Booking a Short Term Loan

Nov 12
22:50

2005

Adam Smith

Adam Smith

  • Share this article on Facebook
  • Share this article on Twitter
  • Share this article on Linkedin

Where would business be today without debt? It may sound a bit ridiculous, considering almost every business in the world is most interested in making...

mediaimage

Where would business be today without debt? It may sound a bit ridiculous,Booking a Short Term Loan Articles considering almost every business in the world is most interested in making money, but without debt they probably would not be in business at all. The plain and simple truth is there are just not that many rich investors hanging around interested in taking an equity position in your company. So we must turn to debt to finance our operations in hopes of becoming profitable.

There is a variety of different debt instruments, both short term and long term, which can be used to meet our various financial needs. Since a lot of companies are in need of short term financing, let’s take a look at short term loans in more detail.

Short Term Loans

Often times a short term loan will be referred to as a bridge or swing loan. In this article, we will use the phrases bridge loan and short term loan interchangeably. Bridge loans help one meet a temporary financial need. Like a bridge allows one to cross with safety to the other side of the river, a bridge loan offers you the ability to survive a shortfall of cash for a temporary period. When unexpected events result in bad times for your company, you can turn to a short term loan to assist in passing through the rough times and on to the road of recovery.

A short term loan can come in handy for much more than just a financial recession within your company. All businesses have operating capital of some kind, and many businesses rely on temporary loans to finance their operating capital needs. If the cost of equity is greater than the cost of debt, then this type of use of a short term loan is perfectly legitimate and recommended. Every intelligent business knows it is wise to finance operations with the cheapest form of capital available.

Short term loans have other particularly pertinent uses. For instance, a short term loan is often used in the real estate market as a means for providing temporary financing for real estate purchases. Some investors will prefer to take out a mortgage bridge loan on a property they are purchasing before they refinance and acquire long term financing. If a real estate investor has decided that in the near future long term rates will drop significantly, then he might take out a short term loan on the property he is purchasing and refinance when the long term rates drop. By taking out a short term loan the investor buys the flexibility he needs to get out of the loan when desired and lock in a lower long term interest rate. Thus you can see how a short term loan can make good financial sense in the real estate environment.

The realities of business necessitate the need for current debt. Fortunately for us, banks and financial institutions have designed financial products and services to fit this need. If you are interested in a short term loan visit your commercial broker today.

Also From This Author

Spending the Millionaire Cash Flow

Spending the Millionaire Cash Flow

Are you sure you want to be rich? I mean really rich? Like the kind of rich where you have so much cash flow coming in you don’t even know what do with all this money – except for swim in it. Being a millionaire would definitely be great. Think about all the great things you could do with your millions in cash flow.
The One Great Way to Make Money

The One Great Way to Make Money

Is there one great way to make money? The simple answer is no. In fact there are a variety of great ways to make money. Just ask Robert Allen or Mark Victor Hansen, two of America’s foremost experts on creating wealth. A few of the great ways to make money include investment (be it in real estate, mutual funds, stocks etc.), entrepreneurial ventures, or via rapid corporate promotions. Each path to wealth offers its own unique advantages, but if you are looking for the one great way to make money that anybody can follow then you have come to the right place.
Online Business Intelligence Helps Get the Job Done

Online Business Intelligence Helps Get the Job Done

Welcome to the information age. In today’s world, harnessing the power of the internet can lead you to almost any information you might seek. The World Wide Web is literally revolutionizing the convenience in deliverability and accessibility of information offered to those connected online. The power of the internet facilitates the dissemination of online business intelligence to all those with access to the internet. There are a variety of different vehicles in which online business intelligence can be distributed.