Qualified Business Owners Can Use Short Term Loans
Short term loans for businesses
Small businesses are suffering as a result of the economy, but some can find relief with short term loans. A short term loan is designed to help businesses run smoothly and fill financial gaps in budgets. For the qualified business owner, they can be a great asset in times of struggle.
In general, there two options regarding short term loans: secured and unsecured. Secured loans are backed by some type of collateral, and unsecured loans aren’t. Each one can be useful to the struggling business owner as they try to manage their monthly finances.
The recession and small businesses
The recession brought down huge corporations, so naturally it had adverse effects on the small business market, too. If you look at small businesses in the nation, most have had to employ some type of financial tool to survive. Cutbacks, layoffs and deep budgeting have all be used to stay within budgets. Sandy Carlson, small business owner in San Diego, California said, “I have had to cut back on everything — straight across the board. When the recession got more difficult, I had to lay off a lot of my workers, and I don’t know if I will be able to bring new workers back any time soon.”
Carlson is not alone. Many businesses had to target human resources in an effort to survive through the recession. The most difficult repercussion was a huge unemployed workforce. Businesses had to keep eliminating jobs but the more jobs that were eliminated, the more stress was on the economy. People stopped spending due to their employment status, and that stifled the economy’s sustenance.
How businesses are making it financially
Secure loans and unsecured loans can be long-term or short-term loans. Before the recession both were popular options for finding funding. The unsecured loan option took a hit quickly when credit lenders started feeling the effects of the recession. Borrowers fell into default because of their lack of money, and credit companies stopped lending. Small businesses felt the push as they were no longer privy to loans they once relied on.
On the other hand, there are secured loans. These are loans with collateral to back them, so traditionally they were easier to get than the unsecured type. Unfortunately, due to the recession even these types of loans are now harder to get. Applicants may need them, but lenders are still charging higher interest rates and penalties for late payments.
The future of lending
No one knows how the lending industry will develop or what the repercussions of the recession are. Marty Leflore, of the SBA, said, “Credit was used all the time by businesses before the recession, but now that the rules have been rewritten, no one really knows what configuration the industry will take on. … Lenders most likely will be more conservative with extending credit because they are as in the dark about the future as business are.” Today the lending world is already changing. Many companies are looking to short term loans as a means of closing up budget gaps. The are not traditional types of loans due to their structures, but because of their nature many business owners qualify for them.