A short term business loans provides quick funds for working capital, unexpected expenses, and other urgent financing requirements. These loans for small businesses usually require repayment within 12 months or less, although a few may allow for repayment over a period of up to 24 months.
Below, compare some of the best options for short term business loans:
7 best short term business loans
- American Express® Business Line of Credit: offers line sizes from $2,000 to $250,000. Initial line sizes above $150,000 are only available to select borrowers .
- Bluevine – Line of credit: provides lines of credit up to $250000 with rates as low as 6.2%. Learn more today.
- Fora Financial – Online term loan: All Fora Financial Lending Programs offer… · $5,000 to $1 .
- Fundbox – Line of credit: up to $150,000. Unlike a lump sum term loan, a Fundbox Line of Credit offers flexible access to .
- Headway Capital – Line of credit: for a line of credit up to $100,000.
- National Funding – Online Term Loan: fast approval within 24 hours. Get up to $500k in small business financing.
- OnDeck – Online term loan: Loan amounts from $5K – $250K · Repayment terms up to 24 months · Great for larger investments in your business.
What is a short term business loan?
Short term business loans are designed to help businesses with their immediate needs, such as unexpected expenses or temporary cash flow gaps. They also provide opportunities for business growth that may arise unexpectedly. Typically, these loans involve a lump sum of capital that you repay over a specific period of time, usually within a year or less. However, some lenders may offer longer repayment terms of up to 18 or even 24 months.
How do short term business loans work?
Short term loans are typically paid back on a daily or weekly basis, which means you’ll need to make larger and more frequent payments compared to long term business loans. These loans are commonly provided by online lenders, who offer quick funding and simplified application processes. Unlike traditional banks or Small Business Administration lenders, short term lenders usually have more lenient eligibility criteria and may be willing to work with startups or businesses with poor credit.
Short term business loans often come with higher interest rates compared to longer-term loans or other conventional financing choices. The interest rates for these loans can vary from 10% all the way up to 99%.
Pros and cons of short term business loans
Pros
1. Versatile range of uses. Short term business loans offer a wide array of possibilities for utilization. These loans do not impose restrictions on how you can use the funds. However, due to their short repayment terms and quick funding, they are particularly well-suited for immediate or unexpected expenses.
2. Speedy funding. If you require a fast business loan, certain short term lenders can provide financing within as little as 24 hours. In comparison to traditional bank lenders, who may take weeks to process your application, short-term business loans are often funded within a matter of days.
3. Simplified applications. The majority of short-term business loans are offered by online lenders, who typically provide streamlined application processes. You can effortlessly complete and submit an online application in just a few minutes, with minimal documentation required.
– Higher interest rates and fees: Short term business loans tend to come with higher interest rates and fees compared to long term loans. For instance, business bank loans have annual percentage rates ranging from 5.89% to 12.23%, while short-term loans can have rates anywhere from 10% to 99%.
– More frequent repayments: Short term lenders often require daily or weekly payments instead of monthly ones. This means you’ll need to make larger and more frequent payments over a shorter period of time. For some businesses, this payment schedule can affect cash flow and be challenging to manage.
– Confusing contracts: Not all short term lenders present interest rates and repayment terms in the same way, which can be confusing when comparing loan products and determining the total cost. Some lenders use APR, while others may offer a simple interest rate or a factor rate. It’s important to calculate these rates and fees into an APR to fully understand the loan’s cost.
How to get a short term business loan
1. Assess your financing needs
Consider the amount of funding you require and the purpose for which you intend to utilize it. Additionally, it is important to evaluate which type of business loan suits your needs. Apart from term loans, short term financing options such as business lines of credit and invoice factoring are commonly available. However, it is crucial to note that short term business loans often involve more frequent payments and higher interest rates. Therefore, it is essential to ensure that your business can comfortably manage any debt it incurs.
2. Evaluate your qualifications
Consider the amount of funding you require and the purpose for which you intend to utilize it. Additionally, it is important to evaluate which type of business loan suits your needs. Apart from term loans, short term financing options such as business lines of credit and invoice factoring are commonly available. However, it is crucial to note that short term business loans often involve more frequent payments and higher interest rates. Therefore, it is essential to ensure that your business can comfortably manage any debt it incurs.
Before applying for a business loan, it’s important to understand where your company stands. Short-term lenders usually have flexible requirements, but it’s still a good idea to check your credit score, time in business, and annual revenue. These three criteria are commonly used by lenders to evaluate loan applications.
3. Find and compare lenders
Before applying for a business loan, it’s important to understand where your company stands. Short-term lenders usually have flexible requirements, but it’s still a good idea to check your credit score, time in business, and annual revenue. These three criteria are commonly used by lenders to evaluate loan applications.
4. Submit your application
Short term lenders usually provide a convenient online application process that can be completed swiftly and with minimal paperwork. While the specific requirements for business loan applications may differ among lenders, you might be requested to submit the following documentation:
Frequently Asked Questions
Who should get a short term business loan?
How long is a short term business loan?
Can I get a short term loan as a startup business?
What is the interest rate for a short-term business loan?