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Here are 8 of the best short-term business loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
Bluevine - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Fast funding | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit | 4.9/5 Best for Startups | $150,000 | 600 | Read Review |
OnDeck - Online term loan with Fundera by NerdWallet | 4.7/5 Best for Working capital needs | $250,000 | 625 | with Fundera by NerdWallet |
Headway Capital - Line of credit with Fundera by NerdWallet | 4.7/5 Best for Easy application process | $100,000 | 625 | with Fundera by NerdWallet |
American Express® Business Line of Credit | 4.6/5 Best for Business lines of credit | $250,000 | 660 | Read Review |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Large loan amounts | $1,500,000 | 570 | with Fundera by NerdWallet |
AltLINE - Invoice Factoring | 4.4/5 Best for Invoice factoring | $10,000,000 | 300 | Read Review |
Expansion Capital Group Merchant Cash Advance with Fundera by NerdWallet | Best for Bad credit | $300,000 | 500 | with Fundera by NerdWallet |
Here are 8 of the best short-term business loans
Best for Fast funding
Best for Startups
Best for Working capital needs
Best for Easy application process
Best for Business lines of credit
Best for Large loan amounts
Best for Invoice factoring
Best for Bad credit
I'M INTERESTED IN:
Our pick for
Fast funding
Bluevine offers short-term financing with terms of 26 weeks. 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 26-week 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
Startups
Fundbox offers short-term funding for startups with six or more months in business. Repayment terms are 12 or 24 weeks.
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
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
36.00-99.00%
Our pick for
Working capital needs
OnDeck’s short-term business loan offers fast access to working capital with repayment terms up to 24 months.
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
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
27.20-99.90%
Our pick for
Easy application process
You can get a short-term line of credit from Headway Capital with repayment terms up to 24 months. The lender offers a streamlined application and flexible qualification requirements.
Headway Capital - Line of credit
Max Loan Amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.
Max loan
$100,000
Min. Credit score
625
Apr range
35.00-80.00%
Our pick for
Business lines of credit
American Express offers short-term lines of credit from $2,000 to $250,000. Repayment terms of six-, 12-, 18- or 24 months are available.
American Express® Business Line of Credit
Max Loan Amount
$250,000
Min. credit score
660
The American Express® Business Line of Credit is a good option for business owners with fair credit who want access to working capital.
Max loan
$250,000
Min. Credit score
660
Our pick for
Large loan amounts
Fora Financial offers short-term business loans in amounts up to $1.5 million. Repayment terms are available up to 18 months.
Fora Financial - Online term loan
Max Loan Amount
$1,500,000
Min. credit score
570
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Max loan
$1,500,000
Min. Credit score
570
Our pick for
Invoice factoring
AltLINE can provide business-to-business companies with fast access to cash that’s currently tied up in unpaid invoices.
AltLINE - Invoice Factoring
Max Loan Amount
$10,000,000
Min. credit score
300
AltLINE offers fast invoice factoring with competitive factoring rates.
Max loan
$10,000,000
Min. Credit score
300
Our pick for
Bad credit
Expansion Capital Group issues short-term funding to borrowers with a minimum credit score of 500 or higher. Like all merchant cash advances, however, this product may be expensive.
Expansion Capital Group Merchant Cash Advance
with Fundera by NerdWallet
Max Loan Amount
$300,000
Min. credit score
500
Expansion Capital Group can provide fast and easy financing for newer businesses and borrowers with bad credit.
Max loan
$300,000
Min. Credit score
500
with Fundera by NerdWallet
What is a short-term business loan?
A short-term business loan is a 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 good options 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.
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 infusion of capital into your business. It offers a 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
Pros
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.
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.
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.
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
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 6.14% to 12.47% whereas short-term loans have rates that range anywhere from 6% to 99%.
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.
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.
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:
- 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.
When to consider an alternative to a short-term business loan
In some cases a short-term loan may not be your best option. Here are instances where you might consider an alternative:
- Loan payment amount is too large. If the monthly payment amount on your short-term loan is outside your budget, a business loan with a longer repayment period may offer a lower monthly payment. Long-term business loans can have terms up to 10 years, and even 25 years, in some cases. Depending on the rate, however, you may pay more in interest over the life of the loan.
- Frequent payments will disrupt your cash flow. Daily or weekly payments are often required by short-term lenders. If frequent payments would disrupt your cash flow, you may want to consider a business credit card which operates similar to a business line of credit and typically requires monthly payments. However, carrying a balance instead of paying off the card in full each month can get expensive, depending on the interest rate charged by the lender.
- Taking on any additional debt isn’t possible. If your business isn’t generating enough revenue to take on another debt payment, business grants may be an option. Business grants don’t require repayment, but competition for this “free money” is strong.
- Can’t meet lender requirements. If you don’t meet lender requirements for a loan because you have a low credit score or haven’t been in business long, consider using crowdfunding to create a fundraising campaign for your business. It can be a low-cost way to raise capital and also an opportunity to build an enthusiastic client base — without taking on additional debt.
How to get a short-term business loan
You can follow these steps to get a short-term business loan:
1. 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.
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. You can check your credit score, time in business and annual revenue — 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, you’ll want to consider factors such as:
- Loan offerings.
- Interest rates.
- Additional fees.
- Repayment terms.
- Funding speed.
- 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.
- 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.
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, you should ask the lender for clarification before signing.
Frequently asked questions
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.
Some merchant cash advance and invoice factoring companies offer short-term financing without a credit check. These companies prioritize other criteria, such as your debit and credit card sales, value of your invoices and/or customer creditworthiness to evaluate your application. Keep in mind, however, that these products may be more expensive than traditional business loan options.
Last updated on August 12, 2024
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.
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.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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