Short term financing — Options for your small business

The lifeblood of a company is its working capital. These funds can be used to pay unexpected bills, bridge cash flow gaps, purchase goods, or seize business opportunities or make loan repayments. A small business can operate more effectively and react to opportunities and difficulties more rapidly with more working cash.

But as a small business owner, how can you boost working capital promptly to accommodate your shifting financial needs? How do you decide which of your financing options is best for you?

Social Lend Africa offers a wide range of short-term small business financing options including; Accounts receivable financing, cash advances, short-term small business loans among others and we are going to delve into all of them to help you understand how they can best serve you.

First, what are the pros and cons of short-term financing?

Advantages

- Application process is quicker.

- Approval is simpler

- Instant funding

- Increases your credit rating.

Disadvantages

- Higher interest rates

- Stricter rules for repayment.

Small business owners typically have choices of the short-term financing they obtain for their businesses and here are some in detail;

Accounts receivable financing/ Invoice financing

You might consider invoice finance if you receive a sizable portion of your income via invoices. It’s a type of loan that, as the name implies, is completely dependent on your invoices. A lender like Social Lend may lend you money against the value of your accounts receivable or purchase your outstanding invoices.

You hand these bills to the lender who will then pay your business a percentage as you continue to provide services or commodities to your consumers. You receive the remaining amount after the invoice is settled and the lender’s service fee is paid.

Advantages

• Gives you the ability to access money you are due without having to wait for clients or customers to pay.
• As your revenue increases, you can raise the money request and lower it as necessary.

Limits

• You won’t get paid in full for your goods or services since the lender will deduct service charges and a monthly interest rate.
• Businesses that sell to the general public/ single walk-in customers may not be eligible for this service.

Cash Advances

A cash advance is a versatile tool that enables businesses that have merchant payments or card payments from their clients to borrow money which is then “secured” against future merchant & card payments. As repayments are deducted as a proportion of future card & merchant revenues, they may be advantageous for businesses who accept payments through a sizable number of such transactions.

Advantages

• Available to small businesses with at least six-month trading history
• Very adaptable; can be applied to a number of business needs
• No set payments, conditions, or security is necessary.

Limits

• To qualify for this sort of financing, you must accept at least 50% of your customer payments through merchant or card transactions.

Short-term small business loans

Short-term business loans are often issued with periods ranging from three months to 12 months, as opposed to regular term loans, which are provided over a longer period. They may be a better choice for small businesses that need more money, such as those wishing to renovate their space or start a new project.

We are able to provide our own short-term loans at Social Lend Africa, with durations ranging from 3 months to 6 months. We’ll match your business with the ideal financing once you complete just one short application. You can receive a verdict in as short as an hour after spending only ten minutes on the application. If you’re accepted, the money may be in your account in as little as 24 hours.

At Social Lend, we provide a range of small business financing products to meet a range of needs, from short-term unsecured loans to long term secured business loans. Call us today on +256–200933093 or email us at support@sociallendafrica.com to know your options.

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