Businesses apply for loans for a whole range of reasons. However, according to the Small Business Survey, conducted by the Department for Business, Innovation and Skills, the most common purpose was to shore up working capital or overcome a cash flow problem. Indeed, 52% of businesses stated that they sought finance for these reasons, whilst a mere 3% said that their primary purpose for seeking a business loan was to increase their marketing spend.
So when you’re borrowing, what kind of business loan do you need? With a short-term business loan for a specific purpose, you can spread the cost over between three and 12 months, whilst a longer-term loan for business development can be repaid over about 12 to 60 months.
Reasons to take out a short-term business loan
You might choose to take out a short-term loan to cover your annual subscriptions to professional associations, pay your insurance premium, buy software licences, settle an unexpectedly large tax bill or pay your VAT whilst you have outstanding debts with a number of customers. In simple terms, short-term finance is suitable for bumps in the road and sudden cash flow problems, rather than for strategic or structural borrowing.
Reasons to take out a long-term business loan
In contrast, a long-term business loan is more suited to substantial borrowing for business development purposes. You might, for instance, borrow to acquire another business, launch a major marketing initiative, refurbish your premises or relocate the company. Alternatively, you may wish to invest in a new research and development programme, launch a new training initiative or take the business international. Finally, longer-term loans can be suitable for more significant or ongoing cash flow problems, where it is going to take you some time to sort out the underlying causes and ensure more predictable revenues.
Reasons to talk to Cashsolv
Cashsolv are specialists in small business finance, and our short and long-term business loans can help you move your company ahead. We’ll be happy to discuss your needs in depth and help you find the right solution, and as an innovative alternative lender our application process is much less arduous than a bank’s.
Whether you need asset-based finance (where you borrow against the value of your premises, plant or equipment), an emergency business loan (with funds inside your account in under 24 hours) or invoice factoring and discounting (allowing you to borrow up to 85% of the value of your invoices as soon as you issue them, with repayment being made when your customers pay you), we can make all the difference to your future.
To learn more, please discover how to make business finance work for you.