Is it Possible to Apply for a Business Loan to Fund Small Businesses?
Most short-term business loans are very easy to qualify for, require fewer documents, and typically have a faster funding process. You are able to use the available equity in your property to secure funding for any worthwhile business use. There are no restrictions on how you use the funds as long as it is for a business use. It does not matter if you are a large corporation or a small business, there are funding options for any business big or small.
Benefits of using a short-term business loan
The advantages of business loans as short-term finance options are as follows.
1. Speeding up and simplifying the loan application process
A business loan requires minimal documentation such as:
- Identification documents
- Rate notice
- Mortgage statement
- Exit strategy
- Business registration details
In contrast, traditional lenders need to see full financial and business documents. Therefore, it may be easier to get approval for short term business loans. There are also unsecured loan NZ lenders who may be able to assist with smaller loan sizes.
2. Acceptable Eligibility Criteria
Traditional business loans often require several years of proof for profitable service. Conventional loans are difficult to avail of when starting a new business. Short term business loans have a distinct advantage here as they do not require a long and successful business history. Even small business owners can get a short term business loans if they available equity in a property. As such, traditional credit is typically not an option for new entrepreneurs unless they have significant assets or established relationships.
3. Quick access to bulk financing
Traditional business loans do not always offer a lump sum payment. Instead, you may need to send a drawing request so that you will pay the loan proceeds regularly. It may require an invoice, receipt, or project budget showing where you will use the money. With a short term business loan, you can obtain a one off payment at the commencement of the loan. When you are short on time and need cash quickly, the speed of financing a short term business loan is a huge advantage. It is especially true if you need urgent funding and needs funds for:
- Debt consolidation
- Equipment purchasing
- Meet urgent payroll deadlines
- Ensure extra cash flow in case of unforeseen emergencies
4. Business Loans are versatile in nature
The main feature of business loans is their versatile nature. All other types of loans available in the financial market have a dedicated predefined usage purpose. A car loan, for example, can be used only to buy a car and for any other purpose. The lenders ask the borrowers what they will use the money for.
The same is not true for a business loan. You do not have to explain how you wish to spend the borrowed money provided it is for a business use. A business loan can be used for buying new equipment, hiring employees, purchasing inventory, and many more without lender interference.
5. No need for a good credit history
The financial market is super competitive for funding a business. You should pass through several filters to qualify for secured or unsecured loans in NZ. The dominating one is the credit score. New companies face difficulty in providing a strong credit history. They can apply for a short term business loan as private lenders to not require a good credit history.
Lenders although looking for your credit report and history, the qualifying criteria are not as tricky when applying for business loans which means approval becomes easier.
Final Thoughts
Business success is about leveraging the company’s current strategic position. The same goes for using business loans and other unsecured loans in NZ to finance your business. The key to success is finding funding that meets your business needs and supports your strategic plan. Ideally, a company’s funding choices will help it better leverage its strengths or compensate for market weaknesses.
