A Swingline loan is a short-term loan offered by financial institutions to provide businesses with sufficient funds to cover outstanding debts. Acquiring a Swingline loan can be through a syndicated line of credit.
They are financial products with a short duration; depending on the financial institution chosen, you can have a term of between 5 and 15 days to return the money.
How do Swingline loans work?
Swingline loans are available to businesses and individuals, but they work differently in each case. When you apply for a Swingline loan for individuals, the way it works is similar to a payday loan; that is, it will give you cash fast.
The Swingline loan for individuals has an additional cost in interest, so it is considerably higher than other types of credit. As for Swingline loans for businesses, they are similar to lines of credit.
However, businesses may use the funds only to pay off existing debts; unlike other financial products, they may not use the loan for business expansion, investments, acquiring new assets, or other reasons.
Swingline loans can be withdrawn or begin to be used the same day you apply to the lender, and you can apply for smaller amounts than your existing line of credit.
The Swingline loan can take the form of revolving credit; this is a line of credit that you can enjoy and recover several times. Another relevant factor is that the borrower or the lender can close the line of credit it considers risky.
Based on how they work, financial products are recommended when money is needed quickly, and other loan alternatives are not a practical solution.
Advantages and disadvantages of Swingline loans
All available lines of credit have pros and cons; it is essential to make an exhaustive evaluation before completing the application, considering if it is a viable solution to solve your inconvenience.
- You can have the funds from the moment you make the application
- It allows you to access a large sum of cash
- They are an effective solution for companies with cash flow deficits; in addition, it helps to keep debts paid off
- You have little time to repay them
- The use of funds is usually limited to debt repayment
- Interest rates are generally higher than those of lines of credit
We can say that the most notorious advantage is the possibility of accessing large amounts of cash, and you get the financing the same day. But the speed is charged in interest, so you should evaluate whether it is profitable to pay those high amounts.
How do you know if a Swingline loan is the best solution?
If you have a company with unpaid debts, Swingline loans are the fastest way to make timely payments. But it would help if you evaluated whether you can take responsibility for the high-interest rates and short repayment terms.
They are recommended as the last resort available; companies should avoid them for their financial health. As for individuals, it is better to find another loan where you will find better interest rates.
If you need a large sum of immediate cash, the most viable alternative will be the Swingline loan. Study the interest and conditions imposed by the lender before proceeding with the application.
Is there a viable alternative to Swingline loans?
When the needs are urgent, there are no loan alternatives that have the speed of Swingline loans, but if you don’t need to have the funds available immediately, you can opt for the SBA.
Traditional lines of credit are another option for businesses; the problem will begin when you have already applied for them and need to catch up on your payments. The best alternative to Swingline loans is to keep up with your debts.
How to acquire a Swingline loan?
If you are applying for a Swingline loan for your business, you can go to any major national bank and see what products are available for Swingline loans. You can start by approaching your local bank and evaluating if they have good solutions.
Another way to access Swingline loans is through online lenders; although you should be more careful with the credentials and interest rates, in this case, they are usually higher, and you have more risks of falling into scams.
You should expect them to evaluate your credit score, time in business, and payment history with any alternatives. That will determine whether you can get the amount of money requested or you will be approved for a smaller loan amount.
Finally, Swingline loans are financial products geared toward business owners or individuals who can pay higher-than-normal interest rates and pay off the loan quickly.