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Best short-term business loans in February 2024

Jan 04, 2024
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Small business owners may face financial issues at some point, such as running low on cash or needing some additional funds to stock up before the busy season. Unlike long-term loans, which are usually for large amounts and best suited for major purchases or expansion, short-term business loans are designed for these smaller needs.

We looked for some of the best short-term business loans, all with minimum repayment periods of 24 months or less. We selected these options based on factors like their eligibility requirements and overall cost. You’ll find lenders that offer fast business loans, help startups and may even help business owners with credit scores as low as 500. You’ll also find guidance about how much a short-term business loan costs, when they’re worth pursuing and how to apply.

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Best for merchant cash advances

4.6

Loan amount
$5k- $400K
Term: 3 - 15 months
Interest rate
1.11 factor rate
Fastest funding
1 business day

Best for bad credit

4.5

Loan amount
$5k- $1.4M
Term: 6 - 16 months
Interest rate
Starting at 1.10 factor rate
Fastest funding
1 business day

Best for secured loans

4.6

Loan amount
$25k- $500K
Term: 6 - 84 months
Interest rate
Starting at 7.49% simple interest
Fastest funding
2 business days

Best for fast funding

4.6

Loan amount
$5k- $750K
Term: 6 - 12 months
Interest rate
Starting at 30.00% APR
Fastest funding
1 business day

Best for early payoff discount

4.4

Loan amount
$10k- $500K
Term: 4 - 18 months
Interest rate
Starting at 1.11 factor rate
Fastest funding
1 business day

Best for established businesses

4.4

Loan amount
$5k- $250K
Term: 6 - 12 months
Interest rate
Starting at 6.20%
Fastest funding
1 business day

Best for invoice factoring

3.8

Loan amount
Up to $30m
Interest rate
Starting at 1.00% discount rate
Fastest funding
1 business day

Best for building business credit

4.6

Loan amount
$6k- $100K
Term: 12 - 12 months
Interest rate
Starting at 29.90% APR
Fastest funding
1 business day

Best for lines of credit

4.3

Loan amount
$2k- $250K
Interest rate
N/A
Fastest funding
Not disclosed

Compare the best short-term business loans in February 2024

LENDER AND LOAN TYPE BEST FOR MIN. FICO CREDIT SCORE LOAN AMOUNT TERM LENGTHS
Credibly merchant cash advance Merchant cash advance 550 $5,000 to $400,000 3 to 15 months
Fora Financial small business loan Bad credit 500 $5,000 to $1.5 million Up to 16 months
Funding Circle business term loan Secured loan 660 $25,000 to $500,000 6 to 84 months
Backd line of credit Fast funding 600 $10,000 to $750,000 6 or 12 months
National Funding working capital loan Early payoff discount 600 Up to $500,000 4 to 24 months
Bluevine line of credit Established businesses 625 $5,000 to $250,000 26 weeks or 12 months
eCapital invoice factoring Invoice factoring 600 Up to $30 million Invoices up to 90-day terms
OnDeck line of credit Building business credit 625 $6,000 to $100,000 12 months to 24 months
American Express Business Blueprint™* Line of credit Minimum FICO score of at least 660* at the time of application $2,000 to $250,000 Must have started your business at least a year ago

A closer look at our top short-term business loans

Credibly merchant cash advance: Best for merchant cash advances

Overview: Founded in 2010, Credibly offers several types of small business loans, including merchant cash advances. With this type of loan, your payments are based on a percentage of your company’s future income until the advance is paid off, helping you avoid large, difficult payments.

Why Credibly is the best for merchant cash advances: Credibly has easy credit requirements, only asking for a FICO score of 550 or higher. It also has quick approvals and funding, which is essential for merchants in need of quick cash.

Who Credibly’s merchant cash advance is good for: You might consider a Credibly merchant cash advance if you have average credit, you’re in a rush to get funding and don’t mind paying high fees to cover a short-term cash flow interruption. 

Fora Financial small business loan: Best for bad credit

Overview: Fora Financial, a working capital lender, has some of the lightest eligibility requirements among lenders on this list. The company offers prepayment discounts on its small business term loans, so you may save if you pay the loan off quickly.

Why Fora Financial is the best for bad credit: Fora has generous qualification requirements, which is important if your credit isn’t great. You can get a flexible, high-limit loan after just three months of operating and with a poor FICO score in the 500s.

Who Fora Financial's small business loan is good for: If you’re a newer business owner without a strong credit profile, a Fora Financial small business loan might work for you  — especially if you think you can repay your loan quickly.

Funding Circle business term loan: Best for secured loan

Overview: Funding Circle is an online lender that has originated almost $20 billion in loans to 135,000 businesses around the world. It offers term loans, business lines of credit and SBA 7(a) loans.

Why Funding Circle is best for a secured loan: Funding Circle’s term loans are secured and can be repaid in as little as six months. But if that is too short, you can choose longer terms, going all the way up to seven years. The streamlined application process can be completed in as little as six minutes, and if approved, funds can be received within two days.

Who Funding Circle's secured business term loan is good for: If you have been in business for at least two years and have a personal FICO credit score of 660, you may be eligible for a loan with reasonably low interest rates.

Backd line of credit: Best for fast funding

Overview: Based in Austin, Texas, Backd offers working capital loans and lines of credit for small business borrowers. As a business owner, you can apply for a Backd line of credit and get preapproval with a soft credit check. If approved, you can draw between $10,000 and $750,000 for your company’s short-term needs.

Why Backd is best for fast funding: With instant preapprovals and access to funding in as little as 24 hours, Backd’s lines of credit might appeal if you need cash quickly.

Who Backd's line of credit is good for: Consider a Backd line of credit if you’re running a relatively new business that could benefit from prompt access to funding. As a trade-off for this speed and convenience, though, you’ll need to be okay with at least an 18.00 percent simple interest rate and be able to make weekly repayments.

National Funding working capital loan: Best for early payoff discount

Overview: California-based online lender National Funding may be a good choice for young businesses — so long as they’re making enough revenue. You may qualify for a loan as large as $500,000 after just six months of operating. It also offers equipment financing that companies can use to buy the tools they need to operate.

Why National Funding is best for early payoff discount: National Funding only requires six months in business and offers loans up to $500,000. This flexibility allows businesses to borrow only the needed amount. Plus there are no prepayment penalties, and borrowers can receive an early payment discount if they're able to pay off their loan in full ahead of schedule.

Who National Funding's working capital loan is good for: If your business generates high cash flow and needs money to keep growing, this loan could be worth exploring.

Bluevine line of credit: Best for established businesses

Overview: Bluevine is a financial technology company that offers lines of credit with relatively low interest rates. You can get lines of credit as large as $250,000, but will only be eligible if you have an established business with nearly $500,000 in revenue each year.

Why Bluevine is best for established businesses: Bluevine only lends to companies that have been around for a couple of years. That gives it the flexibility to offer relatively low simple interest rates. Keep in mind that simple interest rates don’t include fees, so the actual APR could be much higher – even as high as 50.00 percent APR.

Who Bluevine’s line of credit is good for: If you have a seasonal business (like a landscaping or pool-cleaning company) or aren’t sure how much money to borrow, this product could be a good option. Because it’s a line of credit, it allows you to draw money as needed, paying interest only on what you’ve borrowed.

eCapital invoice factoring: Best for invoice factoring

Overview: Alternative financing company eCapital has been offering invoice factoring, asset-based lending and equipment refinancing since 2006.

Why eCapital is best for invoice factoring: The onboarding process takes at least a week for commercial businesses, though only two to four days for transportation businesses. But once you're onboarded, eCapital can respond to funding requests within 24 hours. They can fund up to $30 million, a high limit compared to most online lenders and factoring companies. 

Who eCapital's invoice factoring is good for: If you expect your business will want to use invoice factoring to fill future cash flow gaps, you may want to go through eCapital's onboarding process for fast access to working capital next time you need it.

OnDeck line of credit: Best for building business credit

Overview: OnDeck is an online lender that has been providing small business loans since 2006. Its line of credit lets companies access up to $100,000, which can be paid back in weekly installments over the course of 12 to 24 months.

Why OnDeck is best for building business credit: OnDeck reports your payment history to credit bureaus. If you can repay your line of credit in full and on time, this type of loan is great for building business credit.

Who OnDeck's line of credit is good for: OnDeck’s line of credit is best suited for businesses that need funding as soon as possible and haven’t been able to get approved by other lenders. But since the APRs are so steep, you’ll need to be confident that you can afford to pay back what you’ve borrowed  — or your business credit could take a hit.

American Express Business Blueprint™: Best for lines of credit

Overview: Business Blueprint, formerly Kabbage, is a service from American Express offering flexible lines of credit. What makes the service unusual is that it doesn’t charge interest, instead assessing a monthly fee when you have an outstanding balance.

Why Business Blueprint is the best for lines of credit: Business Blueprint offers lines of credit with flexible amounts and fair eligibility requirements. 

Who Business Blueprint is good for: These lines of credit could be suitable for you if you’re a small business owner with fair credit and want to draw money as you need it. However, you should be comfortable with putting up collateral and a personal guarantee and understand how the unique fee structure works.

* All businesses are unique and are subject to approval and review.

What is a short-term business loan?

Short-term business loans are like any other business loan, just with a shorter repayment period. They’re often referred to as working capital loans. Typically, the lender will want you to repay the loan in three to 18 months, but you may find terms up to 24 months.

Due to their short repayment terms, some loans require weekly or even daily payments rather than monthly payments. Before committing, make sure your business can keep up with the repayment schedule.

Secured vs. unsecured short-term business loan

Repayment terms stay relatively the same between secured and unsecured short-term business loans. But with secured business loans, some lenders offer higher loan amounts, lower interest rates or a better chance of approval for bad credit borrowers. That’s because a secured short-term loan is backed by business assets as collateral, guaranteeing to the lender that your business can repay. 

An unsecured short-term loan works well if you don’t want to tie assets directly to the loan. But keep in mind that many loans require a personal guarantee anyway, which guarantees the loan using your personal assets. You and your business will also need a solid credit profile, such as a personal credit score of 670 or higher and growing revenue, to qualify.

How does a short-term loan work?

Short-term small business loans include everything from term loans and lines of credit to invoice factoring and merchant cash advances. You’ll need good-to-excellent credit for the best rates. But there are short-term bad credit business loans tailored for business owners who are still in the credit-building phase. These loans may have loan amounts of $100,000 or less and cost more in interest rates and fees compared to business loans for business owners with good-to-excellent credit scores.

You can get short-term business loans at banks and credit unions, but it can take days and possibly weeks to get approved and funded. Online lenders typically offer fast approval and funding.

You’ll start by visiting the lender’s website, where you can typically submit some information about your company and see if you prequalify for their product. Prequalification often requires only a soft credit pull.

If you’re approved, the lender will provide information about the next steps, but you can usually expect to get access to the funds within several days. 

Depending on the lender, you may need to make daily, weekly or monthly repayments. Most expect you to pay your short-term loan back within six months to a couple of years.

Requirements for a short-term business loan

Lenders have different eligibility requirements for short-term financing, but in short, they want to feel confident that you’re going to repay what you borrow. Because of this, they’ll often require a combination of the following: 

  • Length of time in business: Typically, six months or more.
  • Annual revenue: Some lenders let you apply for a short-term business loan with just $50,000 in annual revenue, but more commonly, you’ll need at least $100,000 in yearly revenue.
  • Credit score: Most short-term loans require you to have a personal credit score over 600, but some lenders have looser standards.
  • Personal guarantee: Since these types of loans are often targeted at businesses in need of fast access to cash, many lenders require a personal guarantee to secure the loan.

Before applying for a short-term business loan, you’ll need to have some important information and key documents ready to share with your lender, including:

Types of short-term business loans

Some common types of short-term small business loans include:

Business lines of credit

This is one of the most popular business loan types. A business line of credit lets you draw funds from a pool of cash only when you need to, up to a limit. You only pay interest on the outstanding balance and can draw funds multiple times. These can be useful when you need flexibility, but depending on your creditworthiness and annual revenue, short-term line of credit rates may be high.

Term loans

This is a popular loan type. You get a lump sum at the start of the loan and pay it back over time in regular payments of fixed amounts. They’re useful for large one-time expenses. The short-term version is sometimes called a bridge loan.

Invoice factoring

Invoice factoring involves selling your invoices to a factoring company that sends you a portion upfront, collects the remainder and keeps a percentage. These may appeal if you’re dealing with slow-to-pay clients. But since this is a high-risk type of loan open to business owners with bad credit, rates can be high.

Merchant cash advance

Merchant cash advances give you quick access to funds to cover shortfalls or buy inventory. You repay the loan through a percentage of your future sales. They’re useful for immediate needs but often come at a high cost and cut into your future cash flow.

Pros and cons of short-term business loans

Short-term financing can get your company through a rough patch or unexpected expense, but there are also some downsides to tapping into this type of funding. Here’s a look at the pros and cons of short-term business loans.
 

Pros

  • Fast funding. Whether you need money to cover payroll, inventory or other urgent expenses, many short-term business loans are funded within a few days.
  • Flexible financing. Short-term loans often have flexible financing options, giving a borrower a variety of options for financing — from weekly to monthly repayments and repayment terms ranging from weeks to two years. 
  • Simple application process. These loans are usually offered by online lenders, who let you submit your application through their website. The entire process takes just a few minutes in some cases.
  • Easier to qualify for than some other business loans. It depends on the specific loan, but some short-term small business loans accept applicants with bad credit. Others work with startups that haven’t yet established a track record of business success.

Cons

  • Smaller loan amounts. Short-term loan amounts from online lenders tend to have smaller limits than longer term loans. Expect most short-term loans to have a maximum borrowing limit of $100,000, whereas long-term business loans often have maximum amounts in the millions.
  • Rates and fees can be steep. Lenders know that the companies applying for these types of loans are often desperate for cash. As a result, they may charge high interest rates or origination fees in exchange for the speed and convenience that they offer.
  • Tight repayment schedules. Since short-term business loans need to be repaid faster than other types of loans, you’ll have to make more frequent payments. Weekly or daily payments are common.
  • Can create a cycle of debt that’s hard to overcome. If you’re focusing on repaying your loan every day or week, you might not be able to put as much money towards other debts or business needs.

Who should get a short-term loan?

Consider a short-term business loan if: 

  • You’re facing a budget shortfall. A short-term loan can give you an infusion of cash if you need funds to buy inventory or cover emergencies.
  • You want to take advantage of an opportunity. Sometimes, a great deal falls into your lap and it could be a boon for your company, if only you could afford it. Imagine you own a restaurant and the chance to open a new location in a popular area appears, but you need cash tomorrow. A short-term loan could help.
  • You don’t have collateral. Many short-term loans don’t require collateral, making them an option for newer companies or those without significant assets.

But short-term business loans can be expensive and, in some cases, dangerous for your company’s future. You might want to avoid them in these situations:

  • You have long-term cash flow issues.  If you’re facing a more long-term or repeated problem with your company’s cash flow, a loan will only make it worse by saddling you with payments. 
  • You can’t find a reasonable rate. Since most short-term loans are accessible to startups and borrowers with fair or bad credit, they come with high interest rates.

How much do short-term business loans cost?

The cost of a short-term business loan can be higher than other types of loans. Some short-term loans use a factor rate rather than interest. To determine how much you’ll owe using factor rates, multiply your loan amount by the factor rate. For example, if you borrow $10,000 at a factor rate of 1.15, you’ll have to repay $11,500.

Factor rates are common for high-risk loans like merchant cash advances and business lines of credit open to borrowers with fair or bad credit.

Typical business interest rates range from 5.00 percent to over 84.00 percent APR, depending on the type of lender and your company’s creditworthiness. Factor rates can range from 1.09 to 1.50 or more. To ensure you’re getting the most affordable loan possible, make sure you convert loans with factor rates to interest rates so you can better compare your options and see how much more expensive factor rates can be.

Other costs include business loan fees like origination fees and early repayment fees, so be sure to read the fine print to determine the full cost of a short-term business loan.

Alternatives to short-term business loans

While short-term financing serves a specific purpose, there are also other options to consider. Some won’t let you access the funds as quickly as short-term loans, but each may have advantages that could make them a better choice. Alternatives to short-term business loans include:

Long-term loans 

Long-term loans have repayment terms of three years or longer. While you likely pay more in interest over time, the monthly payments can be easier to manage compared to short-term loans. Banks and credit unions typically offer the best rates, while online lenders have more relaxed eligibility requirements and typically offer funds within 24 hours.

Lines of credit 

Lines of credit can also be long term. For example, Wells Fargo offers a Small Business Advantage line of credit with a five year revolving term. It also offers a BusinessLine line of credit, which is also revolving but with no end timeline.

Business credit cards 

Business credit cards are similar to business lines of credit. You use money as you need it, rather than receiving it in a lump sum. Business credit cards may also earn rewards and have grace periods that can save you from having to pay interest as long as you consistently pay your balance in full each month. Once you’re approved for a business credit card, you’ll usually receive it in the mail within a week or two.

SBA loans 

SBA loans are backed by the U.S. Small Business Administration. They’re usually the slowest to provide funds. Even the fastest type of SBA loan, the SBA Express loan, can take 30 days for approval. But what they lack in speed, SBA loans make up for in reasonable interest rates and accessibility to underserved communities.

Where to get a short-term business loan

Depending on your credit history and lender requirements, you may have an easier time getting a short-term small business loan with online lenders rather than banks or credit unions. On the plus side, online lenders tend to have more relaxed requirements, more streamlined application processes and faster funding times than traditional financial institutions. But loan amounts are usually smaller and interest rates may be higher.

Banks and credit unions sometimes offer short-term loans, typically term loans or lines of credit. Bank of America and PNC Bank are two banks that offer both, making them a good choice if you are an established business that doesn't need fast funding. 

How to manage a short-term business loan

While you won’t have to manage a short-term loan as long as other business loans, you’ll need to stay on top of loan payments. For one, short-term loans can come with aggressive repayments, such as a higher payment or rapid schedule like daily or weekly payments. To make all payments, you’ll need to keep a close eye on your business’s cash flow and adjust as needed based on current revenue. 

Some short-term loans also work differently than standard business loans. To manage these loans, you should gain a solid understanding of how your particular loan’s fees work. For example, invoice factoring charges a fee based on a percentage of unpaid invoices you used to gain funding. Factoring companies may charge it as a one-time fee, or the percentage may increase the longer your invoices go unpaid. 

No matter which short-term loan you choose, keep up with repayments by setting up automatic withdrawals from your bank account. And if you think you’ll miss payments or you’re running into hard times, be upfront with your lender so that you can work out a plan. Lenders could delay payments for a short time or restructure the payments to fit your current finances.

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Bankrate Insight

If you see these red flags when looking for a short-term business loan, consider going with a different lender. 

  • Upfront payments. Watch out for lenders that ask you to hand over any cash (including application fees) before you’re approved for a loan.
  • Penalties for early repayment. If you’re able to pay off your debt earlier than you anticipated, you should be able to  — without a fee or penalty.
  • Rushed process. Taking out a loan can have major implications for your business, so you should never be coerced into accepting a loan or taking out more than you need. 

Frequently asked questions about short-term business loans

Methodology

Clock Wait
47
years in business
Credit Card Search
30+
lenders reviewed
Loan
22
loan features weighed
Rates
770+
data points collected
To choose the best short-term business loans, we ensured all loans featured are broadly available across the United States, have a minimum term of no longer than 12 months and offer a minimum funding speed of fewer than five days. We then considered features that make loans affordable and accessible to businesses with different characteristics, including interest rates, loan amounts, credit score requirements, minimum annual revenue and fees. We selected a variety of loan types to best serve businesses with differing needs.
 

Lenders are assessed using a 22-point scale to measure quality in five key areas: Accessibility, affordability, transparency, customer service and flexibility. Based on the results, lenders are given a rating between 1 and 5:

  • 4.5 or higher: Outstanding
  • 4 to 4.5: Excellent
  • 3.5 to 4: Good
  • 3.5 and under: Average
*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.