Lack of substantial capital, inadequate infrastructure, and obsolete technology are among the primary issues that hamper businesses’ profit-generating capacity. Quick access to funds thus helps business entities to tackle these issues effectively for streamlined operations.
One of the typical ways to raise instant finance is via short-term business loans that come with considerable funding value and require you to fulfil simple eligibility criteria.
With KredX, businesses can avail short-term business loans via bill discounting to fulfil their working capital needs.
A short-term business loan in India is also known as working capital loan. It is designed to help business owners to fulfil immediate financing needs by providing quick access to working capital.
Typically, the loan amount is availed in a lump sum and is paid over set repayment tenure. Such a loan can come with a term ranging anywhere from 3 months to 3 years.
Though short-term financingcome come with a high instalment amount due to a limited tenure, they are more likely to accrue interest at a lower rate. Depending on its funding needs, a business entity can select a suitable short-term loan.
Broadly, there are 5 types of short term financing, and each of them comes with a distinct set of features and benefits. Check out some of them:
It is usually an unsecured credit option available for both long and short-term. It is designed to cater to immediate cash requirements and ensures continuous access to funding.
Typically, business entities with an exceptional credit history can avail a line of credit from any commercial lender at favourable terms. It must be noted that under this credit option, no outstanding monthly payment is due until a business entity uses the line of credit.
It is a unique short-term business funding option that helps take care of immediate working capital requirements. Through this type of credit option, business entities can leverage their unpaid invoices to raise funds at a set percentage of the invoice value.
Business entities need to repay this debt along with interest and fees once they receive payment from their customers. Usually, the rate of interest for a particular borrower is determined based on the invoice and the business’s creditworthiness.
With KredX, businesses can utilise their unpaid invoices to access working capital at a discounted rate.
Although invoice factoring and invoice discounting are somewhat similar, a distinct difference separates these two credit options - unlike invoice financing, invoice factoring does not involve a credit facility.
In this case, business entities sell their invoices to a third-party company and in return, receive an upfront payment up to at least 70% to 90% of the bill amount. Hence, the third party, mostly a financial institution, assumes the responsibility for payment collection from customers.
Also known as trade credit or supplier credit, this financing option is an effective way to manage cash flow. In this setup, businesses seek funds from their suppliers and use the money availed to purchase the lending vendor’s products or services.
Businesses do not have to pay any interest unless they fail to repay the debt by the due date. Vendor financing is a feasible short-term business loan as it enables businesses to convert the cost of products into sales.
Business entities can avail a business credit card that matches their everyday spending requirements. With the help of a business credit card, business owners not only meet their cash requirements successfully but also enjoy additional perks.
Such cards extend cashback, milestone bonuses, and reward points on most transactions and help multiply savings. Notably, users are required to pay additional interest and late fees in case of failing to clear all dues within a pre-mentioned payment due date.
It must be noted that business entities need to meet several eligibility criteria, provide required documents, and agree with the financial institutions’ terms of repayment to avail a short-term business loan in India.
Individuals can meet their working capital requirements with more convenient repayment options and simpler eligibility criteria by opting for invoice discounting services from KredX. We help to arrange immediate funds via bill discounting and enable businesses to take care of their short-term requirements and keep their operations running.
In terms of short-term business loan, the loan amount availed has to be repaid in instalments within a predetermined repayment tenure. Business entities may negotiate a more frequent repayment option or better terms with their lending institution as per their eligibility.
Businesses will be required to provide essential documents and go through a verification process for such loan approval. Once all the requirements are met, they may avail a substantial fund to meet their immediate financing needs.
Typically, individuals take a short-term business loan to maintain operations or generate more profits via expansion. Business entities often utilise the funds availed in the following ways –
Other notable benefits of short-term business loans include –
With the help of short-term business credit, entrepreneurs ensure a smooth flow of cash and uninterrupted operations.
The application process for short-term business loans is usually straightforward and involves the following steps:
Start by researching and comparing different lenders to find the ones that offer favourable terms and conditions for short-term business loans. Consider factors such as interest rates, repayment flexibility, and customer reviews.
Prepare the necessary documents required for the loan application. These documents may include business registration certificates, financial statements, bank statements, income tax returns, and identity/address proofs of the promoters.
Complete the loan application form provided by the lender and submit it along with the required documents. Some lenders also allow online applications, making the process more convenient.
Once the application is submitted, the lender evaluates the business's financials, creditworthiness, and repayment capacity. If satisfied, they approve the loan and communicate the terms and conditions.
Upon loan approval, the funds are disbursed to the business's bank account. The time taken for disbursal may vary among lenders but is typically within a few business days.
At KredX, we help customers access immediate access to funds via zero-liability, bill discounting service. Businesses can access such funding within 24-72 hours* only against a few basic requirements mentioned below.
Businesses that extend goods and services to large-chip companies can benefit from our bill discounting services. Also, applicants’ creditworthiness plays a decisive role in determining their eligibility and the amount of money they can raise.
Sign Up Now to Check your Eligibility for Bill Discounting Services
To back up their eligibility, business owners need to submit essential financial details and related documents like -
Get in touch with us to find out about the requirements to benefit from invoice discounting.
Since a short-term business credit accompanies limited repayment tenure, businesses need to figure out the timeline and business loan interest rate that will suit them the most. They can use a financial tool like a short-term business loan calculator to make an informed decision.
To use the financial tool effectively, one needs to account for the following factors –
There are many handy financial tools that offer instant outcomes and enable multiple adjustments. It thus allows users to compare the different loan options easily to help pick an affordable funding option.
Businesses must also weigh their financial standing, creditworthiness, and repayment capability before availing a short-term business loan in India.