By: Leah Virzi
A fine medium
So, you’re looking to take out a loan for your business. You could be starting your own business, buying out a business, buying new or used equipment, or even purchasing real estate. Whatever the case may be, your purchase is between $20,000 to $10,000,000 and you are looking to pay off your loan within 1 to 5 years. This all meets the criteria needed to qualify for a medium-term loan.
Many industries can benefit from medium term loans. For example, your local coffee shop. Your coffee shop has become the most popular in the area, bringing in costumers from three or more towns over, because the quality and flavor of your coffee and pastries have been said to be so incredible. You are looking to expand and build another shop so that you can accommodate the high volume of customers and provide better service. In order to expand, you will have to buy new espresso machines, coffee makers, refrigerators, a new building, and much more. Altogether, the cost accumulates, especially when you may prefer using a super automatic espresso machine that is made in Italy and costs $20,000, alone.
Understandably so, you may not want to be in debt for twenty years, so why not look into a medium-term loan? Medium term loans are advantageous for business owners because they offer more flexibility. This flexibility gives you the chance to pay off your loan over a longer term than you would find with short-term funding, while also avoiding the risks that can be associated with a long-term loan. The interest rates can be fixed or floating, and usually range from 7-30%. When financing your loan, lenders look at your business history, the current and predicted market value of your business, as well as your credit score.
If someone with a poor credit score is applying for a medium-term loan, some lenders may ask them to put forth some sort of collateral. Not all lenders require a collateral, but they may compensate for the lack of collateral in other ways. You just have to find the lender that you believe will make your business the most profitable and successful. When collateral is required, it usually holds a higher value than that of the loan, to ensure that this loan will be paid off in its allotted time. Although that may be frightening, your credit score can improve greatly when paying off a term loan, which may end up helping you in the long run.
With the amount of consideration that goes into the application to finance for a medium-term loan, you would think that it may take a lender a few weeks to get back to you. In reality, the process only takes about one week. That is a quick response, allowing you to compare lenders and find your best fit to start making more money faster than you expected.
Opening a business, buying one out, or making a larger purchase that you perceive to be beneficial for your company can be terrifying at first. But with the opportunity to take out a loan that will only last 1 to 5 years, the idea becomes less frightening. There are less risks associated with medium term loans, and the application process is quick and easy, making it one of the best options out there. You can grow and improve your business, fast with a simple first step, today!