Best Short-Term Business Loans to Consider in 2023
Short-term business loans are there if you need capital quickly. Typically funded within 24 hours of loan approval, short-term loans can bridge any gaps you have in revenue or cover emergency expenses.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
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Short-term business loans are typically given in one lump-sum, with fixed monthly payments and short repayment periods (average of one year). Getting a loan for short-term expenses can help cover payroll expenses, purchase equipment, invest in marketing, or cover any other business expenses you might have right now.
When it comes to choosing the best short-term loan for your business, you’ll want to ask yourself how much you need to borrow, look to see what you qualify for, and see what the lenders' various rates and fees are.
You’ll find many short-term business loan options out there. In this review, we’ve done the homework for you using our rating methodology. This methodology is designed to help you select the best option for your needs.
Best Short-term Business Loans for 2023 - Full Overview
American Express Business Blueprint™ - Best for Fair Credit Score Requirements
Monthly fee: 3-9% for 6 month loans, 6-18% for 12-month loans, 9-27% for 18-month loans
Loan amounts ranging from $2,000 to $250,000
No prepayment penalties and no origination fees
Convenient application process
Pros & Cons
Credit line replenishes as you repay it
Fair credit score requirements
No prepayment penalties
Complex fee structure
Rates may be high
Personal guarantee required
If your credit is fair and you need access to cash, American Express® Business Line of Credit may be the solution. With faircredit score requirements, and borrowing amounts ranging from $2,000 to $250,000, a business line of credit from American Express may be easier for some business owners to get approved for than other options.
Main Features The application for a American Express Business Line of Credit is convenient, and funds are deposited into your account in a timely manner. To qualify for a business line of credit with American Express Business Line of Credit, you must: meet the minimum credit score of 640. However, all businesses are unique and are subject to approval and review. Have a valid business checking account, 12+ months in business. Have an average monthly revenue of at least $3,000. Account holders are charged a monthly fee based on creditworthiness and other criteria. You'll be charged a fee of 3-9% for a 6-month loan, 6-18% for a 12-month loan, or 9-27% for an 18-month loan.
For startups and small business owners who may not qualify for other options because of their credit, American Express Business Line of Credit may be worth looking into.
Industry best factor rate for MCA - as low as 1.10
APR for the Line of credit product starts at 35%
Flexible repayment terms up to 16 months
Get funding in as little as 24 hours
Check your rate with a soft credit pull
Pros & Cons
Loan amounts up to $2 million
Fast funding times
Flexible payment terms
Startups will not qualify
Interest rates not disclosed
Not all industries will qualify
With Backd, you’re the boss and funding is tailored to fit your unique business needs. Loan amounts are high and terms are flexible. Backd was founded in 2018 and has since funded more than $1 billion to over 10,000 small businesses. If you’ve struggled to qualify with other lenders, Backd may be the solution you need.
Main Features Backd offers two loan products - working capital loans and business lines of credit. Working capital loans range from $10,000 to $2 million with terms up to 16 months. Payments are made daily, weekly, or semi-monthly. With a business line of credit, there are no terms and loan amounts range from $10,000 to $750,000. To qualify for either option, you need to be in business for at least one year and have annual revenues of $100,000 or more. You must also be based in the U.S. and have a business bank account.
Backd offers large loan amounts with flexible repayment options. Their online application takes just a few minutes to fill out, and a lending decision is made almost instantly. Whether you’re looking for a traditional short-term loan or a small business line of credit, Backd wants to help you get the funding you need and see your business succeed.
Excellent customer reviews on independent review sites
Pros & Cons
Excellent customer service
Multiple loan and lender options
Poor credit is accepted
Rates higher on this type of funding
High annual income requirements
Lendzi is a direct lender and a lending marketplace partnered with more than 75 lenders. This gives you options when it comes to short-term business financing and allows you to compare loan amounts, interest rates, and loan terms quickly and efficiently. Founded in 2020, Lendzi is known for working with businesses that have been denied a loan elsewhere or may be struggling with their credit. In addition, they have more than 2,000 5-star reviews on trusted review sites, making them one of the best lenders out there according to customers like you.
Main Features Lendzi short-term business loans range from $5,000 to $250,000 with terms up to 24 months. When you apply, only a soft pull will be done on your credit. After you submit your initial application, a representative will give you a call to discuss your business and your financial needs in more detail. Having someone walk you through the process will allow you to make the best lending decision when choosing a loan. Once approved, funds can be in your account in as little as 24 hours. To qualify for a short-term business loan from Lendzi, you’ll need: credit score of 625+, 6+ months in business, $180,000 in annual revenue.
Lendzi is your one-stop shop for small business funding. Whether you need a small loan to help carry you through a slow season or you’re looking to pay for an expensive marketing campaign, Lendzi can help get you the funding you need.
National Funding’s short-term business loans come with repayment terms ranging from four months to two years. Depending on your finances and unique situation, you can get approved for up to $500,000 to cover the costs of payroll, rent, utilities, or other everyday expenses.
Main Features National Funding offers a quick, easy application process where you can get a decision and funding in as little as 24 hours of applying. You’ll also receive access to a Funding Specialist who can help answer any questions you may have about the loan. The factor rate starts at 1.10. To take out a working capital loan, you’ll need a minimum credit score of 600, a business track record of at least six months, and $250,000 or more in annual revenue.
As long as your business earns at least $250,000 in annual revenue, a working capital loan from National Funding may be worthwhile. You can prequalify online without any impact to your credit and won’t have to secure any collateral. Plus if you pay your loan in full within 100 days, you’ll score a 7% discount.
GoKapital offers a wide variety of small business financing, including short-term business loans. One of the best features of a short-term business loan from GoKapital is the early payment discount, meaning you’ll save money by paying your loan off early. Because of this, we recommend GoKapital to small businesses in need of quick funding but have the ability to pay the loan back quickly.
Main Features GoKapital small business term loans range from $10,000 to $250,000 with terms of two to 10 years. Minimum credit score is just 500, allowing those with poor credit a higher chance at loan approval. Payments are made monthly and early payment discounts are given to borrowers able to pay off their loan early. No collateral is required and it takes just a few minutes to fill out the online application. To qualify, you must be in business for at least two years and have $240,000 or more in annual revenue.
If you’ve been in business for a few years and have substantial annual revenues, GoKapital is worth looking into. Because of their early payment discounts, businesses can save thousands on the total cost of their loan.
Most of the time, you want a short-term business loan because you want the money fast and don’t want the hassle that a lengthy bank loan may require. Fundbox not only has a short and sweet loan application, but you can also get a credit decision in minutes. If approved, funds can be deposited as soon as the next business day. Fundbox offers both short-term loans and lines of credit, as well as cash flow software to help you make financial decisions.
Main Features With both Fundbox’s term loans and lines of credit, you can borrow up to $150,000. The term loan is repaid over 24 or 52 weeks, while the line of credit must be repaid over 12 or 24 weeks. Interest can range from 4.66% up to 18%, and varies for each customer and over time. To qualify for a loan with Fundbox, you will need: credit score of 600+, $100,000 or more in annual revenue, 6+ months in business
If you’re looking for a fast-funded short-term loan, Fundbox can help you. With repayment plans of no more than a year, you can get the cash you need and repay it in a flash.
If you’d prefer to have access to a line of credit rather than getting all your money at once, like with a loan, Bluevine can help. Bluevine offers a short-term line of credit for businesses up to $250,000. Borrow what you need and pay for what you use, and your credit line will replenish with your payments. Once you request funds, they’ll be in your account within hours, ready for you to use. Bluevine also offers business checking with 1.5% interest. There are no fees or monthly minimum balances required.
Main Features Bluevine’s line of credit can get you as much as $250,000 that you can borrow from and repay again and again. Simple interest rates start at just 4.8%. To qualify for a business line of credit with Bluevine, you need: credit score of 625+, $10,000 or more in monthly revenue, 6+ months in business.
If you’re looking for short-term financing and like the idea of having access to cash when you need it rather than all at once, a line of credit from Bluevine may work best.
If you need a quick injection of cash, you can get fast funding from Uncapped with a term as short as three months. Alternatively, you can repay Uncapped out of your monthly sales. It’s a great option for business owners seeking short-term financing without hidden fees.
Main Features You can borrow between $10,000 and $10 million from Uncapped with a finance fee ranging from 2% to 12% of the loan amount. There are no other fees or prepayment penalties. If you choose a fixed-term loan, you can select a term as short as three months or as long as 24 months. If you opt for revenue-based financing, you’ll agree to pay a percentage of your revenue between 5% and 25% until the principal and fee are paid. Your business will need to have an online model with six months of history and at least $10,000 in monthly revenue to qualify, but there are no minimum credit score requirements.
With low minimum borrowing amounts and short minimum terms, Uncapped is ideal for businesses that need a fast, short-term loan. Flexible repayment options and transparent fees make the lender ideal for a wide variety of online businesses.
Loan features: Each lender has a cap on how much it will lend, with some offering significantly higher loan amounts than others.
Application process: Some lenders do a hard pull on your credit when you apply, while others do a soft pull. Some applications are lengthy, while others short.
Interest rates and fees: Every lender has different formulas for determining your interest rate, and many charge additional fees. The cost of borrowing can be expensive, so we took the time to look for lenders with the best rates.
Qualification process: Before applying, see what criteria you need to qualify for a short-term loan. Credit scores, time in business, and annual revenues may factor in.
Customer support: You want a lender who is easy to reach on a variety of platforms, including phone, email, and chat.
Online user reviews: It’s smart to read reviews on independent review sites like Trustpilot to see what people say about a lender.
Perks and bonuses: Lenders should work to get your business. Many offer additional features such as payment flexibility, advertising transparency, and advanced technology.
Main Features of The Best Short-Term Business Loans
Min. Credit Score
Min. Time in Business
Up to $150,000
$10,000 monthly revenue
Up to $250,000
Starts at 4.8%
$10,000 to $2 million
$5,000 to $250,000
Starting at 29.9%
American Express Business Line of Credit
Average monthly revenue: at least $3,000
$2,000 to $250,000
6 months: 3-9% 12 months: 6-18% 18 months: 9-27%
$10,000 to $250,000
Starting at 25%
$5,000 to $500,000
Factor rates starting at 1.1
What Is a Short-term Business Loan?
A short-term business loan offers borrowers a lump sum of cash that’s paid off in monthly installments, usually at a fixed rate of interest. Repayment terms can be anywhere from a few months all the way up to five years.
Short-term loans can be secured or unsecured, with secured loans requiring collateral. The main pro in backing your loan with collateral is you’ll typically receive a much lower interest rate.There are many different types of collateral, including cash, property, vehicles, inventory, stocks, bonds, and more.
Generally, these loans are used to pay for one-off investments or expenses, but can also be handy in emergency situations when you need funding quickly. Given their versatility, short-term loans are one of the most common types of lending you’ll find.
How Do Short-term Business Loans Work?
In general, short-term loans have similar characteristics to long-term ones. You borrow a set amount of money from a lender and have to repay it over an agreed period.
However, one of the main differences between the two is that payments usually have to be made on a more frequent basis. In most scenarios, lenders will ask for weekly payments. Moreover, this means the interest rate is usually based on a “factor” rather than an APR.
For example, some short-term business loans may use business days in a year to determine the repayment plan. So, for a 12-month loan, you’d have to make repayments based on 264 business days. Understanding these subtle differences is crucial when you’re searching for short-term loans online.
When to Consider Short-Term Business Loans
There are a few situations in which a short term business loan may be ideal:
You need access to capital quickly. Many short-term loan lenders give same-day decisions on applications and can fund your loan within 24 hours. This may be a great way to get access to cash fast
You don’t qualify for other types of financing. Short-term loans often have less strict requirements to qualify. As a result, you may be able to get financing with poor credit or minimal time in business.
You can pay back the loan quickly. Given the short nature of the repayment period, you’ll be limited in how much you pay in interest. Just be sure to calculate your monthly loan payment before signing the loan agreement to ensure you can afford it.
When to Avoid Short-Term Business Loans
Although short term loans can fill a need or two, there are certain situations when you might want to look for an alternative.
You can’t afford to pay a large amount over a short period. It may be tempting to take out as large a loan as possible. But with a short term loan, this means you'll have a hefty loan bill due each month. If you can’t afford to pay it with what you’re bringing in now, a short-term loan may not be ideal
The money won’t help you make more. Taking out a business loan can help you move your business forward. You can hire more staff members to increase productivity and serve more customers. If the short-term loan won’t do that, consider other types of financing.
The interest rate is astronomical. Interest rates on short-term loans can get crazy, especially if you have bad credit. Calculate the total you’ll pay in interest, including origination fees, and decide whether the cost of financing is worth it.
Business Short-term Business Loan Rates
There are a number of factors that will determine the rates you’ll get on a business term loan. While rates will vary by lender and by your specific qualifications, you can expect a range from 4.00% - 30.00%, on average. Determining factors are outlined below.
Credit score - The higher your credit score, the lower your rates tend to be. This won’t always be the case, but it’s the factor that is most commonly used by both traditional and alternative lenders.
Length of time in business - The longer you’ve been operating, the lower your rates will be.
Financial performance - From a lender’s perspective, the more money you’re earning, the lower the credit risk you present. If you can demonstrate a consistent level of profitability, then there’s an excellent chance you’ll be offered competitive rates.
Specific qualification criteria, such as monthly income and credit score, will vary between each lender. It’s worth checking your credit score and getting your documents together well in advance of any application.
Lenders will commonly ask for:
Valid ID, such as a passport or driver’s license
Two years personal and business tax returns
Three months of business bank statements
Proof of ownership of your company
Evidence of asset ownership if you’re opting for a secured loan
Shop around – These days, most lenders will let you submit an application without facing a hard pull to your credit rating. We recommend submitting applications to a few different platforms. Assess each of them carefully before you accept a final offer.
Prepare your documentation - You should have all of your financial records ready before you officially submit your application. This will speed up the process and make things much easier for you.
Wait for approval - Most lenders will be able to either instantly reject your application or pre-approve you for a number of different offers. If you accept an offer at this stage, you’ll receive a hard pull against your credit rating. Full approval can happen in just a few hours, with funding taking place as soon as 24 hours from approval.
If you’re short on cash or want to take advantage of an opportunity and can’t wait for a bank loan application to process and fund, a short-term loan can provide the capital you need, fast.
Additionally, if you don’t have the credit scores required to qualify for traditional loans, short-term loans may open the door to the financing you seek.
Just keep in mind that with this convenience comes expense. Short-term loans often come with higher interest rates, so factor that cost into your decision to take on financing.