Finding a suitable loan exclusively suitable for your business needs is not always possible, so intermediate term loans act as a middle ground. Intermediate term loans are somewhere between small loans and long-term loans.
Determining a perfect deal to fund your business needs can be discombobulating. There could be several types of business loans, and they work differently from personal loans. A lender will not just look at your credit rating but your business credit score as well. Each business has unique needs and different financial situations.
While instant cash loans require you to pay off the debt in a lump sum or weekly instalments within a one-month period, intermediate term loans last anywhere between one and three years and pay down in fixed monthly instalments.
The interest rate for these loans can be fixed or variable depending on the borrowing size and whether you secure it or not. Although collateral will let you borrow a large amount of money, it cannot be too large. A lender will lend you money that is manageable to pay down within the time span.
When should you take out Intermediate Term Loans?
There are several situations when you may need these loans, but they are most commonly used to raise working capital to meet the following expenses:
1. Expanding your Business
If your business has been doing well and your products and services have got more demand, you would like to expand to another location. Though additional profits you make from your previous sales will supply you with some cash, you may still need some money. If you just need a small amount of money, you can seek to apply for small loans in Ireland with no credit check.
These loans will quickly provide an instant injection of cash. Since the borrowing amount is too small, you do not need to secure it. You will pay off either in a lump sum or in weekly instalments. However, if your needs cannot be funded with these small loans, term loans will come in handy.
It depends on the borrowing amount and whether or not a lender will ask for collateral. Your credit score will also be checked to make the decision about it. Some lenders may ask you for equipment as collateral, while others may treat your office space as collateral.
2. Hiring New Employees or buying New Equipment
Hiring is expensive, especially if it is taking a long time. It may be hard to use your cash reservoir to fund recruitment. Some people assume that it could be very expensive to take out a term loan to fund hiring. This is not a one-off expense, so you should avoid borrowing this much money, but logically they are the best loans to fund the hiring of employees or buying new equipment.
Intermediate loans are repaid directly from the asset you bought using them, whether it is a new employee or a new gadget. Understand it this way. The new equipment will improve the productivity of your employees, which will cause increased revenues. You would use that revenue to pay off the loan. It means these short-term loans are more beneficial to your business when you are to fund everyday expenses to keep the ball rolling.
3. Refinancing Debt
If you have an outstanding business loan that seems to be quite expensive, you may want to refinance it for lower interest rates. You will have to show an improved credit rating and repaying capacity to avail yourself of lower interest rates.
Benefits and Drawbacks of Intermediate Business Loans
Unlike short-term loans, interest rates for intermediate loans carry lower interest rates. You can save thousands of Euros in interest. Another advantage of taking out these loans is that you do not have to pay off the debt in a lump sum. You can easily manage monthly payments without risking your business operations.
The drawback of these loans is that they require collateral. It can be any piece of asset or inventory. You may lose it if you make a default. Some lenders may ask for a guarantee to sign off on these loans.
The application process for these loans is more rigorous than for other small loans. You must have a good credit score. A couple of lenders would love to look at your tax return and other financial information. These loans may take several days to complete processing, so if you need quick fixing, these loans are not the best bet.
Some people think that you can easily get the nod for these loans if you have no additional business debt, but the fact is a lender would like to know about your personal obligation too. For instance, if you have taken on unsecured personal loans in Ireland to fund any of your personal needs, it will be taken into account to decide whether or not to approve this application.
Tips for Getting an Intermediate Loans
Try to follow these steps to get the fastest approval on intermediate loans:
- First off, you need to decide how much you need. Do proper research to know if you can repay the borrowing amount. Use the online loan calculator to get an idea of the total debt cost.
- Check your personal credit score. If it is less-than-perfect, try to boost it. However, a lender would also peruse your business credit history.
- Arrange all documents beforehand. You can get to know about the relevant documents by visiting the website of a lender. Ask the customer support team if no information is on the website about it. If you are applying through a broker, they will tell you about the documents required during the process.
- Think about which asset you would like to use as collateral. It may be equipment, inventory, commercial property, your business vehicle, and the like. However, the chosen collateral should be worth more than the borrowing amount.
- Each lender has a different policy, so compare interest rates, terms, collateral and other formalities before taking out these loans. Shopping around will likely help you get the best deal.
Take Message Home
Intermediate term loans can help fund your business needs. The term of these loans lasts for up to three years, and hence they are more manageable than small loans. These loans may require collateral you may lose in case of a default.
To qualify for these loans quickly, you should improve your credit history. These loans are generally approved when your credit score is not less than fair. Analyze your repaying capacity carefully before asking for money, so a lender does not turn you down.