Best Short-Term Business Loan Options and How to Get One
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How much do you need?
What is a short-term business loan?
How short-term business loans work
Short-term business loan interest rates
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- Need emergency funding? Consider a business line of credit.
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Types of short-term business loans
Business term loan
Business line of credit
Invoice factoring
Merchant cash advance
Best short-term business loan options
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Pros and cons of short-term business loans
Pros
Can be used for a wide variety of purposes, such as immediate or unexpected expenses.
May be able to get financing as fast as the same day.
Usually issued by online lenders, who typically offer streamlined applications with minimal documentation.
Can have lenient qualification requirements; startups or borrowers with bad credit may qualify.
Cons
Typically have higher interest rates and fees compared to long-term loans.
Often require daily or weekly repayments, which can impede cash flow.
Frequent payments and high interest rates can create a cycle of debt that’s difficult to break.
When to consider a short-term business loan
- 💵 Working capital needs. Short-term business loans can provide quick access to funds that can be used to cover day-to-day business operations and expenses such as rent, supplies, inventory and payroll. These working capital loans may be a good option for businesses that can’t qualify for more traditional financing.
- 🤝 Unexpected business opportunity. If you receive an unexpected business opportunity, a short-term loan may be a good option to help grow revenue or even cut costs. It can provide the funds needed to take on a new customer and hire additional staff or take advantage of an inventory discount for buying in bulk, for example.
- 🌦️ Seasonal cash flow gaps. Seasonal businesses often experience interruptions in cash flow during the off-season. A short-term business loan can provide quick access to the funds you need to keep operations running when sales fall off or meet the costs of preparing for the upcoming season.
- 🚨 Emergency expenses. If you need to replace a crucial piece of broken equipment, a short-term loan may be a good option. These loans can help you cover emergency expenses as a result of a natural disaster, accident or economic difficulty.
How to get a short-term business loan
1. Assess your financing needs
2. Evaluate your qualifications
3. Find and compare lenders
4. Submit your application
5. Close your loan
Frequently asked questions
How quickly can I get a short-term business loan?
Can I get a short-term business loan with bad credit?
How long is a short-term business loan?
Are there short-term loans for startup businesses?
Article sources
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
To come up with our list of the best short-term business loans, we selected lenders with term lengths of 24 months or less and strong NerdWallet star ratings.
Our star ratings award points to lenders that offer small-business friendly features, including:
Transparency of rates and terms.
Flexible payment options.
Fast funding times.
Accessible customer service.
Reporting of payments to business credit bureaus.
Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.