The SME guide to short term loan solutions

Every small business owner is aware of the problems related to cash flow. 

Late payments, the need to invest in physical stock and other issues all dominate the life of any entrepreneur trying to run a successful business. Short term loan solutions can be the only way out of a tricky financial situation.

short term loan solutions

One thing is sure if you are looking towards loans to start trading on websites like you should probably reconsider. Trading is not an investment relying on your own business acumen. It is very risky. If you lose your entire loan on an unstable investment, you may be in serious trouble with the loan company.

Read on to find out more about short term loan solutions for SMEs.

Start Up Loan scheme

The UK government has recognised the need to support small businesses. They do this through the Start Up Loans scheme, where SMEs can apply for £500-£25,000 to start up or grow their business.

The only terms for an application are that you are over 18 years old, you live in the UK and you plan to start or have started a business that has been trading for 24 months. You can repay the loan with 1 to 5 years with no application fee or no early repayment fees.

Moreover, if successful, you receive help writing your business plan and 12 months of free mentoring. A good deal all around.

The Start Up Loan scheme is a good place to start if you are looking at short term loan solutions.

Have a chat with your bank

Before examining other avenues of finance, you should always try your bank. Unfortunately, banks are usually unwilling to help with short term loans so it is often difficult to access funds through this route. Many business owners have to look at different options, but it is worth speaking to them. It never hurts to ask!

A short-term loan may still be cheaper than a bank business loan, overdraft and administration charges all build up. It is the same criteria as when you apply to borrow money on your credit card. They may seem like quick fixes, but you may suffer for it.

Quick short term loan solutions

For many small business owners, approaching the end of the month, or when bills start to rack up the ability to access funds quickly is a priority. The business balance sheet may look strong, but after a few months of late invoice payment, financial issues start creeping into the business.

Other short-term loan solutions can start looking more attractive. Be wary of appealing advertisements offering low-interest rates, the spiral of debt is real. Do your research and find a loan that offers a fixed rate of interest then you will not be blindsided by interest payments. Reading the small print and you may find out that the offer is more expensive if you wish to borrow over a period or extend your loan.

As with all loans always be realistic about your ability to repay. Does the loan include early repayment fees? Are there missed payment fees? Read the small print carefully and don’t jump into anything in a stressful moment to cause you more stress down the line.

The British Business Bank

Opposite to what the name suggests, the British Business Bank doesn’t actually lend directly to small businesses. It is a government-funded, independently run agency to help small businesses with funding and other financial assets.

They have over 130 partners including banks, venture capital funds, leasing companies and web-based platforms. The bank works together with these partners to supply loans to ‘enable you to access more finance products.’ If you’re looking at short-term loan solutions it is worth checking out the British Business Bank website to see if they can help your SME.

Ask for independent help

There is plenty of advice out there. As a small business, you are best suited to find independent advice when seeking a loan. You could even ask your local Chamber of Commerce or find an independent financial advisor. Most businesses will eventually search for a loan, if you get the right advice you will be on the right track to pay it back and be a successful entrepreneur.