Get the Best Short-Term Business Loan
Here at AdvancePoint Capital, we offer various short-term business loans and other funding alternatives, including the unsecured loan option, which small businesses can take advantage of today that traditional lenders do not offer. Such an option could be ideal for those seeking flexibility without the need for physical collateral. 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; however, with options like Advancepoint Capital, you'll find it easier to access an unsecured short-term business loan, allowing you to keep your business agile and responsive to market demands. 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. When determining your borrowing needs, consider that short-term loans are often accompanied by higher interest rates compared to other forms of financing, reflecting the expedited turnaround loans can offer. Short-term loans are usually utilized for a quick purchase or to cover an unexpected expense, such as working capital, equipment purchases, improvements, and other legitimate business purposes. Serving as a potential financial lifeline, a short-term business loan is typically easier to obtain than long-term counterparts, potentially requiring lower credit scores or a shorter business tenure for approval.
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. However, flexible financing options allow for a variety of repayment terms, potentially extending up to 24 months as offered by lenders such as OnDeck. 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, offering weekly to monthly repayments to suit their financial workflow. 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. Evaluating the creditworthiness of a business owner is a fundamental step in this process. New startups and seasoned enterprises alike often find the flexible eligibility criteria for short-term loans appealing. Prequalification processes offer a glimpse into what kind of terms one might expect without a full commitment.
Qualification requirements for these loans tend to offer adaptable eligibility requirements, accommodating startups or businesses with less-than-perfect personal credit scores. This reflects an understanding that a credit score, while an indicator of creditworthiness, is not the sole factor in determining loan eligibility. The provision to accommodate variations in credit histories allows entities that might not meet stringent eligibility criteria to obtain necessary funding. Indeed, meeting the basic prequalification criteria enables access to financial support that can be pivotal for growth.
The benefits of short-term financing for those meeting the eligibility requirements include:
- All credit considered, making it an ideal choice for those with bad credit or limited credit history, ensuring that eligibility encompasses a wider range of applicants and their varying levels of creditworthiness.
- Low monthly or annual revenue requirements enable even small businesses to meet the prequalification benchmarks for access to capital.
- No need for extensive financial statements, such as tax returns, balance sheets, or profit & loss statements, simplifying the documentation needed to meet eligibility.
- Issues like low daily balances, overdrafts, or Non-Sufficient Funds (NSFs) in business bank statements are less of a hindrance, expanding the accessibility of loans to those who might not meet traditional eligibility requirements.
- Businesses operational for more than 1 year are often considered, suiting many startups and reflecting a more inclusive approach to defining eligibility criteria.
- The need for speed; faster access to funding as online lenders with more relaxed eligibility requirements typically offer funds within 24 hours, much quicker than the traditional lending process and its rigorous prequalification protocols.
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 emergency repairs, 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 quickly fund emergency repairs for situations like building damage or fleet vehicle malfunctions, others need short-term financing as a startup. Regardless, this loan option can be beneficial for multiple reasons, including:
- Emergency Capital- Emergency capital is essential for unexpected expenses such as emergency repairs 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-A short-term business loan is a great way to capitalize on a time-sensitive business opportunity.
Short-Term Loans for Business Owners
Small Business Loans
Short-term business loans, often requiring adherence to an aggressive repayment schedule, are defined as repayment terms ranging between 6 to 18 months. While these types of loans offer fast funding with high approval rates and the potential for tax-deductible advantages, it's crucial for businesses to ensure they can manage the usually rapid repayment schedule, which might impose higher payments on a daily or weekly basis. 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 indeed a highlight, providing speedy access to capital.
- Fast Funding
- High approval Rates
- Tax Deductible
- Fixed costs & Terms
Business Line of Credit
A business credit line is a great option for businesses that require not just funds on demand for unforeseen expenses but also value the flexibility to only pay interest for the time the funds are in use. Offering competitive interest rates and the convenience of repaying your loan without a prepayment penalty, a line of credit can help boost your credit if managed wisely. Additionally, with the absence of prepayment fees, businesses can enjoy this financial flexibility knowing that they can settle their balance earlier than anticipated without incurring extra costs.
- Approvals in a day
- Flexible with drawing money
- Only pay interest on outstanding balance
- Rates starting at 1% per month simple interest, reflecting the lender's commitment to flexibility and affordability.
Business Cash Advance
A business cash advance is an advance of future sales receivables of the business, and not a loan. This type of financing is ideal for entrepreneurs managing their borrowing needs, as it provides a lump sum up front with flexible terms tied to business income. Repayment terms are flexible and based on a set percentage of future deposits in the bank account of the business, which should align with the business’s cash flow and ability to manage the cost of borrowing. This means it’s crucial to evaluate your borrowing needs carefully and understand the factor rate applicable, which determines the total amount you would need to repay.
- 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, offering businesses a convenient lump sum of capital in exchange for a portion of their daily transactions. This structure can provide flexibility effect in terms of cash flow relief since payments adjust with sales volume.
- 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. By obtaining up to 95% of the total invoice value in advance through invoice factoring, companies can significantly mitigate the impact of cash flow interruptions. This advance process accelerates payment of the invoice by the invoice factoring company before the client pays, serving as a viable financial tool for bridging gaps in cash flow, usually with streamlined application processes that require minimal paperwork.
- 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, ensuring businesses maintain their operations smoothly. Most credit cards, which hinge on the owner's creditworthiness, are offered by traditional banks and come with a personal guarantee. This implies that a good personal credit score can be beneficial in securing better credit card terms.
- Instant Approvals
- Card issued for purchases, cash advances and pay expenses
- Revolving line of credit
- Simple interest
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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
How to Apply for a Short-Term Business Loan?
There are a variety of short-term funding products to pick through. When applying for short-term financing, one fundamental factor to consider during the lending decision process is that generally, the more favorable the costs, rates, and terms offered, the more extensive the financing application, documentation requirements, and processing time can be. The factor rates for these loans can sometimes go as low as 1.
- Find Lender- Assess lenders to pinpoint those offering the most attractive product diversity, rates, and terms. It's essential to compare offers for a well-informed lending decision. Platforms like Fundbox may expedite the process thanks to their AI-powered decision-making.
- Application- The full financing application typically requires both business and personal information for all significant owners, taking roughly 10 minutes to complete, which is a brief commitment for potentially considerable financial support.
- Documentation- The majority of applications will include providing recent bank statements, with tax returns sometimes being requisite for larger loan amounts, as these play a pivotal role in the lending decision.
- Offers- Obtain proposals to evaluate the products' rates, terms, and conditions, alongside their requirements for funding release.
- Accept Offer- Choose the offer that aligns closest with your needs and proceed to request the final authorization.
- Approval- To achieve final approval, fulfill all funding stipulations such as contract signing, and verification of identity, ownership, and banking details, which lenders review before making a lending decision.
- Funding- Anticipate the disbursement of funds so you can allocate this capital according to your business requirements.
Short-Term Business Loan Interest Rates
Short term interest rates depend on the product you are choosing. When examining these products, it's critical to consider the annual percentage rates (APRs) to grasp the full cost of borrowing. The American Express Business Blueprint™ could be an excellent example for entrepreneurs looking for a flexible business line of credit, which can be a part of a comprehensive business blueprint to forecast and manage expenses efficiently.
- Short term Business Loan- Interest rates starting at 9%, Factor rates starting at 1.13%. Bear in mind that APRs can widely vary, and you'll need to be cautious about the feasibility of repayment. Considering the pros and cons of funding, short-term loans can provide working capital quickly, although the total cost of borrowing must be carefully assessed.
- Business Line of Credit- Interest rates starting at 1% per month simple interest. Despite seemingly low rates, when annualized, the APRs might be much higher, affecting the total borrowing cost. This is where a product like the American Express Business Blueprint™, known for its transparent terms and manageable fees, can shine.
- Business Cash Advance - Factor rates starting at 1.13%, but it's essential to investigate the APRs as these advances can sometimes carry steep costs. When weighing the pros high rates against the immediate influx of cash can present, diligence is key.
- Merchant Cash Advance - Factor rates starting at 1.13%, yet considering the APRs is crucial since MCAs can have extremely high rates, making them a last-resort option.
- Invoice Financing- Factor rates starting at 1%. Comparable to other options, the APRs here can be more favorable, potentially as low as 3%.
- Business Credit Cards - Introduction rates starting at 0%, up to 27%. While attractive at first, be mindful that APRs can escalate after the introductory period, impacting your repayment plan. Business credit cards offer pros high rewards and convenience , yet it's important to factor in the long-term costs to maintain a positive financial business blueprint.
Frequently Asked Questions
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. Explore flexible repayment options designed to fit the unique needs of your business. With us as your lending partner, you could access up to $2 million in funding with a minimum credit score of 600.
