Business Growth Encouraged By The Use Of Short Term Loans

Australian business numbers are on the rise for the second year in a row, according to figures released by the Australian Bureau of Statistics (ABS). There were fewer new business registrations, but less businesses closed, which is excellent news for the Australian economy.

Australia is home to more than 2.1 million small businesses, which is 21,500 more than the previous year’s figures. What is interesting, is that 61% of those businesses had no employees, because finances can be tight at certain times of the year.

And that is likely to increase the demand for short term business loans. So, with major banks pulling bank on lending, expect to see private loan lenders in Australia playing a pivotal role in the country's economic future.

Short Term Loans Help Business Grow

Short term loans are generally used by established businesses, to take them to the next level. And the next level is crucial, not only to keep them operating, but also to reap the rewards for our economy.

Sometimes, however, depending on the type and size of the business, a short term loan may even be used as start-up funding.

There are many reasons why businesses need short term loans and, generally speaking, they are used mostly by small to medium sized organisations. For example, a small seasonal business may need a short term loan to cover its low season.

Seasonal Downturn Prompts Need

Or a business may need to lay out a large amount on stock, knowing it won't see a return for several weeks. Equally, a seasonal business may need extra staff at certain times of the year.

What we're seeing here is all related to cash flow, and covering the gap between outlay and income. In most cases the business is good for the loan, it's just an issue of timing. And it is far better to get a short term loan than pull funding away from other areas of the business, leading to deficits at a later stage.

Quicker, and More Flexible

Obtaining a short term loan through a private lending company actually makes better business sense. In all likelihood, anyone needing a short term loan needs it now! But we all know how long it takes to organise funding through a bank!

So, for example, a private lender like Credit Connect Capital Ltd offers short term loans from $50,000 to $10,000,000, interest only, over one to twelve months. Those are good options for a small business.

However, if the business's requirements are greater, Credit Connect Capital also offers commercial loans, and construction and development loans, up to $50,000,000, with rates from 8%. Naturally, loans do need to be secured.

The most important point is to find balance between what you need and what you want. Borrow enough to ensure success, but don't borrow so much as to cause distress down the line. As English philosopher John Locke said, "Our incomes are like our shoes; if too small, they gall and pinch us; but if too large, they cause us to stumble and to trip".

Disclaimer:

*The information contained in this document has been prepared by Credit Connect Capital (CCC) for general purposes only, while every care has been taken in regards to its accuracy no warranty is given or implied. The information contained herein does not constitute nancial product advise and or an offer to invest. We recommend that any person obtain nancial, legal and taxation advice prior to making any investment with CCC.