A short-term business loan can give you the fast capital you need to bridge cash-flow gaps, cover emergency expenses and pay for other immediate financing needs — or take advantage of a new business opportunity.
With short-term loans, you typically receive a lump sum of cash from a lender and repay it on a fixed schedule. Generally, these small-business loans have repayment terms of 12 months or less, although some may have terms that extend up to 24 months.
Below, compare some of the best options for short-term business loans. Plus, learn more about how these loans work and how to get short-term financing.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 5 short-term business loans
Lender | NerdWallet Rating | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Kabbage - Line of credit on Kabbage's website | 4.5/5 Best for Short-term business lines of credit | $250,000 | 640 | on Kabbage's website |
Bluevine - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Fast short-term business loans | $250,000 | 625 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Unsecured short-term business loans | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Short-term business loans for startups | $150,000 | 600 | with Fundera by NerdWallet |
OnDeck - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Short-term business loans for bad credit | $100,000 | 625 | with Fundera by NerdWallet |
Here are 5 short-term business loans
Best for Short-term business lines of credit
Best for Fast short-term business loans
Best for Unsecured short-term business loans
Best for Short-term business loans for startups
Best for Short-term business loans for bad credit
Our pick for
Short-term business lines of credit
Kabbage offers short-term lines of credit of up to $250,000.
Kabbage - Line of credit
Max Loan Amount
$250,000
Min. credit score
640
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.
Max loan
$250,000
Min. Credit score
640
Our pick for
Fast short-term business loans
Bluevine offers short-term financing with terms up to 12 months. Funds can be available within hours of approval.
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
20.00-50.00%
Our pick for
Unsecured short-term business loans
OnDeck offers short-term loans and doesn’t require physical collateral. Borrowers are subject to general liens on their business assets, however, and are required to sign a personal guarantee.
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
29.90-97.30%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
29.90-97.30%
Our pick for
Short-term business loans for startups
Fundbox offers short-term funding for startups with six or more months in business.
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Max loan
$150,000
Min. Credit score
600
Apr range
10.10-79.80%
Our pick for
Short-term business loans for bad credit
OnDeck offers short-term loans for business owners with credit scores of 625 or higher.
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. credit score
625
Est. APR
29.90-65.90%
OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
May fund quickly
Max loan
$100,000
Min. Credit score
625
Apr range
29.90-65.90%
How Much Do You Need?
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 typically have repayment terms of one year or less — although some lenders may offer terms of up to 18, or even 24, months.
Short-term 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.
These 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.
As a result, however, short-term business loans generally have higher interest rates than longer-term loans or more traditional financing options. Interest rates can range from 10% to 99%.
Pros
- Wide range of uses. Short-term business loans typically don’t have restrictions on the ways you can use them. Because these loans have short repayment terms and fund quickly, however, they’re often best suited for immediate or unexpected expenses. You can use a short-term loan for working capital, to manage cash flow gaps, to take advantage of a new business opportunity, to pay for emergency repairs or cover costs during a slow season.
- Quick to fund. If you need a fast business loan, some short-term lenders can provide financing in as little as 24 hours. And compared with bank lenders, which may take weeks to process your application, short-term business loans are often funded within a matter of days.
- Streamlined applications. Most short-term business loans are issued by online lenders, which typically offer streamlined applications. You can usually complete and submit an online application in a matter of minutes, with minimal documentation required.
- Flexible eligibility criteria. Short-term lenders generally have more lenient qualification requirements compared with more traditional business lenders. Startups or businesses with bad credit may be able to qualify for a short-term business loan.
Cons
- Can be expensive. Short-term business loans typically have higher interest rates and fees compared with long-term loans. Business bank loans, for example, have annual percentage rates that range from approximately 3% to 7% — whereas short-term loans have rates that range anywhere from 10% to 99%.
- Frequent repayments. Short-term lenders often require payments daily or weekly as opposed to monthly. This means you’re making larger, more frequent payments over a shorter term. For some businesses, this payment schedule can impede cash flow and can be difficult to manage.
- Confusing contracts. Not all short-term lenders present interest rates and repayment terms in the same way — which can be confusing when you’re trying to compare products and determine the total cost of your loan. Although some lenders use APR, 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 is the best way to understand how much the loan costs.
- Risk of debt trap. The speed and ease of qualifying for some short-term business loans can be problematic if you can’t keep up with your payments. When these daily or weekly payments cut into your cash flow, you may feel the need to take out another loan or refinance in order to repay. With high interest rates and frequent repayments, this cycle of debt can be difficult to break.
You can follow these steps to get a short-term business loan:
Assess your financing needs
You’ll want to 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. In addition to term loans, business lines of credit and invoice factoring are common forms of short-term financing.
Since short-term business loans have more frequent payments and higher interest rates, you’ll want to make sure your business can afford any debt you take on.
Evaluate your qualifications
Although short-term lenders often have flexible qualification requirements, you’ll want to know where your business stands before applying. You can check your credit score, time in business and annual revenue — as many lenders use these three criteria to evaluate your loan application.
Find and compare lenders
Once you have an understanding of your funding needs and qualifications, you can explore lenders to find the best options for your business.
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.
- Business and personal bank statements.
- Business financial statements, 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.
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, you should ask the lender for clarification before signing.
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on July 13, 2022
Frequently Asked Questions
Short-term business loans can be a good option for businesses that need capital to cover immediate or unexpected expenses. Businesses should be able to make daily or weekly payments to repay a short-term loan.
Short-term loans can also be useful for small businesses that have difficulty qualifying for other types of financing, such as startups or businesses with bad credit.
Short-term business loans typically have repayment terms of 12 months or less. Some lenders may offer slightly longer terms — up to 18 or even 24 months.
Short-term loans are available for startup businesses. Some lenders offer short-term business loans for startups with at least six months in business, whereas others require at least 12 months in operation.