There would have been times when you would have needed cash instantly to meet some unforeseen expenses like equipment repairs. But you didn’t have it. You would have considered going for short-term loans to meet those expenses. If you’re confused about what exactly is short-term financing or if you’re not aware of the ways in which you can meet your short-term cash needs then this blog is for you. Read more to learn what is short-term financing, why you need it in your restaurant and is it even good for your restaurant. Lastly, read the difference between long-term and short-term financing and lastly read about the solution that can provide short-term credit to you. 

What is Short-Term Financing?

Short-term financing is a type of loan that helps you cover immediate financial needs. These loans usually have a repayment period of one year or less. They’re designed to give you quick access to cash when you need it the most. You might use short-term loans to pay for unexpected expenses, cover a slow period, or even invest in new opportunities. In essence, short-term financing provides a financial cushion that keeps your restaurant running smoothly.

Is Short-Term Financing Good?

Short-term financing can be a lifesaver for restaurant owners. The quick access to funds can help you handle unexpected situations without disrupting your operations. However, it’s important to remember that short-term loans often come with higher interest rates. So, while they’re convenient, you should use them wisely and only when necessary. They’re best suited for covering temporary gaps in cash flow or emergencies.

What is the difference between short-term financing and long-term financing?

Short-term financing and long-term financing differ mainly in duration and purpose. Short-term financing, typically repaid within a year, is designed to cover immediate needs. For instance, if you need funds to buy fresh ingredients for an upcoming festival, repair a broken oven or short-term emergency loans, a short-term loan can provide quick cash to manage these urgent expenses.

In contrast, long-term financing is for larger investments that take longer to repay. Think of it like this: If you’re planning to renovate your restaurant, open a new branch, or invest in expensive equipment, you’d need long-term financing. These loans usually stretch over several years, with smaller monthly payments.

In Malaysia, short-term loans may come with higher interest rates but offer quicker access to funds, making them ideal for urgent situations. On the other hand, long-term loans often have lower interest rates, making them suitable for significant investments with a long-term payoff. Understanding when to use each type of financing is crucial. Short-term loans help you manage cash flow gaps, while long-term loans support growth and expansion. Choose wisely based on your restaurant’s needs.

Why do you need short-term financing for your Restaurant?

Short-term financing serves several purposes in the restaurant industry. Here are some common reasons you might consider using it:

1. Covering Operational Costs: Sometimes, cash flow can get tight, especially during off-peak seasons. Short-term loans can help you cover rent, utilities, and payroll during these periods.
2. Purchasing Inventory: You might need to buy fresh ingredients in bulk to get a better price. A short-term loan can help you do that without straining your current cash flow.
3. Equipment Repairs or Upgrades: If your oven breaks down or you need a new refrigerator, you can’t afford to wait. Short-term financing allows you to make necessary repairs or upgrades quickly.
4. Marketing Campaigns: Want to boost your restaurant’s visibility with a marketing campaign? A short-term loan can provide the funds you need to promote your business effectively.
5. Handling Emergencies: Emergencies like sudden equipment failures or unexpected bills can happen at any time. A short-term emergency loan can help you handle these situations without disrupting your operations.

Where to Get Short-Term Loans?

EasyEat has recently come up with a short-term financing solution that you can use in your restaurant to meet immediate financial needs. 

These are some of the features- 

• Instant funds within 48 hours.
• No late fees
• Loan without interest
• Low one time processing fees

And More…

Important Statistics to Consider

• According to Bank Negara Malaysia, the total loans disbursed to SMEs in Malaysia in 2023 were RM 305.3 billion, with many of these being short-term loans. This shows the demand and reliance on short-term financing among small businesses.
• A survey conducted by SME Corp Malaysia found that 40% of SMEs experienced cash flow problems in 2022, highlighting the importance of having access to short-term financing options.
• Peer-to-peer lending in Malaysia grew by 68% in 2023, reflecting a shift towards alternative financing options for SMEs, including restaurants.

Short-term financing is a valuable tool for you that can provide quick access to funds when you need them most. Whether you’re covering operational costs, purchasing inventory, or handling an emergency, having a financial safety net is essential. However, it’s crucial to use short-term loans wisely and be mindful of the terms and interest rates.

As you navigate the financial needs of your restaurant in 2024, consider EasyEat’s short term loans (that also gives you an option of raising your credit limit) and borrow money without interest!