Short Term Business Loans

What is a Short term Business Loan?

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The term “short term business loan” refers to a lump sum of money provided to a business that then uses the capital for a business opportunity purpose. Such purposes may include working capital, equipment purchases, business expansion or renovation, and an abundance of other business needs.

The use of “Short Term” in business loans means that the terms consist of a fixed length and/or period of time in which the borrower has to repay the loan. With a “short term” loan, the repayment period is usually designated at a time frame of 18 months or less. Short–term fixed term loans can either have fixed costs built into the loan monthly repayment plan, or they can be based on an interest rate with principal and interest.

If you’re a small business owner who needs access to business funding fast, this business product is for you. Most lenders/funders can fund you in 24 hours or less after approval with your cooperation.

Who can qualify for Short Term Business Loans?

Anyone who currently owns a business that can show a revenue can qualify for a short term business loan. Qualifications such as credit requirements, sales volume, and time in business vary depending on the business funding product you are applying for.

Short term financing allows small business owners who have some financial challenges that more traditional business loan products would reject to have an opportunity to still get the funding they need for their business.

Traditional routes such as financing through banks have application processes that are extensive. Approval ratings for small business owners are low and can take months to determine. Short term business loans, on the other hand, are easier and quicker to qualify for, with fast access to funds upon approval.

The benefits of alternative business financing include their easier approval process. Many of these financial products allow for one or more of the following qualification issues:

  • Substandard, Mid Prime, to Subprime credit scores
  • Low monthly or annual revenue
  • Challenged or no financial statements available such as Tax Returns, Balance Sheets, or Profit & Loss
  • Business bank statement issues such as low daily balances and/or overdrafts or NSFs
  • Less than 3 years in business
  • The need for speed, for when you need money faster than the traditional process allows.

(Infographic from AdvancePoint Capital website)

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How to Apply for a Small Business Term Loan?

There are a variety of business loan options. A good rule of thumb says that the better the costs, rates, and terms, the more information (paperwork), requirements, and length of time it will take to get an answer. That’s not saying you can’t get competitive terms through small business term loans, but the more lengthy the process and paperwork involved, the longer it will take for you to find out if you even qualify, much less what the terms will be.

What you will find with most business lenders and funders is that a loan application will have to be filled out, whether it’s offline or online. It’s a necessary part of doing business with a lender. The only difference is in the application length, process, and necessary documentation.

These applications will usually include many of the following pieces of information;

  • Owner’s Personal information, which includes full name, home address, business email, social security number, date of birth, ownership shareholder percentages.
  • Legal Business Name and DBA if applicable, business address, business number, website.
  • Time in business under current owners’ control, registration date with the state you formed
  • Business Bank relationship information
  • Business Landlord information or Business Mortgage information if you own property
  • Description of the business and its activities.

Documents you may need include but are not limited to*

  • Business Bank Account Statements

*Requirements can vary. Some require only bank statements others will require more.

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Why do Short-Term Business loans cost more?

The answer to the above questions is actually simple. Risk!

Funding or lending to a small business is tricky. Most businesses don’t last five years, so the lender’s risk is greater than that of those who provide mortgages, car loans, credit cards, or personal loans. If what you provide to the lender shows any weaknesses, your ability to get funding diminishes quickly.

Sometimes it’s not a choice. The approval difference between banks and alternative business financing for small business owners frequently boils down to simple necessity. Traditional funding for your business is not easy and a majority of businesses that apply will not get approved.

The bottom line is that when you can’t get approved for other, more traditional products, this may well not only be the best alternative, but the only alternative if you need money quickly for your business. Although the terms may be less favorable, the benefits often outweigh the costs. This type of business funding gets you to your goals, through obstacles, and on the road to greater success, regardless of the terms.

Remember, this is business funding, so the value of the money may be far greater than that of the cost of the money, depending on the use of the borrowed funds. The old adage still applies: “It takes money to make money.”

Check out How to find the Best Small Business Loans to weigh all the benefits and evaluate the decision to get funding for your business.

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.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.