Benefits of Using Cash Loans for Your Business
There may be times when your company will get many orders that your existing inventory cannot fulfil because of a lack of funds. Do not worry. This situation is a good problem to have. You have the orders; you only need additional money to fill your inventory. One quick solution is to get short-term cash loans that are large enough to cover inventory costs. However, where to apply for a loan should be another thing to consider.
Ask Family and Friends First. One of the best places to get a short-term loan is from your friends and family. You may feel awkward to borrow from your parents, siblings, or friends; however, these are the people who will put your best interests in mind. One way to eliminate the awkwardness in asking for a loan from your relatives is to let them know of the financial situation you are in and show them how you will pay them back. It would be best if you offered them an interest rate that you are comfortable paying or offer them a cut of your profits until the loan is fully repaid.
Asking your friends and family for a short-term loan may also be advantageous for you since they may forgo charging you interest. However, it is still best to assure them that you are going to pay them back by coming up with signing a notarized agreement between both parties.
Applying for Cash Loans. If you fail to get a loan from family and friends. Do not worry; there will always be a person or an entity that will lend you money. However, you must expect that these organizations will ask for higher interest rates than what banks normally ask. Therefore, it is important to determine if the profits you will get from filing the large order will be large enough to cover the interest rates of the loan and still give you enough profit. If that is the case, then applying for a cash loan will give you the following benefits.
- No Need for Collateral. One benefit of cash loans is that they do not require you to put up collateral. This non-collateral loan would give you peace of mind that the creditor will not pull out any of your assets if you failed to pay them on time.
- Short Term Periods. While cash loans have high-interest rates, they are only given at shorter-term periods. This arrangement is beneficial for you since you can clear your balance with them in less time.
- No Penalties for Early Repayments. Short-term cash loans will not penalize you for paying the entire loan amount on time. When you get paid to fill your large orders, you can immediately pay your creditor without incurring any penalties.
- Transparency. Legitimate cash loan providers (those with Australian Credit Licenses) will be transparent with you during your loan application. They will inform you of the interest rates you need to pay and the payments schedule without any hidden charges. This is beneficial to you since you will already know how much you will pay monthly to pay-off the loan. It is best to carefully determine if you can handle the loan payments before deciding to apply for a cash loan.
Cash loans are a great tool to use for situations when your business needs extra capital for filling up large orders. However, it is not advisable to apply for cash loans if you are in dire financial situations where you need a long-term loan.