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How can you use a short-term business loan?

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Published on February 27, 2025 | 2 min read

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Small business- How Can You Use A Short-Term Business Loan
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Key takeaways

  • Short-term business loans can be used for emergency expenses, covering seasonal income gaps, short marketing campaigns and more.
  • Types of short-term business loans include term loans, business lines of credit, invoice factoring and merchant cash advances.
  • Short-term business loan terms are typically 24 months or less.

Short-term business loans provide flexibility and quick access to capital, making them a top choice for a variety of situations, including covering emergency expenses, startup costs and gaps in revenue due to seasonal trends. Accounting for your funding needs, loan purpose and repayment ability can help you decide which type of short-term business loan is best for you.

Upfront startup costs

Startup businesses typically have costs they must cover to get off the ground — before they do work that they can get paid for. Short-term business term loans can help fill those financing gaps if you know you’re going to be paid relatively quickly; however, be mindful about keeping up with repayments if your customers have longer payouts, or if your funding needs are more long term.

Emergencies or unexpected expenses

Short-term loans can also be used for surprise expenses — such as broken equipment or unexpected opportunities to make a helpful business purchase. Instead of putting emergency funding on a credit card or dipping into savings, a term loan offers predictable fixed payments.

Make sure you can afford the payments — if you’re taking advantage of an unexpected opportunity, know it will pay off within the term of the loan.

Seasonal inventory purchases

Stocking up or purchasing new inventory for an upcoming busy season can also be a good use for short-term loans, including a business line of credit, invoice factoring or a merchant cash advance (MCA).

While a term loan can offer you the most affordable short-term financing, a business line of credit may offer more flexibility, especially if your seasonal needs are consistent annually. With a line of credit, you only draw what you need, and you won’t have to apply each year.

Cover seasonal income gaps

If your business is seasonal, short-term business financing — like a term loan or a line of credit — can help fill gaps in cash flow that your business may experience in slower months. Make sure you can afford repayments to avoid falling behind and affecting your next season’s income.

Short-term marketing campaigns

While your marketing budget should come from your business’s revenue, using a short-term business loan to invest in a fast marketing campaign that will allow you to capitalize on a specific market can be a good idea. These can include:

  • Social media ad campaigns.
  • Influencer collaborations.
  • Hiring an agency for website development or market research.
  • Paying for print, radio or TV advertising.

Generally, marketing strategies can take months or even years to pay off, so run some projections to ensure that your strategy will help generate revenue, and that you can afford the payments.

Bottom line

There are multiple ways to use a short-term business loan, including emergency expenses, upfront startup costs and seasonal needs. Keep in mind, though, that a short-term loan may not be the best choice for your business. Weighing the pros and cons of this type of loan can help you determine if there is a more appropriate option. Make sure you understand business loan requirements before diving into the application to raise your chances of quick approval.

Frequently asked questions

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