One thing which should be made clear when considering the title of this article is that this is not intended to refer to large corporations. These usually have their own arrangements in place with their own bankers which mean that they can access short-term funding of a different kind.
However, it has to be said that there is also a way of many much smaller companies getting access to loans which are intended for a specific purpose.
The financial market in general has come to realise that both individuals and businesses often require funds for very short-term requirements, such as for buying stock and some other basic requirements in order for them to get their operations off the ground.
However, the crisis in the financial sector which has resulted from the troubles suffered by many of the world’s large financial institutions in 2007 and since has meant that many sources of finance which were once available to people running small companies, despite them having either only a short track record of doing so, or even none at all, are, for the time being at least, unavailable.
Many people may argue that the banks are taking an eminently responsible attitude, in only lending to people and institutions which they know are going to be able to repay the debt, and thereby are safeguarding the interests of their shareholders and the other people and businesses who need financial help, and are very careful to ensure that they meet their repayment commitments.
Yet it has to be remembered that commercial lenders of all kinds are in business in the first place to make funds available for people and businesses which need funds in order to help them either get off the ground in the first place, or to develop, and so to come to play an important role in not just their own prosperity, but that of the area which they serve, and the country as a whole.
So short-term financing is an option which is available for a wide range of businesses which have the potential for substantial growth. Often, such companies require minimal capital to get themselves off the ground. But they may operate in a field which depends on them being able to react quickly to changes in their particular market.
One of the biggest changes which might come into this category is the release of a new product. Such a product may have received a lot of pre-launch publicity, which is pointedly intended to tell those ‘in the know’ that it is something which they simply must own, if they want to stay ahead of their competitors.
Yet it may be that an enterprise wishing to sell the product cannot get a place in the queue to buy it, without being able to show the manufacturer that they can pay for it up-front. This happens very regularly in fast-moving sectors such as technology. Yet despite there being the potential for companies to prosper from selling the product, they are unable to do so because they simply don’t have the money needed available at the right time.
Short-term financing can help overcome such an obstacle, and thereby help ensure that smaller concerns can compete with the ‘big boys’. And thereby, it can help ensure that competition remains in the market, and so that customers can ultimately benefit.
Guest post contributed by Simon Belfield who regularly blogs around SMEs and small businesses. A real advocate when it comes to business funding and looking at a short term business loan from Capital on Tap for his own business.