SME short-term loans help seize business opportunities, including transactions to be completed in a short period of time. Every SME needs quick access to working capital that not only covers operational needs, but also helps expand and diversify the business. For long-term business loans, traditional banks, financial institutions, and unorganised moneylenders fund individuals or companies. On the other hand, short-term SME business loans are specifically aimed at addressing a company’s cash crunch or immediate liquidity needs.
The world is going online, then why should getting a business loan be any different? There are many tangible benefits that companies can enjoy by going online for their small SME business loan needs. With minimal documentation and speedy access to finance, SME short-term loans offered online can fast track the growth of a business and boost profit margins.
Why SMEs need short-term loans
Small businesses have a big need for working capital, although such a short-term loan for sme requirements are difficult to procure from banks and traditional lenders. Typical reasons why short-term finance is required include:
- Seasonal sales
Most businesses and especially small players face seasonal demand; production and distribution of goods or services follows a cyclical pattern. There are months when demand spikes; and other months when it slumps, yet salaries need to be paid and other expenses must be met. Both situations demand fresh infusion of funds and SME short-term loans provide a timely boost to continue business as usual.
- Business expansion
It is expensive to expand a business, more so if it is unplanned and sporadic. An SME short-term loan is the necessary financial support during this challenging phase.
- Emergencies
Emergencies are not uncommon to businesses. They come in different forms – urgent repairs or machinery replacement, injuries or legal liabilities, security breaches etc. An SME business loan for the short term is just what you need at these times to stay in the running.
Benefits of short-term online loans
- Quick access to finance
Time is vital in a competitive business environment and an opportune SME short-term loan can give any enterprise an edge. On the online platform, creditworthiness is assessed in hours and a loan is sanctioned within a few days. Eligibility evaluations are algorithm-based and take a matter of minutes. Documentation needs to be uploaded only after the application for SME business loan has been submitted and approved. Digital verification of documents also saves valuable time. The online medium has the distinct advantage of speed, which is especially useful in the event of an emergency loan.
- Simple application procedure
Online lending companies are accessible 24/7, eliminating the need to make multiple trips to the bank or to wait in queues. SME short-term loans can be accessed from the comfort of a home or office. A computer system with an Internet connection or an app installed on a smartphone is all it takes to apply for an SME business loan.
- Collateral-free loan
To secure an SME short-term loan, lending institutions don’t ask a company to pledge any personal or business assets. Online SME business loans can be accessed by digitally uploading the required documentation while applying for the same.
- Cheaper
Traditional lenders factor in the cost related to physical interactions such as site visits, office/branch infrastructure and so on, into the loan’s interest rate. These costs are eliminated in the case of an online SME business loan, making it cheaper. With the use of fintech, alternative finance companies look beyond a less-than-perfect CIBIL score (a three-digit numeric summary of credit history) to grant an SME short-term loan. Moreover, this short-term finance when repaid on time boosts a company’s credit score.
- Wider choice
The online lending space is a completely new world for companies looking for SME short- term loans. Unlike traditional lenders offering only off-the-shelf products, the virtual space offers interaction with a wide pool of lenders offering multiple products. Online SME short-term loans come in the form of invoice financing, line of credit and merchant cash advance. With a whole gamut of options, online lending companies put the borrower in the driver’s seat. In the virtual world, an SME business loan is tailored to suit the need of every small company.
- Objectivity
SME short-term loans in the online space are sanctioned in the most scientific manner. The space operates objectively, as algorithm-based and objective criteria are applied to every loan application and borrower. A company applying for SME business loan need not worry about subjective factors like personal particulars, location and evaluator’s biases/preferences.
Features of SME short-term loans
How well do you know your short-term loan? Well, here’s a quick guide to some key features of SME short-term loans.
- Wide loan range
Most companies offer a wide loan range, so an SME can apply for the optimum amount to fund its business requirements.
- Personalised credit criteria
No two SMEs are the same and each enterprise has resources and targets unique to its business. Lending companies often customise credit-underwriting parameters, depending on the nature of the business and the size of the SME business loan.
- No prepayment charges
Traditional lending institutions may charge you a fee if a company decides to pay off the SME short-term loan earlier than decided. However, many credit organisations charge no penalty for the same, giving companies the flexibility to close loan obligations ahead of the pre-decided date.
- Flexible repayment options
SME short-term loans offered by lending companies come with flexible repayment options ranging from 6 months to 36 months. Depending on the nature of the business and cash flow, any company can choose the best finance option.
Conclusion
Recent developments in the digital space like Aadhaar-based authentications, digital land/property records, e-signatures, and e-banking have further opened up the scope for online lending. There has been a paradigm shift, with lending moving from a relationship-based activity to a space managed by data and algorithms. It’s a win-win situation for both the borrower and the lender. While financiers like Muthoot finance are coming forward to help business owners in fulfilling small business needs, business owners are also benefitting from the advantage of not committing to long-term debt. So go ahead and explore the online lending space that offers SME business loans.
Explore The Possibility Of Getting Sme Short-Term Loans Online 