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Short Term Business Loans

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Get the Short Term Loan Your Business Needs

Here at AdvancePoint Capital, we offer various short term small business loans and other funding alternatives you can take advantage of today. To keep operations running smoothly, sometimes small business loans are needed to cover the cash flow gaps. Whether it’s money for working capital, cash flow, opportunities, emergencies, or other needs, we provide business owners like you with a wide range of short term loan options.

While your credit score, time in business, and financials may hold you back from approval through traditional loan institutions or lenders like banks, you still have options. We offer alternative short term financing and business funding to help you get started or continue down the road to success.

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What Is a Short Term Business Loan?

The term “short term business loan” refers to a lump sum of money provided to a company that then uses the capital for a business opportunity purpose. Such purposes may include working capital needs, equipment purchases, expansion or renovation, and an abundance of other expenses. A short term business loan is typically easier to obtain than alternatives like long term business loans, which may require a higher credit score or longer time in business.

How Long Are the Terms for a Short Term Loan?

The use of “short term” means that the short term loan consists of a fixed length of time in which the borrower must repay the loan. With a short term loan like this, the repayment period ranges from 18 months or less.

Short term loans can have fixed costs built into the loan monthly repayment plan, or they can be based on an interest rate with principal and interest. When small business owners need access to funding fast, this short term loan product is the perfect match. Most lenders or funders can fund a short term loan in 24 hours or less after approval with your cooperation.

 

Who Can Qualify for a Short Term Loan?

Anyone who currently owns a company with revenue can potentially qualify for short term loans. Qualifications such as credit score requirements, sales volume, annual revenue, and time in business vary depending on the funding product you are applying for.

Short term loans allow owners who have some challenges with more traditional short term loan products an opportunity to still get the funding they need for their company. The benefits of a short term loan allow for one or more of the following qualification issues:

  • Substandard, midprime, to subprime credit
  • Low monthly or annual revenue
  • No financial statements, such as tax returns, balance sheets, profit & loss, etc.
  • Business bank statement issues such as low daily balances, overdrafts, or NSFs
  • Less than 3 years in business
  • The need for speed; faster funding than the traditional process allows

 

Most Common Reasons to Acquire a Short Term Loan

Here are just some of the business needs that might require you to use a short term loan:

  • Emergency Capital
  • Working Capital 
  • Inventory/Supply
  • Cash Flow shortages
  • Expansion 
  • Advertising/Marketing/Customer Acquisition
  • Small Equipment Purchases
  • Business Opportunity

The 7 Best Short Term Business Loan Options

Short Term Loans

A short term loan is a lump sum fixed loan amount upfront, with a specified period to repay. Terms range from 6 to 18 months to repay but typically last for one year or less. A short term loan is a great solution when you cannot get approved for more traditional loan products.

A “factor rate” or fixed cost of money is charged for most loans of this kind. Documentation requirements and credit score requirements are more lenient than traditional loans due to the short term schedule. Payment frequency is bi-weekly, weekly, or in some cases, Monday through Friday, and terms are shorter to compensate for the higher risk.

Because of these features, this small business loan may have higher approval rates than traditional long term loans and other lending options. Short term loans typically cost more than bank loans and have higher interest rates. The loan amount also tends to be smaller than long term loans, and a personal guarantee is required.

 

Short Term Loan Product Overview

Rates: Factor rates from 1.09% up to 1.35%
Terms: 6 to 18 months in duration (typically 12 months or less)
Fees: Origination fees from 0% to 3%
Loan Payments: Weekly, bi-weekly, and, in some cases, daily Monday-Friday
Credit Scores: All credit types considered; No minimum credit score required
Paperwork: Three months bank account statements, 1-page application
Processing Time: Quick turnaround and fast funding; Same-day to 24 hours
Special Features: Same business day funding available

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Short Term Business Loans

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Business Lines of Credit

A business line of credit is an open revolving line of credit. The product allows the owners to draw funds at will or make purchases up to a set limit. A business line of credit charges a principal & interest rate.

Short term lines of credit don’t necessarily have any term length but require either a renewal semi-annually or annually to be extended.  Business lines of credit offer flexibility in accessing capital that many other short term loans do not have. A personal guarantee is required for short term lines, and early repayment is available, as calculated by simple interest.

 

Business Line of Credit Product Overview

Rates: Interest rates starting at treasury index plus 1% to 2.5%
Terms: Open, revolving line of credit 
Fees: Origination fees ranging from 0% to 3%
Payments: Monthly, bi-weekly, or weekly payments
Credit Scores: Good to excellent credit preferred; All credit considered including less than stellar credit
Paperwork: Three months bank statements, 1-page application
Processing Time: Quick processing times; Same-day funding up to a week
Special Features: Prepayment benefit option

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Business Cash Advance

Business cash advances (BCAs), also known as a purchase of future sales agreement, advance money off of future sales. The owner is responsible for paying back a fixed payback amount known as a specified amount, which is greater than the amount advanced to the company. A “factor rate” is charged, which is the difference between the advance amount and the payback amount. Factor rates do not function like principal & interest rates as they are a flat, fixed cost of money.

The BCA is repaid by taking a fixed percentage (specified percentage) of future overall estimated annual gross sales deposits. The payments are collected by an ACH fixed daily or weekly payment deducted from a small business’ bank account based on the specified percentage of future sales. Reconciliation or a refund can occur at the end of every month if the fixed payments exceed the month’s fixed set percentage of sales, as described in the agreement. There is no term limit to a business cash advance. A business cash advance is not a term loan but an advance of future receivables.

 

Business Cash Advance Product Overview

Rates: Factor rates range from 1.09% up to 1.35%
Repayment Period: No term limits; Repayment period dependent on future sales
Fees: Origination fees from 0% to 3% 
Payments: Weekly or daily fixed ACH payments; Monthly payment not available. 
Credit Score Standards: Poor to excellent credit accepted, bad credit considered, and no minimum credit score required
Paperwork: Three months bank statements, 1-page application
Processing Time: Quick turnaround and fast funding; Same-day to 48 hours

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Business Cash Advance

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Merchant Cash Advances

A merchant cash advance (MCA), also known as a purchase of future sales agreement, is similar to another small business financing option but different in the repayment process. Merchant cash advances are connected to future credit card sales instead of overall sales. MCAs take a set percentage of future credit card sales until the advance is paid back in full. The payment process provides more flexibility in repayment versus alternative loan solutions.

 

Merchant Cash Advance Product Overview

Rates: Factor rates ranging from 1.09% up to 1.45%
Repayment Terms: No term limits (payoff depends on future credit card sales)
Fees: Origination fees 0% to 3%
Payments: Set fixed percentage of future credit card sales withdrawn at the time of batch of credit card sales
Credit Standards: All credit considered including bad credit; no minimum credit score required
Processing Time: Quick turnaround; Same-day to 24 to 48 hours

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Merchant Cash Advances

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Invoice Financing or Factoring

Although this option is not a short term loan, invoice factoring offers a short term funding solution. Invoice factoring advances money through outstanding issued invoices that a company has in accounts receivable but not yet collected.

Invoice financing allows access to capital quicker and avoids waiting for outstanding invoices to be paid by the client. The invoice finance company advances the money to the small business owner in exchange for a nominal fee. The invoice factoring company assumes the collection of the invoice and relinquishes the responsibility of collecting on those invoices by the small business owner. It’s an excellent choice to cover cash flow shortages.

 

Invoice Factoring Product Overview

Rates: None
Repayment Terms: No term limits
Fees: 1% to 3% fee based on Invoice; Monthly service fees depend on volume of invoices factored
Credit Standards: Credit of the clients must be favorable, not the small business owner advancing off invoices; Personal credit score is not a factor in the decision
Processing Time: Advances issued daily off of invoices created; Setup typically takes 1 week

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Invoice Financing

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Business Credit Cards

Business credit cards aren’t term loans or personal loans but revolving lines of credit and are used as a short term financing solution to pay business expenses.

The fast, convenient, and straightforward way to get the money you need for your small business – now!

Get your quote today by filling out our simple form.

What Are the Pros and Cons of Short Term Business Loans?

Pros

  • Access to capital when other traditional options are not available
  • Fast processing time, usually same day to a couple of days
  • No upfront fees for services rendered

Cons

  • Rates can be higher than traditional lending
  • Shorter-term
  • Smaller loan amounts due to the shorter term
  • Some products don’t have benefits to pay off the loan early
  • Monthly payments are rare

How to Apply for Short Term Business Loans

There are a variety of short term loan products to pick through. A good rule of thumb when looking at a short term loan is the better the costs, rates, and terms, the more information (paperwork), requirements, and length of time it will take to get an answer.

What you will find with most lenders and funders is that an application for business loans will have to be filled out either offline or online that will include many of the following pieces of information for lender approval;

  • Owner’s personal information, including full name, home address, company email, social security number, date of birth, ownership shareholder percentages, etc.
  • Legal name and DBA if applicable, company address, company number, website, etc.
  • Time in business
  • Business bank statements
  • Description of the company and its activities
  • Business expenses

Frequently Asked Questions

No, compared to other loan choices like long term loans, a short term loan is not difficult to obtain. Lenders don’t require a stellar credit score or lengthy time in business, so this can be a great way for small business owners to get the cash flow they need fast.

Typically, short term business loans have a time frame of around 18 months or less. Short term loans usually have fixed costs built in their monthly repayment plan. Short term business loans can also be based on an interest rate with principal and interest.

Put simply, no; Here at AdvancePoint Capital, we offer short term business loans for all credit score types. As many business owners use short term business loans as a working capital loan, it’s crucial to have cash flow choices available, which is why we accept a wide range of credit histories.

Although many types of short term small business loan options don’t require excellent credit, some of them, such as business lines of credit, do, so research each product thoroughly before looking for term financing options and diving into long term loan products.

A short term business loan can have many advantages other loan products do not offer. First, it’s a faster way to get cash flow to your business compared to other financing options. If you’re in a time crunch, this can be a great solution.

Next, short term financing requirements are far less stringent than other options like long term loans, meaning your business and personal credit score won’t be as big of an issue. Finally, if your financing needs aren’t substantial, it can be a great way to get a reasonable amount that you can pay back daily or weekly.

Short term loans may not offer enough capital for your business needs. If you’re looking for a loan that provides substantial funding, long term solutions or lines of credit may be a better fit. Make sure you have a strong understanding of your financing needs before applying with business loan lenders. You can use tools like a business loan calculator to help with the decision-making process. Business lenders have a diverse range of short term loan choices your business can take advantage of today, especially in the online marketplace.

Most businesses with a business bank account and a company can qualify with online lenders. Yes, your credit score, annual revenue, and time in business may play a role in approval decisions depending on which lenders you’re considering, but typically the requirements are lenient. Short term loans are far more attainable compared to lines of credit or a long term loan. Take a look at the repayment terms to be sure it’s the right fit for you.

There’s no one size fits all funding option. Factors such as credit score, annual revenue, and time in business may alter your eligibility for better or worse solutions, depending on the state of your business. Some loans like long term loans, purchase order financing, or a line of credit may be better suited for your business down the road. The most important aspect of a loan, long term or short, is that you can pay back the lenders. Just be very mindful of the repayment term attached to your loan options.

The best short term loan for business owners will depend on your need and the available loan options based on your qualifications. Qualifications include annual revenue, credit standards, cash flow, and minimum eligibility requirements.

Advice, Tips, and Benefits of Short Term Business Loans

With short term loans, it’s essential to ask questions and research what products are available. With so many business loans out there, it can be challenging to choose the right short term business loan.

Take the Next Steps to Get a Short Term Loan

Ask the tough questions when you begin your short term loan search. Always start by asking why you need the loan funds, what’s the dollar cost, and how you will put it to use? Have I been given all funding options in the marketplace, and am I getting competitive rates, costs, and terms for my situation? Does the product require collateral? Always take the time to do a cost versus benefit analysis for borrowing money for your company with a short term loan.

Check your offers, term sheets, and agreements for terms and conditions, including the cost of money (interest rate or factor rate), all closing or funding fees, term duration, payment frequency, personal guarantees, and any collateral requirements for the short term loan.

Attempting to qualify for loans requires a lot of research and knowledge about your own company in order to weigh the pros and cons of various loans and their benefits to you. There’s a wide variety of loans for businesses available, but choosing the wrong loans can have a significant impact on your company’s future. You should choose who want to work with to find business financing carefully whether it’s banks, credit unions, online lenders, brokers, third parties, or alternative lenders.

Using AdvancePoint Capital’s Funding Marketplace

Applying for a short term loan with AdvancePoint Capital is as simple as a 1, 2, 3, 4 process. Start with this online form, then fill out the short application page, wait a few hours for your approval, and then get your cash flow to move your business forward.

The fast, convenient and straightforward way to get the money you need for your business – now!

Get your quote today by filling out our simple form.