It sounds like something of a paradox when this is suggested, but in real-world terms a short term loan can dramatically help things in the long run. Cash shortfalls happen more often than not, in both business and personal life, so having a lifeline for such events not only alleviates financial worries it also goes some way in boosting morale.
The key thing to remember here of course is moderation, and going out tomorrow to get a huge loan with an even bigger interest rate may not be the best way to go about it. There are various alternative providers to banks out there that secure loan payments against your cars’ logbook for example (information on logbook loans can be found here) but the loan must suit its context and purpose. For example, if you need a very short term loan to cover an overdraft, a log book loan may well be worth pursuing. If however you need a larger sum of money that you’d like to pay back over a few years you should see your bank.
The point is that loans aren’t always the evil entities they’re made out to be; if you’re worried about short term cash flow sometimes a loan is absolutely necessity and can keep the strain off while you get on with your work. Many small businesses, me included, have benefitted from taking out a small loan that has helped to set me up and keep me finance-worry free for a few months while I make some money. Sure, I’ve accrued some debt during that time but in real life these things happen, you could even class a loan as an investment because you’re essentially spending money to make more money.
Whatever avenue you take with your business or personal finance, do not be afraid to explore what loan options may be available to you – they can genuinely help ease the strain at times when the last thing you need is worry.
January 28th, 2010 at 12:43 am
I absolutely agree with you that cash flow problems is an issue for small businesses, but as you said, there are options and some of them are a necessity if you are to stay in business! In addition to bank loans and SBA loans, business owners can turn to business cash advances when they’re in need of pretty fast cash that don’t have such strict requirements as loans and they have the great payback option of having small debits taken from batch credit card sales which makes repayment much less stressful.