Where can I get a short-term business loan?

When your small business is facing a cash crunch or needs to jump on an unexpected opportunity, a short-term business loan can provide fast, flexible financing. These loans typically offer repayment periods between three and 24 months, making them ideal for immediate, temporary financing needs.

As for where to get a short term business loan, options include traditional banks, credit unions and online lenders. For business owners asking, “where can I get a short term business loan?”, the right choice depends on how quickly you need the funds, your company’s credit profile and whether you prefer lower interest rates or faster access to capital.

Banks and credit unions

A bank or credit union typically offers the lowest rates and has flexible repayment periods. This includes term loans where you can choose a short repayment period of 24 months or less or opt for a longer repayment period, usually up to 60 months.

This flexibility gives you more control to manage your small business loan and your cash. You can pay off a loan early and save interest, or you can choose to budget payments over a longer period, which may give you breathing room to ensure you have enough cash on hand to cover all of your business’s obligations.

However, bank lenders aren’t the best choice if you need a fast business loan. Some lenders may require you to apply over the phone or in person, and the extensive underwriting processes could mean you won’t see funds for at least a few days to a week once you apply. Receiving funds quickly may be important if you’re covering an immediate or emergency expense.

Pros

• Can improve business credit score
• Multiple loan options available
• Range of repayment schedules

Cons

• Longer underwriting process
• May require collateral
• Requires more business documentation

Banks that offer short-term business loans

These four banks may be the best place to get a short term loan.

Online lenders

If you’re looking for the fastest possible application, approval and funding timeline, an online lender might be the best option. These lenders specialize in quick funding, often getting cash to you within 24 to 48 hours.

Online lenders also tend to offer more alternative financing options, like merchant cash advances or invoice factoring. These are accessible loans that may provide access to funds to business owners who may not qualify for loans from banks or credit unions:

• Businesses with bad credit
• Startups with little or no credit or financial history
• LLCs that aren’t in good standing

The downside is that online lenders with low credit score requirements and open to new businesses tend to offer lower loan amounts. Their loans also tend to have higher interest rates and fees, such as a 30 percent APR, and shorter repayment periods that could lead to higher monthly repayments than bank loans.

Pros

• Don’t typically require collateral
• Minimal documentation required
• Quick funding

Cons

• Higher loan costs
• Lower loan approval amounts
• Shorter repayment terms

Online lenders that offer short-term business loans

If you’re not sure where to look, here is a sample of top online lenders offering short-term business loans.

Pros and cons of short-term business loans

Consider the pros and cons of short-term business loans before applying for one.

Alternatives to short-term business loans

If a short-term loan isn’t the best option for your business, here are some alternatives:

• Long-term loans. These have repayment periods of 60 months or longer. These are best if you need to lower your monthly payments or finance larger purchases.
• SBA loans. The U.S. Small Business Administration insures these loans. SBA loans offer borrowing limits in excess of $5 million and long repayment terms of 10 or 25 years.
• Merchant cash advances. Merchant cash advances advance you a lump sum of money based on your credit and debit card sales. You then repay the loan based on a percentage of your future sales. Borrowing fees can reach the triple digits with this advance, so you may only want to use it in case of an emergency.
• Crowdfunding. Crowdfunding helps you raise funding for your business, either through one-time donations or by offering rewards or equity in your business to the investors.
• Business credit cards. If you can pay your balance off each month, the best business credit cards let you borrow money without interest charges. Other perks may include sign-up bonuses and rewards for every dollar you spend.

Bottom line

Short-term business loans can be a valuable tool for covering immediate expenses or seizing time-sensitive opportunities. If speed is your top priority, online lenders may be the fastest route to funding. However, if you can wait a bit longer, banks and credit unions typically offer more competitive rates and terms, potentially reducing your overall cost of borrowing.

Frequently asked questions

• How do short-term business loans work?

  Short-term business loans tend to work like any other loan, giving you cash that you have to repay, plus interest. But these loans are paid off quickly, within three to 24 months. Depending on the lender and type of loan, you may have to repay the loan weekly, biweekly or monthly.

• Is it hard to get a short-term business loan?

  If you’ve been in business for at least six months, have reasonable credit and can show that your business is generating revenue, many online lenders offer short-term loans. Just be ready to provide a personal guarantee when applying for the loan. The personal guarantee backs the loan with your personal assets, reducing the risk to the lender in case you default.

• What is the difference between short- and long-term business loans?

  The main difference between short- and long-term business loans is how long the repayment period is. Short-term loans usually have repayment periods of 24 months or less. Long-term loans have longer repayment periods, often 60 months or longer. Short-term loans also tend to offer higher interest rates than long-term loans, leading to higher borrowing costs. The cost may be worth it if you need funds quickly to cover an immediate need.