5 Reasons to Pass on a Short-Term Loan During COVID-19
Many businesses are facing financial difficulties as measures to curb the coronavirus pandemic leave several places of operation closed for the time being. Even though customers aren’t coming in, bills still need to be paid and the business still needs to be managed, and this all costs money.
Some business owners may feel the budgetary pinch to the extent that alternative financial resources are the only option for survival. Although short-term loans may seem like a quick, viable option, we’re here to say that our alternative funding services can bring your business the fast cash a short-term loan provides without all of the downsides and strings attached.
Here are five reasons why you should say no to a short-term loan and rely on asset-based financing or invoice factoring to keep your business afloat.
You Could Get Caught in a Loop of Debt
Short-term loans are exactly that; short term. This means that unlike a standard loan that’s paid off over time or the zero debt option of invoice factoring, you’ll be paying back a high-interest, expensive loan within the next year or less.
Many small businesses and people who rely on short-term loans to get them through a rough patch usually don’t come up with the cash necessary to clear the debt. This usually results in the client taking out another short-term loan in order to “clear their debt.”
Avoid the cycle of debt that leaves your credit vulnerable to devastating drops. Your unpaid client invoices can help keep your business funded with the help of our invoice factoring services. There is zero debt to pay back on your end and the best part is, your business gets approved and paid within 24 hours.
Hidden Fees and Interest Rates Make Them an Expensive Option
Before applying for any financing, it’s always important to watch out for any hidden fees or interest rates. Short-term loans may seem like a simple solution, but the truth is, you are going to dearly pay for this financial fix.
With interest, these loans could cost your business up to $30 for every $100 borrowed. That’s even higher than the interest from the average personal loan from a bank.
Also, when it comes to things like a payday loan, you could face hidden fees that rack up hundreds of dollars, just by using their service during this time of crisis.
Working with a company that offers alternative lending, can help you avoid hidden fees as well as ensure that your borrowing capacity isn’t hindered in any way by interest rates that soar through the roof.
They May Just Be Too Easy to Obtain
Let’s face it, you could get approved for a short-term loan in the span of a lunch break. While this may seem great, the truth is, this option just doesn’t give you the time you need to think about alternative solutions to your financial problems. The worst part about it is, once you’ve signed off on the loan, the debt is yours and there’s no taking it back if you change your mind.
Unlike Asset-Based Lending, You May Not Get Enough Money for Long-Term Goals
Short-term funding isn’t great for your long-term goals. After the pandemic passes over, you’re going to want to open back up with a vengeance. Sadly, a short-term loan may not get you enough money to accomplish all of the necessities.
With an option like asset-based lending on your side, you can get the maximum funding you need within 30 days of your application. Asset-based lending offers your business a higher advance rate with a revolving line of credit where you name the terms!
Sustain Your Business the Smart Way With Goodman Capital Finance
At Goodman Capital Finance we live to see businesses like yours succeed. We understand that right now things are uncertain for many organizations like yours. That’s why we are still available to offer our invoice factoring and asset-based financing services through our online application. Stay healthy while also benefiting your business today, with the help of Goodman Capital Finance.