Best Short-Term Business Loans of 2025

A closer look at the best short-term business loans

Term length: 6 months.

Term length: 3 to 12 months.

Term length: 18 to 24 months.

Term length: 4 to 18 months.

Term length: 12, 18 or 24 months.

Term length: 4 to 18 months.

Term length: 3 or 6 months.

Term length: 6, 12, 18 or 24 months.

*See disclosure at bottom of page.

Term length: Invoices that are up to 90 days outstanding.

What is a short-term business loan?

A short-term business loan is a small-business loan that typically has a shorter repayment period, ranging from three to 12 months — although some terms may go up to 24 months.

Short-term business loans can be useful for covering working capital needs and short-term expenses, paying for emergency expenses or taking advantage of an unexpected business opportunity.

How do short-term business loans work?

Short-term business loans are generally structured as lump sums of capital that you pay back over a set period of time, or term. These loans are usually repaid on a daily or weekly basis, meaning you’ll make larger, more frequent payments than you would with a long-term business loan.

Short-term loans are most often issued by online lenders, which offer fast funding and streamlined applications. Compared with bank or Small Business Administration lenders, short-term lenders typically have more flexible qualification requirements and may work with startups or businesses with bad credit.

Short-term business loan interest rates

Short-term business loans generally have higher interest rates than longer-term loans or more traditional financing options. Interest rates can range anywhere from 10% to 99% APR.

And although some short-term lenders use an annual percentage rate, others might offer a simple interest rate, or even a factor rate. You should always calculate these rates (and fees) into an APR, as this makes it easier to compare products and is the best way to understand how much the loan costs.

» MORE: Estimate loan costs with NerdWallet’s business loan calculator

Types of short-term business loans

Here are some of the most common types of short-term business loans:

Business term loan

A business term loan provides a one-time lump sum of cash that you repay over a set period of time, with interest, to the lender. Term loans can be used for a variety of purposes such as paying short-term expenses, investing in specific projects or making large purchases.

Business line of credit

A business line of credit allows you to access capital as it’s needed for your business. After a lender approves you for a set limit, you have the flexibility to determine how much money to withdraw and when. You’ll make regular payments and pay interest on the funds you draw. Lines of credit can be a good option for working capital, cash flow gaps, seasonal slows and emergency funding.

Invoice factoring

For business-to-business companies, invoice factoring can be an option for short-term funding. Invoice factoring involves selling unpaid invoices to a factoring company at a discount in exchange for a cash advance. The factoring company then assumes responsibility for collecting payment from your customers. It can be a good option if your business has a large amount of cash tied up in unpaid invoices.

Merchant cash advance

A merchant cash advance (MCA) can be an option for a business that has substantial debit and credit card sales. MCA companies give you an upfront sum of capital that you repay using a percentage of your debit and credit card sales, plus a fee. MCAs can have extremely high APRs, however, so they should be used as a last resort option.

Pros and cons of short-term business loans

When to consider a short-term business loan

Here are situations when a short-term business loan may be the right fit for your needs:

• 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 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.

» MORE: Compare the best working capital loans

How to get a short-term business loan

Follow these steps to get a short-term business loan:

1. Assess your financing needs

Think about how much funding you need and what you want to use it for. You’ll also want to consider what type of business loan is right for you.

Since short-term business loans have more frequent payments and higher interest rates, make sure your business can afford any debt you take on.

2. Evaluate your qualifications

Although short-term lenders often have flexible business loan requirements, you’ll want to know where your company stands before applying. Know your time in business and annual revenue, and check your credit score — as many lenders use these three criteria to evaluate your loan application.

3. Find and compare lenders

Once you have an understanding of your funding needs and qualifications, you can explore lenders to find the best choice for your business. As you compare different options, consider factors such as interest rates, additional fees, repayment terms, funding speed and lender reputation.

4. Submit your application

Short-term lenders typically offer a streamlined, online application that can be completed fairly quickly with minimal documentation. Although business loan application requirements vary by lender, you may be asked to provide business and personal tax returns and bank statements as well as business financial documents, such as a profit and loss statement.

Short-term lenders don’t usually require physical collateral to secure your loan, but you’ll likely have to sign a personal guarantee. Your lender may also take out a general lien on your business assets.

5. Close your loan

Before you sign a business loan agreement, you should compare all loan offers you receive to make sure you’re getting the best deal for your business. You’ll also want to thoroughly review the agreement and make sure you understand the repayment terms, interest rate and additional fees. If you have any questions, ask the lender for clarification before signing.

When to consider alternatives to short-term business loans

In some cases, a short-term loan may not be your best option. In these instances, you may consider an alternative:

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.