A BEGINNERS GUIDE TO SHORT TERM FINANCE

Recently updated on December 14th, 2022 at 06:17 pm

In this article, you will discover the benefits of short term financial loans for personal and business use.

Especially during periods of uncertainty, it may take longer to sell your current home after you have found your new place. Or your business may be suffering slow payments, resulting in cash flow shortfalls. Where do you turn to for immediate access to funds you only need for a short time?

When people think about personal or business finance, they often think of mortgages or other types of secured loans with long repayment terms of up to 30 years with a bank. These types of loans typically have a very strict ‘lending criteria’ (i.e. what you need to demonstrate to be able to be eligible for a loan), usually require years of financial information, and have an onerous application process that takes a long time to be approved, and settle.

But what if you only need finance for a short period of time? And you don’t want to jump through hoops – particularly if you don’t have all your financials in order, or have limited trading history?

If you have equity in your home or other property, a short term loan may be a good option if you need to obtain funding quickly, without all the hassle.

What are short term loans – personal use?

Here’s a common scenario: you’ve sold your current property that’s scheduled to settle in say October, but you find the house of your dreams in September. Rather than panic, or pass on your new house because you can’t get funding earlier, consider a bridging loan.

As the name suggests, a bridging loan is designed to do just that: ‘bridge the gap’ between your new property purchase and the sale of your current home. And the great thing is it’s a very fast and easy way to access finance by drawing down into the equity of your home to purchase your new home.

What’s less commonly known is that a short term loan might also be used to renovate or prepare your property for sale, pay off personal debts, or even complete a small land sub-division. And, what’s more, this is our speciality and what we do that’s different to most other lenders.

What are short term loans – business use?

It’s common for businesses of all shapes and sizes to experience cash flow crunches. These credit squeezes can be alleviated from a short term loan that provides a quick injection of funds that provide some breathing space.

Backed by the equity in your property, short term business finance helps smooth the ‘ups and downs’ of business cash flow, or helps you take advantage of an investment opportunity that needs immediate funding. Other common requirements include purchasing new stock or equipment, making wage payments, alleviating the pain of slow customer payments, or paying outstanding tax bills.

What are the types of short term financing?

Whether for personal or business use, there are a few different types of short term financing options. Choosing which one is right for you depends on your specific objectives and circumstances.

Caveat loan

Often called “unregistered second mortgages,” a caveat is placed on your property without requiring the consent of your bank, so it can be approved quickly. The caveat is released when the loan is repaid.

Second mortgage

Unlike a caveat loan, this needs approval from your existing lender. With added security, terms are generally more favourable than a caveat loan.

First mortgage

Cheaper and faster than a second mortgage, the first mortgage is top priority registered interest in your property and helps you to release equity in your home for personal or business use.

Home equity loan

Using your principal place of residence as security, these loans can help release equity in your home to fund renovations, investments, business working capital or repay debts.

If you need to act quickly to purchase a new property, fund your business or make an investment, don’t miss out on the opportunity – consider a short term loan to provide the finance you require, along with peace of mind.

Mango Credit

Yanis Derums is the Founder and Director of Mango Credit– a leading private lender specialising in bridging loans for personal use and business short term loans for commercial and/ or investment purposes. Yanis has extensive experience with financial analysis, credit assessment, product structuring, and general business management