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Best Short-Term Loans For Small Businesses

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 Vissers
  • UPDATED

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.

Short-term business loans can help see your small business through unforeseen challenges or to allow you to take advantage of time-sensitive business 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 best short-term business loans available to small businesses. If a short-term loan doesn’t sound right for you, check out our other best small business loan options.

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BusinessLoans.com

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  • Offers: Term loans, lines of credit, & merchant cash advances
  • Revenue Requirements: $100K/year
  • Minimum Credit Score: N/A
  • Offers: Term loans, lines of credit, & merchant cash advances
  • Revenue Requirements: $100K/year
  • Minimum Credit Score: N/A

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Revenued Business Card

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  • Offers: Business credit card & credit line
  • Revenue Requirements: $15K/month
  • Minimum Credit Score: N/A
  • Offers: Business credit card & credit line
  • Revenue Requirements: $15K/month
  • Minimum Credit Score: N/A

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Lendio

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  • Offers: Accounts receivable financing & other business loans
  • Revenue Requirements: $10K/month
  • Minimum Credit Score: 550
  • Offers: Accounts receivable financing & other business loans
  • Revenue Requirements: $10K/month
  • Minimum Credit Score: 550

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OnDeck

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  • Offers: Short-term loans & lines of credit
  • Revenue Requirements: $100K/year
  • Minimum Credit Score: 625
  • Offers: Short-term loans & lines of credit
  • Revenue Requirements: $100K/year
  • Minimum Credit Score: 625

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Fora Financial

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  • Offers: Short-term loans & merchant cash advances
  • Revenue Requirements:$5K/month
  • Minimum Credit Score: 500
  • Offers: Short-term loans & merchant cash advances
  • Revenue Requirements:$5K/month
  • Minimum Credit Score: 500

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Fundbox

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  • Offers: Short-term lines of credit
  • Revenue Requirements: $100K/year
  • Minimum Credit Score: 600
  • Offers: Short-term lines of credit
  • Revenue Requirements: $100K/year
  • Minimum Credit Score: 600

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Read more below to learn why we chose these options.

Table of Contents

What Are Short-Term Business Loans?

Short-term business loans are loans that you have to pay back quickly—usually in less than a year. Short-term loans for businesses typically have a fixed-fee structure, so you know how much you will pay at the start of the loan. Loan repayments are deducted from your bank account daily or weekly.

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.

Best Types Of Short-Term Business Loans

Some popular types of business loans with short-term lengths include:

  • 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.

Best Short-Term Business Loan Options

Let’s explore your best short-term business financing options. 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.

BusinessLoans.com: Best For Short-Term Financing Options

BusinessLoans.com


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Pros

  • Multiple short-term business financing options
  • Time-saving application process
  • Relaxed borrower requirements
  • High borrowing amounts

Cons

  • Minimal pricing information disclosed on website

Why We Chose BusinessLoans.com For Short-Term Business Loans

BusinessLoans.com is a free business financing marketplace that provides businesses with multiple short-term financing options suited to their needs. This way, you can save time and choose the offer that works best for you.

After you fill out a quick form with some information about your business, BusinessLoans.com will connect you with some 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, they recommend that your businesses should make at least $100,000 per year and have been in business for at least 6 months. But 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.

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Revenued: Best Short-Term Loans With No Credit Check

Revenued Business Card


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Annual Fee

$0

Minimum Recommended Credit

N/A

Rewards Rate

3% cash back on eligible purchases

Pros

  • Access to both business credit card & credit line
  • Card benefits include $500 welcome offer & 3% cash back
  • No credit check to apply
  • Credit limit grows automatically with your business revenue

Cons

  • Factor rates can be high
  • Not available to startups

Why We Chose Revenued For Short-Term Business Financing

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 a business spending card, which is tied to your future business revenue and also allows you to open a flexible line of credit, called Flex Line, with your future sales as collateral. 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 $15,000/month. You also need a minimum of 6 months in 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 rate between 1.1 and 1.5. There are no fees related to the credit card, as it is a charge card with no annual fee; you will, however, need to pay the balance in full every month.

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Lendio: Best For Accounts Receivable Financing

Lendio


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Pros

  • Multiple types of financing available
  • High borrowing amounts
  • Relaxed borrower requirements for AR financing
  • Useful for businesses with outstanding invoices

Cons

  • Rates can be expensive
  • Funding isn’t always as quick as advertised

Why We Chose Lendio For Short-Term Business Loans

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, purchase order financing. Using AR financing such as invoice financing, businesses with outstanding invoices can quickly free up cash from unpaid invoices.

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 550, at least 6 months in business, and business revenues of at least $10,000/month before applying.

Compared to other types of business loans, accounts receivable financing generally has more relaxed borrowing requirements, so you may receive offers even if you don’t meet these minimums.

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.

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OnDeck: Best Fast Short-Term Business Loans

OnDeck


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Pros

  • Same-day funding
  • Lower costs for repeat customers
  • Transparent pricing
  • Builds business credit

Cons

  • Financing not available in some states
  • High APRs

Why We Chose OnDeck For Short-Term Business Loans

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 same-day business loans are not cheap, but they are fast and reliable.

OnDeck also offers revolving lines of credit that run from $6,000 to $100,000. Time to approval is quite quick, just as it is with OnDeck’s term loans. If and when you’re approved, you’ll be able to start withdrawing funds immediately.

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 1 year in business, and business income of at least $100,000/year.

OnDeck Rates & Fees

APRs for OnDeck short-term loans start at 29.9%, but the average APR is 62.1%. Term lengths are up to 24 months, and payments are required on a daily or weekly basis.

With an OnDeck LOC, term lengths are 12 months per draw, there are no draw fees, and you can repay early without facing any penalty. The average APR for OnDeck lines of credit is 48.9%.

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Fora Financial: Best Short-Term Business Loans For Bad Credit

Fora Financial


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Pros

  • Low credit score & revenue requirements
  • Early repayment discount
  • High borrowing amounts
  • Opportunity to borrow more once you pay off 60% of loan

Cons

  • High borrowing fees
  • Not as fast as some other short-term lenders

Why We Chose Fora Financial For Short-Term Business Loans

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 $1.4 million—with a 72-hour turnaround.

Fora Financial Eligibility Requirements

To qualify for funding from Fora Financial, businesses will need a minimum credit score of 500, as well as 6 months in business. As far as business revenue, you only need to bring in $5,000 a month.

Fora Financial Rates & Fees

Fora’s loan terms have a maximum length of 15 months. Your borrowing fee will be approximately 10 to 30% of the loan amount, plus a 1-4% origination fee taken off the top of the loan.

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Fundbox: Best Short-Term Business Line Of Credit

Fundbox


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Pros

  • Apply & draw funds directly from the Fundbox app
  • Convenient for ongoing borrowing needs
  • Funds are disbursed quickly
  • Transparent pricing

Cons

  • Low borrowing amounts
  • Short repayment terms

Why We Chose Fundbox For Short-Term Business Loans

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 upfront all of your weekly payment amounts 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 600 and $100,000 in annual business revenue. Ideally, applicants will have at least 6 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% 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.

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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.

Short-Term Loans For Businesses: FAQs

How long is a short-term business loan?

Most short-term business loans require you to repay the loan within a year. The term length of short-term business loans varies from one lender to the next, and sometimes you will have to pay back the loan in full within as little as three months or less. But other short-term loans have terms as long as 12 months or even 18 months.

Where can I find a short-term small business loan?

You can find a wide range of short-term business loans online. Some of the best short-term loan companies that serve small businesses include OnDeck (term loans) and Fundbox (lines of credit). You can also find a business loan using an online lending marketplace such as BusinessLoans.com or Lendio.

How do short-term business loans work?

Short-term business loans are typically distributed as a lump sum of up to $100,000-$250,000 (or sometimes more) that you repay daily or weekly over a period of weeks or months.

These tend to be unsecured loans that carry high, but fixed, fees—often calculated in the form of a factor rate.

Short-term loans tend to be fast and easy to qualify for, and you will often receive the loan within just 1-3 days of approval.

Why should businesses use short-term loans?

Businesses should use short-term loans if:

  • They can’t qualify for a bank loan due to bad credit or another reason
  • They need money to cover operating expenses or make a short-term business investment, such as inventory
  • They need money fast to due to an emergency of some sort

Short-term loans are not a good financing choice for a long-term business investment, i.e., an asset that your business will hold for more than a year.

Are there short-term loans for startup businesses?

Most short-term business loans require that the business has been operating for at least 6 months, sometimes a year. In rare cases, the lender might only require 3 months in business.

Short-term loans are still significantly easier for newer businesses to qualify for compared to a bank loan, which typically requires 2 years in business.

What are the disadvantages of short-term business loans?

The main disadvantages of short-term business loans are that they charge high interest and other fees, and they have large daily or weekly payments (due to the fact that you have to repay the loan so fast).

Generally, business should not use a short-term loan if they can qualify for a bank or SBA loan and are able to wait a few weeks to get their funds.

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Shannon Vissers

Shannon Vissers

Lead Staff Writer: Payment Processing at Merchant Maverick
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.
Shannon Vissers
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