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There may be times when your business receives many orders that your existing inventory cannot fulfill due to a lack of funds. Do not worry. This situation is a good problem to have. You have the controls; you only need extra money to fill your inventory. A quick fix is to get short-term cash loans large enough to cover inventory costs. However, where to apply for a loan should be another thing to consider.
Ask your family and friends first. One of the best places to get a short-term loan is from friends and family. You may feel uncomfortable borrowing from your parents, siblings or friends; however, they are the people who will have your best interests in mind. One way to take the discomfort out of asking your loved ones for a loan is to let them know the financial situation you’re in and show them how you’re going to repay them. It would be better if you offered them an interest rate that you are comfortable paying or offered them a cut in your profits until the loan is fully paid off.
Asking your friends and family for a short-term loan can also benefit you since they can waive charging you interest. However, it is always best to assure them that you will reimburse them by signing a notarized agreement between the two parties.
Cash loan application. If you are unable to get a loan from your family and friends. Do not worry; there will always be a person or entity that lends you money. However, you should expect these agencies to charge higher interest rates than banks normally charge. Therefore, it is important to consider whether the profit you will derive from depositing the large order will be large enough to cover the loan interest rates while providing you with enough profit. If so, applying for a cash loan will provide you with the following benefits.
- No warranty needed. One of the benefits of cash loans is that they don’t require you to provide collateral. This unsecured loan would give you peace of mind that the creditor will not take away any of your assets if you do not pay them on time.
- Short term periods. Although cash loans have high interest rates, they are only granted for shorter periods. This arrangement is advantageous for you since you can settle your balance with them in less time.
- No penalty for early repayments. Short term cash loans will not penalize you for paying the full loan amount on time. When you get paid to fulfill your large orders, you can immediately pay your creditor without incurring penalties.
- Transparency. Legitimate cash loan providers (those with Australian credit licenses) will be transparent with you when applying for a loan. They will let you know the interest rates you need to pay and the payment schedule with no hidden charges. This benefits you since you will already know how much you will pay monthly to repay the loan. It’s best to carefully consider whether you can handle loan repayments before deciding to apply for a cash loan.
Cash loans are a great tool to use in situations where your business needs additional capital to fill large orders. However, it is not advisable to apply for cash loans if you are in a difficult financial situation where you need a long-term loan.