Why Short-Term Loans Are Better Than Longer Term Loans

Why Short-Term Loans Are Better Than Longer Term Loans

First off, if you are considering taking out a business loan it's important to weigh all potential factors involved, a few of those being: How much do you need? What rates are you going to have to pay? And what are the terms as far as length of repayment?

With a longer-term loan, you are paying back the money usually over the span of decades. Generally, with these types of loans, there's a lengthy application process and your chances of qualifying are more difficult than they might be with a short term loan.

This is why it's critical to sit down, consider the variables inherent with both short and long term loan programs and then choose which might be better for your company.

Weighing Short and Long Term Loans

Short Term:

  • Has a higher interest rate; however, given that a long term loan can last for decades, over the long haul you usually will be paying more in interest.

  • Less paperwork; streamlined application process.

  • Better chance of qualifying through alternative lending companies; less restrictive criteria where even bad credit now is acceptable in some situations.

  • The much faster process start to finish; some can get the money in their account in as little as 24-48 hours.

Long Term:

  • Lower rates, but consider the entire duration of repayment—you generally pay more in overall interest.

  • The application process involves an inordinate amount of paperwork.

  • Tighter lending restrictions associated with this type of loan. Especially when it comes to smaller businesses, banks are becoming more and more reticent about doing longer-term loans.

  • The entire process could take weeks, if not months.

First Union has worked with numerous small businesses, and in most cases, the short term loan programs are the better way to go. Not simply because of the ease of application but also because short term loans are becoming increasingly flexible as far as repayment options, the ability to use the cash for whatever you want, and loan amounts. We'd love to discuss our loan programs with you. Call today!

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First Union Lending LLC is a dually licensed Lender/Broker with its main offices located at 4900 Millenia Blvd First Floor Orlando, FL 32839. First Union Lending LLC and its ads are meant for continental United States, including Alaska and Hawaii small business owners. Business Loans offered by First Union Lending LLC have varying rates and terms that can range from 30 - 120 payments and all rates and terms are based on eligibility of the business and its owners. The actual terms are based on credit, business history, industry, amount and terms. As an example, a $5,000 loan paid over 5 years at 8% would have a total repayment of $6,082.92 over the life of the loan. We use the latest encryption to protect sensitive information transmitted online, as well as run our own secure server network to ensure your information is protected offline as well. California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through VBJ Consulting, LLC, a licensed finance lender/broker, California Financing Law License No. CFL#60DBO78163

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