When it comes to a business loan, almost every applicant has the same confusions - how many types of business loan are there? Is there a difference between a short-term loan and long-term loan? What is a short-term loan and long-term and what are business loan benefits? Do I need to submit different documents for a long-term business loan and short-term business loan? Though the questions have a very easy answer and all of them are easily available on the internet, yet, given the different things potential loan applicants’ have to deal with it’s is natural to get confused.
So, let’s take the time out and untangle the confusion one by one.
- What is a short-term business loan and long-term business loan?
As the names make it very evident, long and short in the two terms define the time period for which the loans can be availed. A short-term business financing can be availed for a shorter period of time which can range from 6 months to 3 years. On the contrary, a long-term business loan is offered for a longer period of time to make the repayment easier. The repayment tenor can be as high as 8-10 years.
- What is the difference between a short-term loan and long-term loan?
- Purpose: the Long-term business loan is good for big-ticket investment such as business expansion etc. A short-term business loan is best to cover up the small and urgent cash needs.
- Loan amount: Loan amount is higher in long-term loan compared to a short-term loan.
- Tenor: The tenor can be as high as 240 months for the long-term credit scheme, and up to 60 months for the short-term option.
Last but not the least, the documentation remains the same irrespective of the term of your business loan.
You can know about 4 Benefits of Taking a Collateral Free Business Loan.
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