When your ecommerce runs dead silent for most of the year, only for demand to shoot through the roof during the holidays, it can be a pain to keep up with the sudden need for cash.
Or what if you have a handful of huge clients slow on paying their invoices – how are you supposed to keep the lights on?
When the need for cash is dire, short term business loans can be your saving grace.
In this article, I’ve outlined the seven providers of the best short term business loans out there.
9 Providers of The Best Short Term Business Loans – Overview
- OnDeck
- American Express Business Blueprint
- BlueVine
- Funding Circle
- Lendio
- Fundbox
- Credibly
- QuickBooks Capital
- National Funding
Let’s dive in further.
OnDeck: Best For Building Credit Score
- Annual revenue needed: $100K
- Credit score needed: 625
- Loan Amounts: $6K – $100K
OnDeck was founded in 2006 and based in New York, US. It was founded in 2006 and operates as a financial platform that provides loan financing to small and medium-sized businesses.
OnDeck has established itself as a go-to solution for short term business loans, and it’s easy to see why. They have a wide range of financial solutions available for all sorts of business needs, and they operate with speed and efficiency.
Starting from their fast funding capability. They can provide businesses with quick access to capital through just a 10-minute application process. Once approved, the funds can be in a business’s account as soon as the same day.
There’s no lack of trust either. Having delivered over $15 Billion to US businesses, OnDeck boasts an A+ Rating with the Better Business Bureau.
More Than Short Term Business Loans
OnDeck is not just about short term business loans either. They also offer a line of credit, meaning a revolving fund that replenishes as businesses repay.
This flexibility is ideal for businesses with ongoing financial needs, with credit limits ranging between $6K to $100K.
OnDeck is committed to transparency on one hand, and supporting your business on the other. For example, businesses can check their eligibility without a hard credit pull, ensuring their credit score remains unaffected.
Timely payments are reported to credit bureaus, meaning businesses can build their credit history when repaying the business loan. This focus on credit-building is a testament to OnDeck’s dedication to the long term success of its clients.
To qualify for short term business loans, businesses need to have been operational for at least a year, possess a personal credit score of 625, report an annual revenue of $100K, and maintain a business checking account.
American Express Business Blueprint: Best Loan Provider With Deep Pockets
- Annual revenue needed: $36K
- Credit score needed: 660
- Time in business needed: 1 year
- Loan Amounts: $2K – $250K
American Express Business Blueprint, was founded in 2009 as the Kabbage short term business loan.
When you sign up to the AMEX Business Blueprint, you’re actually signing up for the American Express Business Line of Credit. Through AMEX, you can get small business loan amounts ranging from $2K to $250K, catering to a wide range of needs.
Instead of traditional interest rates, the American Express Business Blueprint employs a unique fee structure based on the term of your loan. For instance, for a 6-month loan, the monthly fees range from 3% to 9%.
This structure ensures transparency, and businesses can be assured of no hidden costs, application fees, or origination charges.
In addition, the absence of a prepayment penalty provides businesses with the flexibility to repay their loan early without any additional charges.
Access to American Express Business Line of Credit
Eligibility for the American Express Business Line of Credit requires businesses to have a minimum FICO score of 660, be operational for at least a year, and demonstrate an average monthly revenue of at least $3,000.
The application process is streamlined. Small business owners only need to connect their checking account, bookkeeping software, or payment solution to the American Express Business Blueprint platform.
This data-driven approach allows them to evaluate a business’s eligibility efficiently.
One of the standout features is flexibility. Each time a business draws from its line of credit, a separate installment loan is issued, each with its own agreement. This structure allows businesses to manage their finances effectively, paying fees on each individual loan.
BlueVine: Best Tailored Loans for Small Businesses
- Annual revenue needed: $480K
- Credit score needed: 625
- Time in business needed: 2 year
- Loan Amounts: $5K – $250K
BlueVine is a California based short term business loan provider and was founded in 2013.
With a focus on transparency, flexibility, and customer support, BlueVine has carved a niche for itself, offering a range of financial products designed to meet the diverse needs of today’s businesses.
With BlueVine, expect a seamless user experience.
The online application process is not only user-friendly but also remarkably swift, allowing businesses to apply for financing in just a few minutes.
And for those in urgent need of funds? BlueVine delivers, with the potential for funds to be available as soon as the next business day.
Transparency and Diverse Loan Offerings
BlueVine offers a variety of financing solutions, from lines of credit to short term business loans and even invoice factoring. This diversity ensures that businesses can find a financial product that aligns with their specific needs.
Whether it’s a line of credit ranging from $5K to $250K or invoice factoring up to a whopping $5 million, BlueVine has got it covered.
Transparency is a hallmark of BlueVine’s services.
They are upfront about their pricing and loan terms, ensuring businesses are never in the dark about the cost of borrowing. This commitment to clarity extends to their fee structure, with a firm policy against hidden charges.
Behind the scenes, BlueVine’s dedicated customer support team ensures a smooth experience.
Funding Circle: Best SBA Loan P2P Business Lending Platform
- Credit score needed: 660
- Time in business needed: 2 year
- Loan Amounts: $5K – $500K
Funding Circle has its origins in the UK and has expanded its operations to other countries since being founded in 2010. It stands out as a pioneering peer-to-peer lending platform, bridging the gap between small businesses seeking financing and investors eager to support them.
With a global reach and a diverse range of loan offerings, Funding Circle has become the go-to online business loan marketplace for businesses looking for short term financing.
At the heart of Funding Circle’s operations is its commitment to simplicity and transparency.
The online application process is designed for efficiency, allowing businesses to apply for financing in just a few minutes.
And when it comes to costs?
Funding Circle is all about clarity, ensuring that businesses are well-informed with no hidden fees lurking in the shadows.
Pioneer of Peer-to-peer Lending
What truly sets Funding Circle apart is its peer-to-peer model for short term business loans.
Bypassing traditional banking structures, this model connects businesses directly with individual and institutional investors. This direct connection can often lead to more favorable loan terms and conditions, tailored to the unique needs of each business.
Funding Circle’s loan portfolio is as diverse as the businesses it serves.
From SBA 7(a) loans and term loans to merchant cash advances and invoice factoring, the platform caters to a wide range of financial needs. Short term business loans are available for amounts between $5K and $500K, but they also offer merchant cash advance loans ($5K-$400K) and working capital loans.
Support doesn’t end with loan approval.
Funding Circle assigns dedicated account managers to guide businesses through the lending process, ensuring a smooth and informed experience. A slew of positive reviews suggest that the platform is working and users are happy.
Lendio: Best User-Friendly P2P Business Lending Platform
- Credit score needed: 650
- Time in business needed: 2 year
- Loan Amounts: $5K – $750K
Lendio is a US-based short term business loan provider. It started as FundingUtah in 2006, and then by 2011, it was renamed Lendio.
Rather than being a direct lender, Lendio operates as a marketplace, similar to Funding Circle. They connect businesses with countless lenders, each offering a variety of loan products. This unique approach ensures that businesses have access to tailored financing solutions, optimized for their specific needs.
Lendio’s selection of short term business loans starting at a modest $5,000 and can stretch up to a substantial $750,000 to cater to a wide range of business needs.
And while short-term loans inherently come with higher interest rates due to their brief repayment periods, Lendio’s rates remain competitive, averaging between 8% and 13%.
These rates are typically fixed, offering businesses the predictability they need for effective budgeting.
A robust credit score can further tilt the scales in favor of the borrower, potentially securing even lower interest rates.
Streamlined and User Friendly Platform
The platform is designed for efficiency and user-friendliness.
The online application process is streamlined, saving businesses the time and hassle often associated with traditional bank loan applications. And once approved? Funds can be in your account in as little as 24 hours.
Support is a cornerstone of Lendio’s operations. From expert advice to personalized loan options, Lendio ensures that businesses are well-equipped to make informed decisions. This commitment to customer service is reflected in the numerous positive reviews and testimonials that Lendio has received over the years.
Fundbox: Best Business Line of Credit
- Credit score needed: 660
- Annual revenue needed: $100K
- Time in business needed: 6 months
- Loan Amounts: Up to $150K
The 2013 founded Fundbox is located in California and they cater primarily to small and medium-sized businesses. Fundbox’s main short term business loan offer is a revolving line of credit that’s designed to meet the dynamic needs of today’s enterprises.
Their main appeal is its user-centric approach. And with requirements that place business transaction history before strict collateral demands, Fundbox offers a more inclusive approach to lending.
The online application process is a breeze. By simply connecting your business bank account or accounting software, Fundbox swiftly assesses your financial health, eliminating the cumbersome paperwork that often plagues traditional loan applications.
And once you’re approved? The funds can be in your bank account as soon as the next business day.
Clarity and The Revolving Line of Credit
With transparent fees, small business owners can be confident that there are no hidden charges lurking in the shadow of their business loan.
This transparency extends to their interest rates, which start at 4.66% for 12-week terms. And when it comes to repayments, Fundbox offers both 12 and 24-week options, ensuring businesses can choose a plan that aligns with their cash flow.
One feature that makes Fundbox stand out is their revolving line of credit.
As businesses repay, their available credit replenishes, offering a continuous source of working capital. This, combined with the flexibility in fund usage, ensures businesses have the financial agility they need to navigate various operational challenges.
Support is integral to the Fundbox experience. Known for its responsive customer service, Fundbox ensures that businesses have a reliable partner throughout their financial journey.
In essence, Fundbox provides a fresh, holistic approach to business financing, leveraging technology and a deep understanding of modern business needs to deliver tailored solutions.
Credibly: Best For Businesses With Low Credit
- Credit score needed: 500
- Annual revenue needed: At least $15,000 in average monthly revenue
- Time in business needed: 6 months
- Loan Amounts: Up to $400K
Credibly is a short term business loan provider founded in 2010 and is based in Michigan, US.
With a focus on simplicity, speed, and transparency, Credibly offers a range of short-term business loans designed to meet the diverse needs of today’s enterprises.
By allowing businesses to pre-qualify online, Credibly ensures that only a soft credit inquiry is made, safeguarding your credit score.
Once you decide to proceed, the application process is seamless, and approval can be secured in as little as four hours. This speed is further exemplified by their funding process, where access to funds can be granted in less than 24 hours.
Good For Low Credit Score Businesses
Recognizing the challenges many small businesses face in securing a business loan, Credibly provides options even for those with a minimum credit score of 500.
Their variety of business loans, ranging from working capital loans to equipment financing, ensures that businesses have a spectrum of choices to find the perfect fit for their needs.
However, while Credibly offers numerous advantages, it’s essential for businesses to be aware of potential drawbacks. The relatively smaller loan amounts and short repayment periods might not suit all businesses, and not all fees are disclosed online.
In essence, Credibly provides a fresh, data-driven approach to business financing, leveraging their proprietary “Findata” evaluation and a deep understanding of modern business needs to deliver optimized lending solutions.
QuickBooks Capital: Best Accounting Software Integration
- Credit score needed: 620
- Time in business needed: 6 months on a QuickBooks account
- Annual revenue needed: $50K
- Loan Amounts: Offers a range between $1,500 to $150,000.
QuickBooks Capital is a financing solution tailored for providing short term business loans.
As an extension of the widely recognized QuickBooks accounting software (based in California since 1983), this lending platform seamlessly integrates with QuickBooks financial data.
This means they can provide tailored loan offers based on a business’s financial health, as reflected in its QuickBooks data. A data-driven approach like this is far more accurate than relying on traditional credit scores, offering a more comprehensive view of a business’s financial standing.
Since the process is largely automated, they can make approval decisions rapidly. Once a loan is approved, the funds can be accessed as early as the next business day.
And with more accurate data available instantly, they can offer competitive interest rates as well. For six-month loans, rates can vary from 3.13% to 8.49%, translating to an APR of 12% to 32%. These can vary based on the loan’s duration, the applicant’s credit history, and the loan amount.
QuickBooks Capital is renowned for its transparent terms, which shouldn’t be a surprise to anyone familiar with QuickBooks software. Small business owners looking for short term business loans can rest easy knowing there are no hidden fees. The backing of the trusted QuickBooks brand adds an extra layer of reliability and security to the platform’s offerings.
The absence of prepayment penalties means they can settle their loan ahead of schedule without any additional charges.
Repayment flexibility is another advantage, with automated repayments tailored to a business’s cash flow. This ensures that businesses can manage their repayments without straining their finances.
National Funding: Best Early Repayment Terms
- Annual revenue needed: $250K
- Time in business needed: 6 months
- Credit score needed: 600
- Loan Amounts: Ranges from $5K to $500K
National Funding is a California-based small business funding company since 1999. They specialize in American businesses looking for small business loans. With flexible eligibility terms, National Funding may be especially attractive to businesses operational for a short time or with bad credit scores.
The streamlined application process and minimal documentation requirements mean that the business loan funds can potentially be accessed within 24 hours of applying.
Early Repayment Discount
One of the distinguishing features of National Funding is its early repayment discount. Businesses that have the capacity to settle their loans ahead of schedule may qualify for this special discount, the specifics of which are detailed in the loan agreement.
The short term business loans provided by National Funding range $5K to a substantial $500K. Interest is articulated as a factor rate, starting at 1.1 for borrowers with good credit profiles. The repayment schedules are designed to be either daily or weekly, catering to the diverse cash flow patterns of businesses.
National Funding has relatively lenient qualification criteria. Unlike traditional banking institutions or SBA loans that typically mandate a credit score threshold of 690 or above, National Funding opens its doors to borrowers with credit scores as modest as 600.
What’s So Special About Short Term Business Loans?
What’s the deal with short term business loans as opposed to other types of financing?
At their core, they’re pretty much what they sound like: loans designed to be paid back in a short amount of time. Typically, we’re talking about a period of 3 to 18 months, though it can vary based on the lender and your business needs.
The main difference with long term business loans is, as the name implies, duration.
While short-term loans are like a sprint, helping businesses handle immediate needs or temporary cash crunches, long-term loans are more of a marathon, assisting with bigger investments and long-term projects.
Another thing to note is that short-term loans often have higher interest rates compared to their long-term counterparts. It’s kind of like the convenience fee you pay for getting quick cash. But on the flip side, they’re usually easier to qualify for and faster to get, which can be a lifesaver when you’re in a pinch.
In a nutshell, short-term business loans are all about addressing immediate needs, whether it’s covering payroll during a slow month, restocking inventory, or handling unexpected expenses. They’re not a one-size-fits-all solution, but they can be a handy tool in the right circumstances.
Why Businesses Need Short-Term Loans
Alright, let’s dive into the nitty-gritty. Why would a business even need a short-term loan? Isn’t the goal to have a steady cash flow and avoid debt?
Well, in an ideal world, yes.
But let’s be real, business is unpredictable. Sometimes disastrously so, as in the case of WeWork. And sometimes, you just need that extra boost to get through a rough patch.
Here’s why short term business loans can be an absolute lifesaver:
Cash Flow Management
Ever had those months where bills are piling up, but payments from clients are trickling in at a snail’s pace? It happens to the best of us.
Short-term loans can bridge that gap, ensuring you can pay your bills and keep the lights on.
Seasonal Business Demands
If you’re in a business that has peak seasons (think holiday sales for retailers or summer months for ice cream shops), you might need some extra cash to stock up on inventory or hire temporary staff.
A short-term loan can help you prep for the rush.
Unexpected Expenses or Emergencies
Life’s full of surprises, and not all of them are fun.
Maybe your main equipment breaks down, or there’s a sudden repair needed at your storefront. Instead of panicking, a short-term loan can help you handle these unforeseen hiccups.
Taking Advantage of Business Opportunities
Picture this. You get a chance to buy inventory in bulk at a massive discount or maybe there’s a prime advertising slot available at a steal. Opportunities wait for no one, and a short-term loan can give you the funds to jump on them.
In essence, while we’d all love to have a cushion of cash for every business need, it’s not always feasible. Short-term loans aren’t about being reckless with money; they’re about strategically using resources to navigate the rollercoaster world of business.
Factors to Consider Before Applying for a Short-Term Loan
Okay, so you’re thinking about getting a short term business loan.
But hold up!
Before you dive in, there are some things you should mull over. It’s not just about grabbing the cash and running.
Here’s what you should keep in mind:
Your Business’s Financial Health
Take a good, hard look at your books. How’s your cash flow? Do you have other debts? Understanding where you stand financially will help you figure out if you can handle another loan and how much you can realistically borrow.
Purpose of the Loan
This might sound obvious, but you’d be surprised how many folks skip this step. Why do you need the loan? Is it for something tangible like buying equipment, or is it more about boosting cash flow? Being clear on this will help you decide on the loan amount and how to use it effectively.
The Amount Needed
Don’t just pull a number out of thin air. Calculate how much you actually need. Borrowing more than necessary means you’re paying interest on money you didn’t even need in the first place. On the flip side, borrowing too little might leave you shortchanged.
Repayment Terms and Interest Rates
This is a biggie. How long do you have to pay back the loan? What’s the interest rate? Are there any hidden fees? Make sure you’re not getting into something that’ll turn into a financial nightmare down the road.
Your Credit Score
Yep, this will likely come into play. Lenders want to know they’ll get their money back, so they’ll peek at your credit score. A higher score might get you better terms, while a lower one could mean higher interest rates or even a declined application.
The Lender’s Reputation
Not all lenders are created equal. Do some digging. Read reviews, ask fellow business owners, and make sure you’re working with someone reputable.
In short, while a short term business loan can be a fantastic tool, it’s not something to rush into blindly. Do your homework, understand what you’re getting into, and make sure it aligns with your business goals and capabilities.
How to Apply for a Short Term Business Loan
You’ve weighed the pros and cons, done your homework, and decided that a short-term loan is the way to go.
Now comes the application process, or more accurately, the pitch. It might seem overwhelming, but with a bit of prep, it’s a breeze.
Let’s break it down:
1. Gather Your Documents
Before anything else, you’ll need to get your paperwork in order. Typically, lenders will want to see:
- Business and personal tax returns.
- Recent bank statements.
- Financial statements (like profit and loss statements or balance sheets).
- A business plan (especially if you’re a new business owner).
2. Choose Your Lender
Remember that research you did on different lenders? Time to put it to use. Whether it’s a traditional bank, an online lender, or a credit union, pick the one that fits your needs best.
3. Fill Out the Application
This might be online or in-person, depending on the lender. Be thorough and honest. Fudging numbers or leaving out details can come back to bite you.
4. Wait for Approval
After you hit that ‘submit’ button, there’s a bit of a waiting game. Lenders will review your application, check your credit, and maybe even ask for additional info. Online lenders might get back to you in a matter of hours, while traditional banks could take a bit longer.
5. Review the Offer
If you get the green light, the lender will send over an offer. This will have all the details: loan amount, interest rate, repayment terms, and any fees. Read it. Then read it again. Make sure you know exactly what you’re signing up for.
Applying for a short-term business loan isn’t rocket science, but it does require attention to detail and a bit of patience.
Take it step by step, and before you know it, you’ll have the funds you need to give your business that extra push. Check out this article for details on how to create a pitch deck for investors.
Risks and Benefits of Short Term Business Loans
Short term business loans can pull your business out of a serious bind and even result in massive profits. But they also carry some serious risks you must be aware of.
Let’s take a look at the benefits and risks of short term business loans.
Benefits:
- Quick Access to Funds: One of the biggest draws of short-term loans is how fast you can get the cash. Sometimes, you’re looking at just a few hours post-approval. For businesses in a pinch, this speed can be a game-changer.
- Easy Approval: Compared to long-term loans, getting approved for a short-term one is often simpler. Especially with online lenders, the criteria might be less strict, making it a solid option for businesses that are still building their credit.
- Flexibility: These loans can be used for a variety of purposes, be it handling unexpected expenses, capitalizing on a business opportunity, or navigating seasonal fluctuations.
- No Long-Term Commitment: Since you’re paying back the loan quickly, you’re not tied down for years. This can be a breath of fresh air for businesses that don’t want long-term debt hanging over their heads.
Risks:
- High Interest Rates: The convenience and speed come at a price. Short-term loans often have steeper interest rates compared to their long-term counterparts. Over time, this can add up.
- Potential for Debt Cycle: If you’re not careful, it’s easy to fall into a pattern of taking out one loan to pay off another. This cycle can be tough to break and can lead to mounting debt.
- Impact on Credit Score: Just like any other loan, if you default or miss payments, it can ding your credit score. And trust me, that’s a headache you don’t want.
- Less Thorough Vetting: Because the approval process is quicker and sometimes less stringent, there’s a risk of not fully understanding the terms. This can lead to unexpected fees or terms that aren’t in your favor.
In a nutshell, short-term business loans can be a fantastic tool in your financial toolkit. But, like any tool, they need to be used wisely.
Alternatives to Short-Term Business Loans
The financial world is vast, and there’s more than one way to get the funds you need.
Let’s explore some alternatives to short term business loans:
Merchant Cash Advances
As you may have noticed, some short term business providers on this list also provide merchant cash advance (MCA) loans. It means that lenders give you a lump sum, and in return, they take a percentage of your daily credit card sales. Here’s an article with the best business cash advance services.
Crowdfunding
Platforms like Kickstarter or Indiegogo allow you to raise money by pitching your business or product to the public. It’s a cool way to not only get funds but also test the market and build a community.
Venture Capital
If you’ve got big dreams and a solid business plan, venture capitalists might be interested in investing. They’ll provide funds in exchange for equity in your company. It’s a big step, but it can lead to significant growth.
Angel Investors
These are individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity. They can be a great resource, both in terms of funds and mentorship.
Trade Credit
If you have good relationships with your suppliers, they might offer trade credit. This means you can receive goods now and pay for them later, giving you some wiggle room in your cash flow.
Personal Loans or Savings
It’s a bit risky, but some business owners tap into their personal savings or take out personal loans to fund their ventures. Just be sure you’re comfortable with blending personal and business finances.
Grants
Some government programs or private organizations offer grants to businesses, especially if they’re in specific sectors or meet certain criteria. It’s free money, but there’s often a lot of competition.
In the end, the best financing option depends on your business’s unique needs and situation.
Your Turn
Whether it be a short term business loan or revolving line of credit, you now have a huge selection of cash flow boosting business loan providers to choose from.
All of the above have their own strengths and weaknesses, so take a look and consider which platform best suits your business and personal style. Ultimately though, if you’re strapped for cash and you need a boost just until the payments start rolling in, then just pick the one that will fund your loan.
If you’re looking for a more permanent solution, like giving up equity in your business, don’t hesitate to contact us!
Good luck.
Updated: February 5th, 2024
