Short Term Business Loan

One of the things that makes short-term business loans so great is that they can be used for nearly any business expense you’ve got. One use for a short-term loan is to cover unexpected business expenses that arise. This may come up if part of the building your small business is in needs repair, or if you need help to cover costs during a slow season. You can also use a short-term business loan for a new business opportunity that you need capital to make progress with, like if you want to expand your business and open a new location or if there’s a great opportunity to get a new space entirely. 

The speed with which you could get your funding from a short-term loan can also help you move quickly on these business needs, making it a great financing option for businesses that qualify for them and need quick funding. Remember, when considering short-term business loans, they’re short term. If you’re looking for higher loan amounts and a longer repayment period, a regular business loan might be a better fit for you.

The term for these small business loans is right in the name: short term. Short-term business loans typically have repayment terms of 18 months. So while it’s not the shortest repayment period for financing you could find, it’s a fairly short repayment term, especially if the loan amount is somewhere near the $500,000 amount. You could potentially repay the loan early if you wanted, but you would need to check whether there was a prepayment penalty before doing so. Any extra fees like a prepayment penalty would be outlined in the terms of your loan.

When it comes to short-term business loans, they’re one of the more difficult types of small business loans for startups to qualify for. Because short-term lenders usually require at least two years of business history, these loans aren’t typically great for startups. Instead, new businesses might consider a business line of credit or a business credit card to get started. Then once you’ve got some more time in business under your belt, an established good credit score, and proof of monthly or annual revenue, you can apply for a short-term loan if you still need one.

If you’ve got credit, you might be wondering if a short term business loan is the right small business loan for you. While there are some lenders that will lend to people with bad credit, the terms for those loans are not great. Generally, lenders look for a credit score of at least 650 for short-term loans. 

The thing about bad credit is that it takes time to improve. But it can be done, your credit score can change over time. Making on time, full payments towards your business credit card is a great way to boost that credit. 

There are a lot of variables that go into determining the rate you’ll likely get for your short-term business loan. As mentioned above, your credit score can impact the interest rate you pay. Additionally, whether the loan is secured with some form of collateral, or unsecured, can also impact the rate, because unsecured loans are a bigger risk for lenders. That being said, rates usually start around 8% and increase from there. You can use our small business loan calculator to get a good idea of what you might end up paying.

Some loans can provide you with cash in hand in as little as 24 hours after your application is approved. Having all of your application materials ready to go when applying can help speed the process along if you’re in a bind and need a quick cash flow boost.