Short-term loans to companies are one of the great needs for SMEs. Its main feature is that these types of loans are at most one year. The importance of financing companies in the short term is maximum, since it is what will allow them to continue to have money for the daily activity expenses.
Traditionally in Spain, small and medium-sized companies have always used traditional banks to obtain short-term loans, but currently this situation is changing after the birth of different alternative financing formulas that offer this type of short-term loans.
From Good Finance we are very aware of the importance of granting loans to short-term companies, more knowing that after the economic crisis many companies had great difficulties to achieve it, so it is one of our main objectives. So what does it mean to finance your company in the short term through Crowdlending?
Credit to short-term companies through Crowdlending: Advantages
First, it should be clarified that since Good Finance it is not possible to finance credit cards, credit policies or credit lines in the short term, since it has to be fixed amounts for subsequent reimbursement to investors.
In the short term both loans for investment and loans for working capital are financed, but … What are really the advantages of loans to short-term companies? Below we list and develop each of them:
Interest rate lower than long-term loans
Granting loans to short-term companies implies a lower interest rate than long-term loans, since the shorter the term of the credit, the lower the risk to the investor.
Agility and ease in obtaining short-term credits
As we can imagine, nothing has to do with the procedures and documentation to be provided by the companies in their financing work depending on the duration of the credit. That is why it is much more feasible and agile to obtain a loan in the short term than in the long term.
As we know, crowlending is a type of financing funded by individuals. This, together with the duration of the credit, causes investors to increase confidence in lending their money to projects that want to be financed in the short term. Why? The answer is simple: the fact of recovering the borrowed capital faster, makes them feel more secure when lending their money. The proof is that most of the loans published in Good Finance in the short term are completed in a matter of hours.
Increased ability to cope with payments
One of the problems that companies often have is the ability to cope with different payments, such as payment to suppliers, payrolls, expenses derived from the activity, etc.
This, which in many occasions does not allow economic activity to continue normally, is solved thanks to short-term loans.