The best short-term financing solutions

Why use short-term financing?

Short-term financing is needed to meet immediate cash requirements, such as invoice payment, inventory financing or working capital needs. The management of working capital requirement (WCR) is a key factor in this short-term financing strategy. It is designed to be used over a short period (less than a year), and can be an effective means of maintaining a company's financial stability by avoiding the accumulation of overly long-term debt.

Subsidies

Grants are an attractive source of short-term financing for many businesses, particularly non-profit organizations and R&D-oriented companies. Grants are funds awarded by government agencies, foundations or other entities to companies for specific projects. They are often intended to support initiatives that have a positive impact on the community or industry.

One of the major advantages of grants is that they generally do not require repayment, meaning that the company does not accumulate debt. Nevertheless, obtaining a grant can be a highly competitive process, requiring time and effort to write convincing grant applications. What's more, grants are generally limited to specific projects, so their use is restricted.

Campaign credit

Campaign credit is another short-term financing solution used by companies to manage their short-term cash flow requirements. It is primarily a revolving line of credit granted by a bank or financial institution to help a company meet seasonal or cyclical cash flow requirements.

The advantage of campaign credit is that it offers considerable flexibility. The company can borrow money when needed, and repay the amount borrowed when cash flow improves. This makes it easier to manage seasonal fluctuations in demand or variations in cash flow.

Authorized bank overdraft

The authorized bank overdraft is a short-term financing solution offered by many banks. It allows a company to borrow money in excess of its account balance, up to a limit set by the bank. This limit is generally based on the company's financial health and its relationship with the bank.

The main advantage of an authorized bank overdraft is that it offers an immediate source of financing in case of need. However, it's important to note that interest rates are generally higher than for other forms of short-term financing, which can make it a costly option in the long term if used frequently.

Letter of credit

The letter of credit is an essential short-term financing solution for companies that operate internationally. More specifically, the documentary credit (CREDOC) offers a comprehensive banking mechanism that secures payments with your foreign partners while optimizing your cash flow. You only pay upon receipt of the goods and compliant documents, which improves your short-term cash management.

The main advantage of this solution is that it reduces commercial risks while maintaining favorable payment terms. However, it is important to note that bank charges apply and that the documentary procedure must be rigorously followed.

Business loans without proof of income

Among the emerging solutions, loans without supporting documentation stand out for their simplicity and speed of approval. This option allows companies to finance their needs without having to detail the intended use of the funds.

Among business loans that do not require supporting documents, quick business loan is a preferred option for managers who want to obtain funds without delay and thus meet their cash flow requirements.

Factoring

Factoring is a short-term financing solution that allows a company to sell its unpaid invoices to a third party, a factoring company (Factor). In exchange for these invoices, the company receives immediate payment, usually an advance of 80% to 90% of the total value of the invoices.

Factoring offers a number of advantages, including an immediate improvement in cash flow and the delegation of receivables management to the factoring company. This enables the company to concentrate on its core business, rather than spending time chasing outstanding payments. However, factoring is costly and can represent a significant loss of income for companies.

Karmen financing

At Karmen, we've launched Karmen Loan to meet the specific short-term financing challenges of businesses. Our solution offers flexible loans from €30K to €5M, with terms from 1 to 24 months, specially designed to help you manage your cash flow needs.

Our approach adapts to different aspects of your business: inventory management, procurement needs, marketing investments or supporting your operational growth. It's a short-term financing solution that's gaining in popularity, particularly among fast-growing start-ups and digital SMEs. With this approach, the company obtains financing in exchange for a fixed percentage of future revenues.

The major advantage of the Karmen loan is that it requires no collateral or fixed repayments. Payments are based on the company's actual revenues, which means that payments increase when the company is doing well and decrease when revenues are down.

Short-term financing is an essential asset for a company's financial management. It offers the flexibility needed to meet immediate liquidity needs, maintain financial stability, and seize every opportunity for growth. The Karmen loan is THE solution for companies, especially start-ups and digital SMEs, looking for fast, flexible short-term financing.