Best Short-term Business Loans for 2021

The Best Overall Short-Term Business Loan Provider

Introduction

These days, there are many different business loan types and each one meets a specific need. Short-term options (sometimes known simply as term loans) are one of the most popular. The application process is simple, approvals tend to be higher than other types of lending, and funding can be used for just about any reason you’d like. 

The Best Short-Term Business Loan Providers for 2021

To help get you started, we’ve pulled together a list of some of the best short-term business providers. There’s a decent range of interest rates, fast funding, and platforms to help those with bad credit. 

The Best Short-term Business Loan Providers Explained

1. Fora Financial- Best for Capped Terms 

Founded in 2008, Fora financial has handed out over $2 million in funding to over 25,000 small businesses. Fora Financial provides terms of 15 months, so you won’t have to pay extra fees. This lend also boasts fast funding, so if you need funding to chase a new opportunity you won’t need to wait long for your money. 

Features

Fora Financial is a solid choice for short-term loans as the terms are capped at 15 months. Given this, you won’t need to incur interest over an extended period. With this lender, you can put your loan to use for any of your business requirements. Thus, there are no restrictions placed on how you use your money. Yet, Fora Financial does demand a credit score of more than 500.

Our thoughts

Fora Financial makes it easy and clear to apply for a loan. It has a fast online application process and you only need to provide bank statements dating back 3 months. Read more in the full Fora Financial review.

2. Fundbox - Best for Flexible Weekly Payments

Fundbox specializes in short-term loans with term limits set at either 24 or 52 weeks, making it an ideal choice for businesses that want to fund a project or need to cover an emergency situation.

Features

Fundbox has carved out a successful niche with its flexible weekly payments and poor-credit-friendly loans. Many use the platform to improve their credit score before taking on other types of borrowing. 

Our Thoughts

If you’ve been struggling to get a loan, or simply need funding to cover an emergency, there are few better platforms than Fundbox. The service is designed around giving small businesses a helping hand. Read more in the full Fundbox review.

3. Quick Loans Direct - Best for Fast Turnaround 

As the name might suggest, Quick Loans Direct is a specialist in providing short-term funding to you quickly. Many applications can be approved and disbursed on the same day and there are no credit score requirements to apply. 

Features

Quick Loans Direct doesn’t use your credit score to determine your loan terms; instead, it assesses your business performance on the whole. This opens up applications to all small businesses, giving applicants access to rates as low as 7.00%

Our Thoughts

The platform’s primary selling point is a fast turnaround for funding. So, if you need cash within the next 24 hours, we’d highly recommend submitting an application. You’re under no obligation to accept any offers and your credit rating won’t take a hit for looking. Read more in the full Quick Loans Direct review. 

4. Fundera - Best for Low Rates

Founded in 2013, Fundera has built a reputation as one of the most reliable platforms in the industry. It’s a loan marketplace, meaning you’ll be connected to multiple lenders, which is great for finding some diverse rates and terms. 

Features

While Fundera might have some pretty strict eligibility criteria, including a credit score requirement of 680 and annual revenue of $300,000 or more, it’s still one of the best services on the market. Rates start at a respectable 7.00% and terms extend to five years. 

Our Thoughts

Fundera lets borrowers get the most out of short-term borrowing by giving them the time they need to repay their loans. If you have good credit, we’d recommend it as your first port of call so you can take advantage of some great rates. Read more in the full Fundera review. 

5. OnDeck - Best for Bad Credit

OnDeck has made a name for itself as one of the most welcoming alternative lenders on the market. Applications are open to all small businesses and there are no special requirements to meet. 

Features

OnDeck has quite high interest rates, starting at 35.00%. However, the more loans you take out with the platform, the lower this rate gets. Plus, since all applications are welcome, even those with no credit history, anyone can apply for funding.

Our Thoughts

This is definitely a provider that’s suited to those with limited and/or poor credit. We’d recommend using it if you have a small project to fund, or are looking to boost your credit score over the short term. Read more in the full OnDeck review. 

What Is a Short-term 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.

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 lots of the same characteristics as long-term ones. In other words, 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 and sometimes daily 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.

Business Term Loan Rates

There are a number of factors that will determine the rates you’ll get on a business term loan. However, you can expect rates that range anywhere 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. There are a growing number of poor-credit lenders in the market; however, their offerings typically entail relatively high rates of interest.
• Length of time in business - The longer you’ve been operating, the lower your rates will be. It can be tough for startups to access term loans; the minimum required time in business is usually 12 months.
• 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.

How to Qualify for Business Term Loans

Specific qualification criteria, such as monthly income and credit score, will vary between each lender, so we always recommend you do your research before you apply. It’s worth checking your credit score and getting your documents together well in advance of any application.

Lenders will commonly ask for:

• Photographic ID such as a passport or driver’s license
• Personal and business tax returns covering the previous two years
• Business bank statements from the previous three months
• Proof of ownership of your company
• Evidence of asset ownership if you’re opting for a secured loan

There may be other document requirements that will be made clear to you when you apply. 

How to Apply for a Business Term Loan

The process will depend on each lender but you can follow these general guidelines below to get an idea of what to expect.

• Step one: 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.
• Step two: Submit your details online - The vast majority of applications start online and will ask for a few basic personal details, information about your business, and the nature of your borrowing needs.
• Step three: 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
• Step four: 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 be as fast as 24 hours and many lenders now specialize in fast funding

Business Term Loans Pros and Cons

Pros

• Speedy applications - With everything being done online, including submission of all documents, the application process can usually be completed very quickly. Lenders have a good idea of which businesses would be good candidates for lending and approvals are often lightning-fast.
• Easy budgeting - With the vast majority of term loans being fixed-rate interest and repaid over a set timeframe, it’s very easy to slot the payments into your monthly budget and better manage cash flows.
• Reasonable rates - Those with good credit can expect very good rates on term loans, while those with poor credit should still find plenty of affordable options.
• High limits - Term loans generally have pretty generous borrowing limits, making them a great choice to finance any big projects on the horizon.

Cons

• Strict eligibility criteria - You’ll generally find that a lot of lenders are looking for those with good or excellent credit, as well as evidence of good business performance, before approving funding. However, this is less important for low-dollar, short-term options, and we have plenty of platforms on our list for those with poor credit
• Fees - You should always check your contract for any origination or early prepayment fees in your loan contract, as these can sometimes be quite high. Plus, keep an eye out for late payment penalties. More importantly, strive to make sure you’re positioned to keep up with the payments.

See Our Additional Guides on Business Loan Types

• Business Acquisition Loan
• Business Lines of Credit
• Commercial Real Estate Loans
• Equipment Financing
• Merchant Cash Advance
• Hard Money Loan

Final Thoughts

Applying for a term loan to cover a short-term project or expense has never been easier. There are plenty of platforms and loan marketplaces that can help you choose an optimal product, regardless of your personal and business circumstances. 

If you find yourself in a bind and need funding quickly, many providers will offer 24-hour turnaround, like Quick Loans direct. The application process is painless and approvals are near-instant.