What are the different types of Short Term Loans?
A plethora of Short Term Loans are offered by Banks/NBFCs to cater to varied and specific needs. Merchant Cash Advances: A Short Term Loan that’s basically a cash advance from a lender. Most popularly used by small businesses. In return, the borrower allows the lender to access their credit facility. And every time the business makes a sale, a certain percentage of it is taken by the lender as repayment towards the loan. Lines of Credit: A line of credit is a credit limit that a business has with its bank/NBFC. It’s used to meet the business requirements and is repaid via monthly installments. The interest charged is only on the amount borrowed. Payday Loans: Payday Loans are extreme Short Term Loans ranging from a few days to a month. They are easy to obtain, albeit at very high interest rates. The entire loan amount, plus interest, must be paid in one lump sum when the borrower’s payday arrives.