When it comes to commercial business loans there are a lot of options. Commercial loan rates and lenders vary greatly, as do terms. Short-term commercial loans exist to help with smaller projects, while longer term loans are available when needed. Which one is right for you?
What is the Difference?
Short-term loans have terms within one year. In some instances, commercial loans with terms of less than 5 years may be considered short-term. These loans can sometimes be considered an expense rather than debt, having a significant impact on the income statement and the balance sheet. Generally short-term loans are for less money than long-term loans.
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Which One Do I Need?
If you are dealing a relatively small project that can be completed quickly, such as buying a piece of equipment or making small repairs, then a short term loan may be the best solution. It can be paid off relatively quickly and the financing doesn’t outlive the usefulness of the project. If you are doing a larger scale repair job, expansion, or equipment replacement, a long-term loan may be the way to go.
A Word About Interest
Beware that often short-term commercial loan rates are higher than long-term rates. Pay attention and shop around with various commercial loan lenders to be certain you are getting the best terms and rates for your specific needs.
This article was originally published by Biz2Credit