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The 5 Best Short-Term Loans For Small Businesses

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Short-term business loans can be just the thing to see your business through unforeseen challenges or to help you take advantage of time-sensitive opportunities. Such loans may not have been a part of your original business plan, but when used carefully, there’s no reason why a short-term loan should put your long-term business goals in danger. If you can pay back your loan in a timely manner, you’ll have overcome your temporary hurdle, dodged the debt trap, and positioned your business for future success.

Let’s take a look at the leading short-term financing options available to small businesses as we head into 2021.

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CompanyHighlightsNext StepsHighlights
OnDeck

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  • Offers short-term loans and lines of credit to businesses
  • Minimum Required Credit Score: 600
  • Minimum Required Business Revenue: $100,000/year
  • Offers short-term loans and lines of credit to businesses
  • Minimum Required Credit Score: 600
  • Minimum Required Business Revenue: $100,000/year

Apply Now

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Fundbox

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  • Offers lines of credit to businesses
  • Minimum Required Credit Score: 500
  • Minimum Required Business Revenue: $50,000/year
  • Offers lines of credit to businesses
  • Minimum Required Credit Score: 500
  • Minimum Required Business Revenue: $50,000/year

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Credibly

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  • Offers merchant cash advances, business lines of credit, working capital loans, and other financing products
  • Minimum Required Credit Score: 500
  • Minimum Required Business Revenue: $15,000/month
  • Offers merchant cash advances, business lines of credit, working capital loans, and other financing products
  • Minimum Required Credit Score: 500
  • Minimum Required Business Revenue: $15,000/month

Apply Now

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Lendio

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  • Offers short-term loans, business lines of credit, business term loans, merchant cash advances, and other funding types
  • Minimum Required Credit Score: 550
  • Minimum Required Business Revenue: $10,000/month
  • Offers short-term loans, business lines of credit, business term loans, merchant cash advances, and other funding types
  • Minimum Required Credit Score: 550
  • Minimum Required Business Revenue: $10,000/month

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LendingClub Personal Loans

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  • Offers personal loans for business and business term loans
  • Minimum Required Credit Score: None for personal loans
  • Minimum Required Business Revenue: None for personal loans
  • Offers personal loans for business and business term loans
  • Minimum Required Credit Score: None for personal loans
  • Minimum Required Business Revenue: None for personal loans

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Read more below to learn why we chose these options.

Best Short-Term Business Loan Options For 2021

You might be hesitant to take out a short-term loan, but there are several reputable short-term lenders offering honest financing solutions that can get you over a temporary business hurdle. Let’s explore your best short-term business financing options.

1. OnDeck: Best Short-Term Business Loan Overall

OnDeck



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Whether you need $5,000 or $250,000, OnDeck offers short-term loans and lines of credit 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 short-term loans do not charge interest in the traditional sense. Instead, you’ll pay a factor rate for your loan — a fixed fee that is calculated when you take out the loan. With OnDeck’s short-term loans, this rate will come out to about 0.4%-0.42% of your borrowing amount per month, depending on your term length and creditworthiness. Payments are required on a daily or weekly basis.

OnDeck also offers revolving lines of credit that run from $6,000 to $100,000. Term lengths are 12 months per draw, there are no draw fees, and you can repay early without facing any penalty. Time to approval is quite quick, just as it is with OnDeck’s short-term loans. If and when you’re approved, you’ll be able to start withdrawing funds immediately.

Pros

  • A fast and easy application process
  • Funds are disbursed quickly
  • Lower costs for repeat customers

Cons

  • Rates can be expensive
  • Financing isn’t available in some states

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2. Fundbox: Best Short-Term Business Line Of Credit

Fundbox



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Sporting relaxed credit score requirements, Fundbox’s business lines of credit are accessible to a wide range of business owners. With a minimum required credit score of just 500, businesses with credit scores that might disqualify them in the eyes of other lenders may still qualify for a Fundbox line of credit.

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% for 12-week terms and 8.99% for 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. 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’s easy borrower requirements and fast funding come with a catch: Rates and fees can be on the high side.

Pros

  • Low credit score requirements
  • A fast and easy application process
  • Funds are disbursed quickly

Cons

  • Rates can be expensive
  • Frequent repayments required

Get Started with Fundbox

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3. Credibly: Best For Merchant Cash Advances

Credibly



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Credibly offers a variety of business funding products. Its merchant cash advance service and business lines of credit are the products best suited to businesses needing quick cash. The company offers working capital loans, business expansion loans, equipment financing, and invoice factoring.

Credibly’s merchant cash advances (MCAs) offer up to $400,000 in funding, and just as with a small business short-term loan, a factor rate is used to determine the cost of financing. For payment, Credibly automatically debits a percentage from either your business bank account or your credit card processor every day. These MCAs don’t have set terms, but the anticipated duration of the repayment period is three to 18 months. Unfortunately, there is a $50 monthly administration fee.

Credibly’s revolving business lines of credit have more relaxed revenue requirements than the company’s MCAs ($50K/year versus $15K/month) but steeper credit score requirements (560+ versus 500+). Both require at least six months of business history. An approval decision should come within 24 hours of your application submission. After approval, you should get access to up to $250,000 in funding within the same day. The company offers both unsecured and secured lines of credit.

Pros

  • Low credit score requirements
  • Funds are disbursed quickly
  • Wide variety of financing products available

Cons

  • Rates can be expensive
  • Some additional fees are charged

Get Started with Credibly

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4. Lendio: Best Short-Term Loan Aggregator

Lendio



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Lendio is a business financing platform that aggregates loan offers from lenders and matches them to its customers. The platform matches its users to short-term loans along with a wide variety of other business financing products, including business lines of credit, business term loans, merchant cash advances, and accounts receivable financing.

Lendio’s loans for short-term funding run from $2,500 up to $500,000. Loan terms range from one to three years, and factor rates start at 8%. Origination fees and collateral requirements will vary depending on the individual lender you’re matched with. Repayments will be required daily or weekly.

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 550 and monthly business revenues of at least $10,000 before applying.

Pros

  • Many types of financing available
  • High borrowing amounts
  • A fast and easy application process

Cons

  • Rates can be expensive
  • Funding may not come quickly

Get Started with Lendio

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5. LendingClub: Best For Bad Credit

LendingClub Personal Loans



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LendingClub is a peer-to-peer lender specializing in personal loans that can be used for business. If you require $40,000 or less in funding and have a low credit score and/or have not established a business revenue track record yet, LendingClub’s personal loans might be just the ticket for you.

If you apply for a personal loan and are approved, LendingClub will send you a few different lending options. For the most part, loans with long term lengths will have higher interest rates but lower monthly payments, while loans with short term lengths will have lower interest rates but higher monthly payments. Unfortunately, along with interest, LendingClub also charges an origination fee of between 1% and 6% of your borrowing amount.

LendingClub also offers business term loans of up to $500,000. Terms run from one to five years. You’ll need at least a year of business history and at least $50K in annual revenue.

Pros

  • A fast and easy application process
  • No credit score or time-in-business requirements for personal loans
  • Funds are disbursed quickly

Cons

  • Personal loans have low maximum borrowing amounts
  • Rates can be expensive

Get Started with LendingClub Personal Loans

Read our in-depth review

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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.

More Financing Resources For Small Businesses

We hope this summary of your best short-term financing options has been helpful. For a more in-depth look at how short-term business loans work, check out our merchant’s guide to short-term loans.

For a broader look at small business financing and how to obtain it, read our small business loan explainer. It contains a wealth of tips for narrowing down your search for a loan and details each type of business financing available in the loan marketplace.

In Summary: Best Short-Term Business Loan Options For 2021

  1. OnDeck:
    • Offers short-term loans and lines of credit to businesses
    • Minimum Required Credit Score: 600
    • Minimum Required Business Revenue: $100,000/year
  2. Fundbox:
    • Offers lines of credit to businesses
    • Minimum Required Credit Score: 500
    • Minimum Required Business Revenue: $50,000/year
  3. Credibly:
    • Offers merchant cash advances, business lines of credit, working capital loans, and other financing products
    • Minimum Required Credit Score: 500
    • Minimum Required Business Revenue: $15,000/month
  4. Lendio:
    • Offers short-term loans, business lines of credit, business term loans, merchant cash advances, and other funding types
    • Minimum Required Credit Score: 550
    • Minimum Required Business Revenue: $10,000/month
  5. LendingClub Personal Loans:
    • Offers personal loans for business and business term loans
    • Minimum Required Credit Score: None for personal loans
    • Minimum Required Business Revenue: None for personal loans
Jason Vissers

Jason Vissers

Jason Vissers is a writer and cereal chef from San Diego. He graduated with a Political Science degree from San Diego State University in 2001. He's been writing about website builders, crowdfunding sites, online lenders, and credit cards for Merchant Maverick since 2015. Additionally, Jason can't eat raisins.
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We Recommend OnDeck for Loans 🏆

Fast turnaround: as little as 1 - 2 days.
Low requirements: 600+ credit score, 12+ months in business and $100,000+ revenue.

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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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