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Short-term business loans could help your business get out of a temporary financial hardship or capitalize on an opportunity. Could they be right for you?
Shannon has been writing for Merchant Maverick about small business software and financing since 2015. She started writing professionally about business topics in 2005. Shannon has been featured in the Washington Post, Reader's Digest, US News, MSN, Yahoo Finance, Business Insider, and other publications. She has a bachelor's degree in English from San Diego State University and currently resides in San Diego, California.
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Shannon VissersShannon has been writing for Merchant Maverick about small business software and financing since 2015. She started writing professionally about business topics in 2005. Shannon has been featured in the Washington Post, Reader's Digest, US News, MSN, Yahoo Finance, Business Insider, and other publications. She has a bachelor's degree in English from San Diego State University and currently resides in San Diego, California.
Expert Contributor
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Erica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.
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Erica SeppalaErica has been writing about small business finance and technology since 2008. She joined Merchant Maverick in 2018 and specializes in researching and reviewing business software, financial products, and other topics to help small businesses manage and grow their operations. Her expertise has been cited in MSN, Reader's Digest, Vox, U.S. News & World Report, and Real Simple. She is a Certified ProAdvisor for QuickBooks Online and QuickBooks Payroll, a graduate of Limestone University, and currently resides in Greenville, South Carolina.
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Though fees can be high, short-term loans are fast, with a 1-3 day time to funding. These loans also tend to have relaxed credit score requirements, minimal time in business requirements (often six months or less), and minimal or no collateral requirements.
Let’s look at the best short-term business loans available to small businesses.
All of these short-term business loans offer honest financing solutions that can get you over a temporary business challenge. The best lender for your needs will depend on your business model as well as your credit score and other business credentials.
Why We Chose AdvancePoint Capital For Best Overall Short-Term Loans
If you're unsure of what type of funding you want (or what you qualify for), AdvancePoint Capital can help you find short-term funding through its network of lenders. AdvancePoint offers solutions for all types of borrowers -- whether you own a startup or have credit challenges. This includes short-term loans, lines of credit, invoice financing, and revenue-based financing.
AdvancePoint has a fast and easy application process. After approval, you can have funds in your account in as little as 24 hours. AdvancePoint has high borrowing limits up to $500,000, and long-term funding is also available if that's what you're looking for.
AdvancePoint Capital Eligibility Requirements
Since AdvancePoint is a loan marketplace that works with multiple lenders, eligibility requirements vary.
To qualify for funding, you should have a minimum personal credit score of 650, at least $200,000 in annual gross sales, and a time in business of at least 12 months.
AdvancePoint Capital Rates & Fees
Rates and fees vary by product and lender. However, some general information is provided.
Lines of credit: Simple interest averaging 1% per month
Revenue-based financing: Factor rate of 1.09% to 1.45%
Invoice financing: Starts at under 1%
When To Use AdvancePoint Capital
You want to choose from multiple lenders and funding options
Why We Chose BusinessLoans.com For Short-Term Financing Options
BusinessLoans.com is a free business financing marketplace that provides your business with multiple short-term financing options suited to your needs. This way, you can save time and choose the offer that works best for you.
After you fill out a quick form with information about your business, BusinessLoans.com will connect you with suitable pre-approval offers from lenders in its network. Some short-term loan types available through BusinessLoans.com include term loans, merchant cash advances, invoice factoring, and lines of credit.
BusinessLoans.com Eligibility Requirements
BusinessLoans.com has no specific credit score or other borrower requirements. However, it is recommended that your businesses should make at least $100,000/yearand have been in business for at least 6 months.
It is still possible that BusinessLoans.com will be able to find an offer for you even if you don’t quite meet these minimums.
BusinessLoans.com Rates & Fees
BusinessLoans.com does not list rates or fee information on its website. Fees will vary depending on which lender in BusinessLoans.com’s network you receive an offer from.
When To Use BusinessLoans.com
You want to see what short-term business financing options you qualify for
Access to spending card and credit lines based on revenue
No credit check to apply
Credit limit grows automatically with your business revenue
Cons
Factor rates can be high
Not available to startups
Doesn’t help build credit
Why We Chose Revenued For No Credit Check
With Revenued, small businesses can access quick and easy cash draws, even with poor credit or no credit, as this short-term lender requires no credit check. Revenued offers the Revenued Business Card, which gives you access to a spending line called Flex Line. You can use Flex Line to withdraw cash from your credit line at your convenience.
This short-term financing option is convenient for small, frequent cash draws, particularly if you have good cash flow but bad credit.
Revenued Eligibility Requirements
Revenued requires business revenues of at least $20,000+ monthly cash flow. You also need a minimum of 1 yearin business and to maintain an average daily business bank account balance of at least $1,000.
Credit score is not a consideration.
Revenued Rates & Fees
Revenued cash advances have factor rates between 1.1 – 1.5.
There are no monthly or annual fees for the Revenued Business Card.
Similar to BusinessLoans.com, Lendio is a business financing platform that aggregates loan offers from lenders and matches them to its customers. The platform matches its users to a variety of business loan options, including various short-term business financing options.
One important form of short-term business financing you can access through Lendio is accounts receivable financing, a category that includes invoice factoring, inventory financing, and purchase order financing. Using AR financing, such as invoice financing, businesses with outstanding invoices can quickly free up cash from unpaid invoices.
Lendio also offers term loans and merchant cash advances with short-term lengths.
Lendio Eligibility Requirements
While the specific borrower requirements will vary depending on which of Lendio’s lending partners you get matched with, Lendio recommends that you have a personal credit score of at least 600, at least 6 months in business, and business revenues of at least $8,000/month ($96K/year) before applying for short-term loans.
MCA applicants only need a credit score of 500, in addition to $8K monthly revenue and 6 months in business.
Lendio does not have a minimum credit score or time-in-business requirement for AR financing, though the monthly income requirement is a little higher at $10,000/month, or $120K/year.
Lendio Rates & Fees
Looking at AR financing specifically, Lendio says loan terms are up to a year, with interest rates as low as 3%. You can receive up to 90% of your receivables amount and will receive your cash in as little as 24 hours after approval. Loans up to $10 million are available.
For its term loans, Lendio offers term lengths as long as 7 years. Lendio says rates on these term loans are as low as 8%.
For merchant cash advances, Lendio’s term lengths max out at 36 months, with factor rates starting at 1.08.
When To Use Lendio
You have fair credit and want to explore various short-term financing options
You have a B2B business and want to explore accounts receivable financing options
If you need up to $250,000, OnDeck offers short-term loans to businesses in need of fast cash. If your loan application is accepted, you may be able to access your funds within the same business day. OnDeck's same-day business loans are not cheap, but they are fast and reliable.
OnDeck also offers revolving lines of credit with same-day approval. If and when you're approved, you'll be able to start withdrawing funds immediately. For small draws from $1K-$10K, you can use the Instant Funding option which allows you to receive requested funds in seconds, even on nights and weekends.
OnDeck Eligibility Requirements
To qualify for an OnDeck short-term loan or line of credit, you’ll need a minimum credit score of 625, at least 12 monthsin business, and business income of at least $100,000/year.
OnDeck Rates & Fees
APRs for OnDeck’s funding start at 29.9%, although the average APR falls somewhere closer to 50% to 60%. Term lengths are up to 24 months, and payments are required on a daily or weekly basis.
With an OnDeck LOC, term lengths are up to 24 months per draw, there are no draw fees, and you can repay early without facing any penalty.
When To Use OnDeck
You have fair credit and need a small, fast loan
You have fair credit and need a convenient line of credit
Opportunity to borrow more once you pay off 60% of loan
Cons
High borrowing fees
Not as fast as some other short-term lenders
Origination fee charged
Why We Chose Fora Financial For Bad Credit
Fora Financial is a direct lender offering short-term business loans and merchant cash advances. Though businesses with good credit can probably find better rates, Fora Financial is a good choice if you need a business loan for bad credit.
Fora also offers pre-payment discounts and higher borrowing amounts than other short-term business lenders -- up to $1.5 million -- with a 24-72 hour turnaround.
Fora Financial Eligibility Requirements
To qualify for funding from Fora Financial, businesses will need a minimum credit score of 570, as well as6 months in business. As far as business revenue, you need to bring in $20,000/month.
Fora Financial Rates & Fees
Fora’s loan terms have a maximum length of 18 months. Rates range from 10% – 30%, plus a 1% – 4% origination fee taken off the top of the loan.
When To Use Fora Financial
You have bad credit and need a loan or cash advance up to $1.5 million
Why We Chose Fundbox For Best Business Line Of Credit
Fundbox is a super convenient and flexible form of financing for businesses that need 24/7 access to a line of credit to solve cash flow issues. You can both apply and draw funds right from the Fundbox app (or from your online dashboard); Stripe users can also use their Stripe dashboard to apply.
With each Fundbox cash draw, you can choose the length of your term -- 12 or 24 weeks-- and see all of your weekly payment amounts upfront so you won't be surprised later. As with other short-term business financing options, Fundbox fees can be on the high side. But if your business needs easy access to cash on-demand, Fundbox's convenience is unmatched.
Fundbox Eligibility Requirements
Fundbox requires a FICO of 600and $30,000/year in business revenue. Ideally, applicants will have at least 3 months in business.
Note that before applying, you’ll need at least three months of transactions in a business bank account or at least two months of activity using compatible accounting or invoicing software.
Fundbox Rates & Fees
Fundbox’s lines of credit are offered for up to $150,000, and repayments are made in equal installments over 12 or 24 weeks. The borrowing fee begins at 4.66%+ (12-week terms) or 8.99%+ (24-week terms), and there is no prepayment penalty.
If you’re approved, funds will be deposited into your business bank account within one or two days of your withdrawal request. There are no draw fees or money transfer fees.
When To Use Fundbox
You have fair credit and need small cash infusions from time to time
You have good cash flow and can repay your cash draws quickly
Business Loan & Funding Products Review Methodology
We spend hours researching and evaluating each business loan and funding product that we review at Merchant Maverick, placing special emphasis on key characteristics to generate our ratings.
Weighted Rating Breakdown
Rates & Fees 20%
Services 20%
Eligibility Requirements 20%
Application 15%
Sales & Advertising Transparency 10%
Customer Service 10%
User Reviews 5%
When rating lenders and funding providers, we use a 31-point rubric that looks at rates and fees, services, eligibility requirements, application, sales and advertising transparency, customer service, and user reviews. We weigh each section differently to calculate the total star rating. This rubric is applied to traditional term loans, as well as short-term loans, start-up loans, lines of credit, online lending products, merchant cash advances, and equipment financing products.
Rates & Fees: 20% of the total star rating
Services: 20% of the total star rating
Eligibility Requirements: 20% of the total star rating
Application: 15% of the total star rating
Sales & Advertising Transparency: 10% of the total star rating
Customer Support: 5% of the total star rating
User Reviews: 5% of the total star rating
Each section is further broken down into granular, weighted subsections, in which we examine specific attributes like terms lengths, conditions of repayment, credit score and revenue requirements, ease of application, length of time to funding, the ethics involved in promoting the lending product, customer support, and the overall reputation of the lender or funding provider.
Term Loan: A lump-sum loan, repaid in fixed daily or weekly installments, used for short-term investments or working capital.
Merchant Cash Advance: An advance on your future credit card sales, repaid daily as a percentage of your sales.
Line Of Credit: A credit line that you can draw from as needed and repay in daily or weekly installments.
Invoice Financing: A loan that uses your unpaid invoices as collateral to help smooth cash flow issues when customers don’t pay on time.
These types of short-term loans can be useful for when your business needs cash fast to cover gaps in revenue, make payroll, purchase inventory, or cover another business expenditure.
How To Choose The Best Short-Term Loan For Your Business
Short-term loans don’t have the best reputation, to put it mildly.
However, though such loans can be expensive, they won’t necessarily end up harming your business’s future. Just make sure you adhere to the following best practices.
Be Aware Of The Overall Cost Of The Loan
Remember that the short-term loan interest rate (or factor rate) isn’t the only means by which a short-term loan can cost you. You may also be on the hook for origination fees, draw fees, or other fees, depending on the lender. And if the loan carries a variable interest rate, you’ll need to account for the fact that the prime interest rate may rise, thus increasing your overall borrowing costs.
It’s essential to have a plan for paying off your loan, and you can effectively do that only if you’re aware of the true overall cost of the loan.
Make Sure You Can Handle The Repayment Schedule
Short-term loans tend to require weekly or even daily repayments. This can be problematic if your business experiences inconsistent cash flow. Make sure you’re able to handle the repayment schedule before you take out a short-term loan.
Look Out For Prepayment Penalties
With short-term lending, your loan terms may not include an explicit prepayment penalty, but most short-term loans frontload all the interest that would otherwise accumulate over time and charge it to you as a factor rate. That means you won’t save money by repaying the loan early.
However, some short-term lenders offer discounts for early repayment. If you foresee being able to pay off your short-term loan early, look for a lender that offers early repayment discounts with its short-term loans.
If a short-term loan doesn’t sound right for you, check out our other best small business loan options.
Shannon has been writing for Merchant Maverick about small business software and financing since 2015. She started writing professionally about business topics in 2005. Shannon has been featured in the Washington Post, Reader's Digest, US News, MSN, Yahoo Finance, Business Insider, and other publications. She has a bachelor's degree in English from San Diego State University and currently resides in San Diego, California.
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The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.
Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.
Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.
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