan? We offer a range of flexible loan products specifically developed to assist businesses with working capital requirements and temporary cash flow problems.