6 Best Short-Term Business Loans (October 2023)

Get the Best Short-Term Business Loan

Here at AdvancePoint Capital, we offer various short-term business loans and other funding alternatives small businesses can take advantage of today that traditional lenders do not offer.

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 small businesses with a wide range of loan options through our lender network that traditional lenders do not have.

With traditional lenders, your credit score, time in business, or financials may be an obstacle to getting approved there are other options. We offer alternative short-term financing and business funding to help you get started at reasonable loan costs and the best short-term business loan interest rates.

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What is a Short-Term Business Loan?

The term “short term ” typically refers to terms paid back from 3 to 18 months. A term loan offers a fixed amount you are approved for, with a fixed term payback and a fixed payment. Short-term loans are usually used for a quick purchase or to pay an expense, working capital, equipment purchases, improvements, and any other legitimate business purpose. 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 a longer time in business.

How Long are the Terms for a Short-Term Loan?

The use of “short term” means that the loan consists of a fixed length of time in which the borrower must repay the loan ranging from 6 to 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 loan product is the perfect match. Most lenders or funders can fund in 24 hours or less after approval with your cooperation on this product.

Who Can Qualify for a Short-Term Loan?

Anyone who currently owns a company with revenue can potentially qualify for short-term loans. Qualifications will depend on credit, bank statement cash flow, revenue volume, industry, time in business, and other important factors.

Short-term business loans are a great alternative for owners who have some challenges with credit or other qualifications that a traditional lender may have a problem with. The benefits of short-term financing allow for one or more of the following qualification issues:

All credit considered
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
more than 1 year in business considered
The need for speed; faster funding than the traditional process allows

Common Reasons to Use a Short-Term Business Loan

How does short-term financing help a business, you ask? Short-term business financing provides businesses with quick access to capital, allowing them to address urgent financial needs such as emergencies, seize time-sensitive opportunities, and cover unexpected expenses. This type of funding can help businesses bridge temporary cash flow gaps, purchase inventory, repair or replace equipment vital to the business, pay suppliers, and go after business opportunities to help grow the business. While some businesses acquire short-term commercial loans to fund their company needs quickly, some need short-term financing for a startup. Regardless, this loan option can be beneficial for multiple reasons, including:

Emergency Capital- Emergency capital is often need for those unexpected expenses that arise from operating a business.
Working Capital- The go to reason for small businesses that covers purchases, repairs and expenses of the business.
Inventory/Supply- A short term business loan is a great option to purchase inventory or supply.
Expansion- Business expansion can include purchasing equipment, furniture, construction expenses or other reasons that money is needed to expand
Advertising/Marketing/Customer Acquisition -Advertising is a great way to expand your customer base but can come with costs that add up fast and impact cash flow. A short term loan can defray those costs and give you the breathing room to expand.
Equipment Purchases- Equipment financing can play a critical role in acquiring the equipment you need to operate your business.
Business Opportunity- Short term business loan is a great to to capitalize on a time sensitive business opportunity.

6 Best Short-Term Loans for Business Owners (October 2023)

Small Business Loans

Short-term business loans are defined as repayment terms ranging between 6 to 18 months. This short-term business financing option has a lower minimum credit score requirement and less documentation needed for approval than traditional installment loans. Same-day funding is available.

Fast Funding
High approval Rates
Tax Deductible
Fixed costs & Terms

Business Line of Credit

A credit line is a great option for businesses that need to draw money on demand for unexpected emergency expenses but only want to pay interest for a short amount of time. Line of credit has competitive interest rates as well as the ability to pay off early with no prepayment penalties to save interest.

Approvals in a day
Flexible with drawing money
Only pay interest on outstanding balance
Rates starting at 1% per month simple interest

Business Cash Advance

A business cash advance is an advance of future sales receivables of the business, and not a loan. Repayment terms are flexible and based on a set percentage of future deposits in the bank account of the business.

Approvals in day
No set term limit
High approval Rates
Credit accepted as low as 550

Merchant Cash Advance

A merchant cash advance is an advance of future credit card processing receivables and is repaid by a set percentage of credit card processing.

Quick approval process
Payments based on merchant processing sales
No personal collateral needed
Credit score considered above 550

Invoice Factoring or Financing

Invoice factoring provides businesses that invoice their clients regularly the ability to get an advance of the business's outstanding invoices within the net terms of the invoice. This advance process accelerates payment of the invoice by the invoice factor company before the client pays. Great for filling the cash flow gap.

Same day advance off of invoice
All credit considered
Quick & Easy approval
Factor rates start at 1% of invoice

Business Credit Cards

Credit cards are always an option for immediate purchases and cover emergency expenses. Most credit cards are offered by traditional banks. Credit cards have a personal guarantee.

Instant Approvals
Card issued for purchases, cash advances and pay expenses
Revolving line of credit
Simple interest

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

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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
Higher approval rates than other business funding products

Cons

Short term business loan interest rates can be higher than traditional lending
Shorter term requires quicker repayment terms verses long term loans
Smaller loan amounts due to the shorter term than other financing options
Some products don’t have benefits to paying off the loan early
Mostly Weekly payments, as monthly payments are not common
Personal guarantee is required in some cases
No startup businesses

advancepoint apply short term business loan

How to Apply for a Short-Term Business Loan?

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

Find Lender- Choose companies that have the best product diversify, rates, terms to compare offers.
Application- You will need to fill out an application and supply both business information and personal information for a majority of business owners. Owner’s personal information, including full name, home address, company email, social security number, date of birth, ownership shareholder percentages, etc.
Documentation- In most cases you will be required to provide most recent bank statements as part of your application. In some rare cases for large loan amounts a tax return may be requested.
Offers- Receive offers and compare products rates, terms and conditions, as well as stipulations to fund.
Accept Offer- Select the offer that best suits you need and request final approval.
Approval- Supply stipulations to fund to receive final approval such as signing agreement, verifying identity, ownership and bank account
Funding- Receive funds and apply capital to your needs.

Short-Term Business Loan Interest Rates

Short term interest rates depend on the product you are choosing.

Short term Business Loan - Interest rates starting at 9%, Factor rates starting at 1.13%
Business Line of Credit - Interest rates starting at 1% per month simple interest
Business Cash Advance - Factor rates starting at 1.13%
Merchant Cash Advance - Factor rates staring at 1.13%
Invoice Financing - Factor rates starting at 1%
Business Credit Cards - Introduction rates starting at 0%, up to 27%

Frequently Asked Questions

Are short-term business loans difficult to obtain?

No, compared to other loan choices like long term loans, a short term funding 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.

How short are short-term business loans?

Typically, short term business loans have a repayment periods 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 rates with principal and interest.

Do you need a good credit score to obtain short-term business loans? Is bad credit accepted?

Put simply, no; Here at AdvancePoint Capital, we offer short term business loans for all credit score types from good to bad credit. 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 allow for bad credit, some require excellent credit, such as business lines of credit, so research each product thoroughly.

What are the benefits of short-term business loans?

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

Next, short term 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 without depleting business assets.

What are the drawbacks of short-term loans?

Short term loans may not offer enough capital for your business needs due to short repayment terms. 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 funding choices your business can take advantage of today, especially in the online marketplace. Just keep an eye on interest rates and costs.

Who qualifies for short term business loans?

Most businesses with a business bank account and a company can qualify with online lenders as bad credit is considered. Yes, your credit score, annual revenue, and time in business may play a role in approval decisions and repayment terms. Depending on which lenders you’re considering, typically the requirements are lenient due to the shorter repayment terms. Short term loans are far more attainable compared to lines of credit or Small Business Administration loans. A business owner should always consider carefully the repayment terms to be sure it’s the right fit for you.

Should I try to get short term loans for my business?

There’s no one size fits all funding option. Factors such as credit score, business credit, 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 terms attached to your loan options.

Which loan is best for the short term?

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 credit score requirement.

Does a short-term business loan help credit?

Short-term business loans can help or hurt business credit, depending on how they are managed. Most short-term business loans do not report on personal credit, so they do not impact personal credit reports with Experian, Equifax, or Trans Union. They can help establish a positive business credit history. If you have a poor pay history or, worse, a default, then short-term business loans can negatively impact business credit and make it more challenging to secure future business financing.

How does short-term financing help a business?

Short-term business financing is an excellent option when a business has a current working capital need. Common uses include purchases of inventory, supplies, equipment or to tackle cash flow shortfalls due to a fall in accounts receivables. Additionally short term loans are also used to take advantage of business opportunities.

Advice & Tips to Compare Short-Term Business Loan Offers

When considering a short-term loan, you need to consider several factors – your offers, the agreement terms and conditions, the interest rate and factor rate, closing and funding fees, term duration, guarantees, and payment and collateral requirements.

So, where do you start when beginning your short-term loan search? With the tough questions.

Why do you need the loan?
What’s the actual dollar cost?
How will you use the loan?
Have you checked out all of your options in the marketplace with online lenders?
Am I receiving competitive rates, costs, and repayment terms for my loan inquiry?
Does this loan require collateral?

And, if you want to be extra thorough, consider conducting a cost-benefit analysis.

When not to choose short-term business loans

The following are a list of reasons that you should look out for and would not be a good fit for short term business loans.

The payments are not affordable - You payments monthly add up to an amount that is greater than your comfortable with when you consider your other monthly expenses verses your monthly revenue.
Product Selection - You qualify for a better products with lower rates, fees. costs and longer terms.
Time to Repay - The time to repay is to short and not affordable
The amount Your approved for- The offer isn't enough money to take care of your needs properly.
Risk of Default - Whether its the short term, or the payment, you are concerned you can not afford to make the payment based on future predicted revenue

Apply for a Short-Term Business Loan Today!

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.

Short-Term Business Loans