Studying Some Forms of Financial Aid and Understanding Them
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For the smooth functioning of any business organization or commercial institution, the uninterrupted flow of financial aid is the most important thing. Apart from any other factor, one issue that plays a decisive role in determining the future of the business is cash flow. The primary source of finances for a business is the payments made by the customers against the invoices prepared. But, it is a common case that the customers do not make the payments on time. In other times, the due date of receiving payments from the customers is yet to arrive, but cash needs are mostly urgent in nature.
Short-term Finances over Traditional Ones
Even until a decade or two back one could ask for financial assistance in the form of loans from the traditional finance institutions like banks only. However, these institutions also failed to meet the immediate cash needs, primarily because of their strict verification and sanctioning procedures. They took several weeks time or even a month at times to sanction a loan application. Therefore, by the time the applicant would receive the money, the need will be over. This is exactly why the other forms of financial aids known as the short-term finances have become so popular in the recent past.
Apart from the being almost instantaneous, these loans come with several other beneficial features. On the very first hand, these loans can be availed without undergoing much of a strict verification. Several individuals and entrepreneurs are rejected other forms of loan on the grounds of a poor credit history. However, most short-term loan providers do not consider the credit history of the applicants, thereby making the entire process even faster. Also these finances are available at a comparatively lower rate of interest. There are several kinds of short-term finances available in the market. All one would need to do is learn about their nature and select the one that fits his needs the most.
Discussed below are some of the most popular short-term finances.
Invoice Factoring
This is one form of finance, which has been gaining fast acceptance in the recent years. This process involves a third party other than the entrepreneur and the customer, known as the factoring company. the factoring company would provide the business with a certain sum of money against the unsettled invoices. This money can be used to meet the immediate requirements. Once the due date of payment arrives, the factor would persuade the customer to settle the invoice. Once the factor receives the money from the customers, a portion of the amount is kept back as a service charge and the rest is handed over to the business.
Logbook Loans
Both entrepreneurs and individuals can use this form of financial assistance. An applicant can receive a logbook loan within a few minutes of time. No credit check is conducted upon the applicant. Moreover, this loan is given against the logbook or the V5 document of a vehicle. One would not need to mortgage his vehicle as collateral. This loan comes with a lower APR and this is one of the several features which is making logbook loans popular.
Author’s Bio: Adil Kaya has been writing on finance and related topics for over a couple of years now. His articles are a good source of information for the readers. He also possesses a great deal of knowledge on the ways to find www.bahis10.com. Follow his posts for more details on such topics.
Category: Business
