A short-term business loan is a type of loan that can help a business with its working capital needs. For example, a short-term business loan can help a business owner purchase more inventory, make some improvements, and pay payroll without the commitment of a longer term loan. It can be found online or at a bank and comes in different forms with varying rates and qualifications.
We reviewed more than 10 short-term business loans before deciding on the top six. We chose reputable lenders with years of industry experience and compared them based on maximum loan amounts, application process, funding time, and more.
Best Overall : Kabbage
Why We Chose it: Kabbage offers multiple short-term business loans with fast approvals, quick funding times, and a simple online review process.
In house experts to answer questions
No origination fees or prepayment penalties
Convenient access to your loan online with a card and an app
Minimum business revenue requirements
Minimum time in business requirements
Recently acquired by American Express, Kabbage was founded in 2009 as a technology company that connects small businesses with cash flow solutions including short-term business loans and payment processing loans. It also offers online banking services and small business tips and resources. It was started as a way to help small businesses get the cash they need quickly and with less paperwork than a typical bank.
You can apply for a short-term business loan online and get an automatic financial review with approval the same day. You can also apply over the phone with a representative if you have questions. Typically funding is completed within three business days, sooner if the funds are deposited into your PayPal account. Terms vary but are usually between six and 18 months.
Once you get funded, you can draw from the funds as often as you like and won’t be charged any prepayment penalties. Kabbage doesn’t charge loan origination fees but instead charges monthly fees that are a percentage of your balance. You can review the payment schedule before accepting the loan so you know what to expect.
Kabbage doesn't have a minimum credit score requirement but does require that you be in business for at least one year and have revenues exceeding $50,000. Short-term business loans are available up to $250,000.
Kabbage has a positive industry reputation and mostly positive customer reviews with customers appreciating the quick funding times but some customers found it hard to get in touch with someone.
Best for Startup Costs : Accion
Why We Chose it: Accion offers short-term small business loans as well as a community of support without minimum time in business or revenue requirements.
No minimum time in business
No minimum yearly revenue requirements
One-on-one lending approach
Maximum loan amount is $250,000
Qualification requirements vary based on location
Accion was founded in 1961 by a law student in California as a grassroots community development initiative. It has grown into a global nonprofit company that is dedicated to helping entrepreneurs generate income, create jobs, build assets, and achieve financial success through business ownership. It offers personalized service, trained lending specialists, and custom repayment plans, and prides itself as being a company that goes beyond lending.
Loans are typically six months to three years and to qualify, you need to be caught up on your debts. No minimum credit score is specified, but one in the mid-500s is usually needed. The company looks at the overall financial picture and needs instead of having concrete qualification criteria. As a startup, you will typically need to show that you haven’t had a recent bankruptcy or foreclosure and have a solid business plan.
Short-term business loans are available from $300 to $250,000 and are ideal for startups because there are no revenue requirements and no minimum amount of time in business. Additionally, the company will tailor loans, terms, and repayment schedules to the business’s needs and will offer advice and support throughout the process.
Best for Bad Credit : SnapCap
Why We Chose it: SnapCap offers short-term business loans with low credit score requirements, fast approvals, and seamless application processes.
Low minimum credit score
Loans up to $1 million
Annual revenue requirement
Customer service isn’t 24/7
Founded in 2012, SnapCap was created to help growing businesses get the financing they need. Their parent company is LendingTree and they have provided more than $975 million in funding in more than 375 industries since the company started.
To qualify for a short-term business loan with SnapCap, you will typically need a credit score of 500, $100,000 or more in annual business revenue, and at least one year in business. Rates vary based on the type of loan, overall business financials, industry, and loan term. The company requires daily or weekly payments to pay back the loan, and these are done as ACH withdrawals.
The company offers unsecured loans up to $1 million with terms between three months and three years. You can look for loans on the site and inquire without it affecting your credit. You can also answer the questions on the Express Review page and get approval the same day.
After the online application, a lending specialist will call you to go over loan details, rates, terms, amount, and repayment structure. Funding can happen as quickly as the next day. The process is meant to be streamlined and paperless with an online processing system. The dedicated loan specialist will work with you during the duration of your loan.
Best for Quick Approval : OnDeck
Why We Chose it: OnDeck offers same-day funding on some of its loans as well as a simple application and multiple types of loans to choose from.
Loans up to $250,000
Discounts on future loans
Daily or weekly payments
Prepayment penalty on some loans
Since its founding in 2006 in New York City, OnDeck has funded more than $13 billion in loans. It uses proprietary software and an algorithm to compile a company’s financial data and determine their loan eligibility. The company offers term loans and business lines of credit as well as multiple loan types, terms, and repayment options. There’s a team of U.S.-based loan advisors to answer questions and assist you throughout the loan process. It has funded more than $13 billion in loans.
You can apply for a short-term business loan online or over the phone and the application generally only takes 10 minutes with same-day approval and some loans even fund as quickly as the same day. This is helpful if your business has an emergency and needs the money quickly. If you apply for a business slime of credit, the loan amount will be between $6,000 and $100,000 with a 12-month repayment term that resets after each withdrawal.
Term loans are between $5,000 and $250,000 with a lump sum of cash upfront and the option to apply for more once the loan is halfway paid off. Terms are up to 18 months. Credit score, minimum time in business, and rates vary depending on the type of loan, industry, and location of your business but rates typically start at 9%.
It has positive reviews with customers praising its fast approval times.
Best for Low Annual Revenue : StreetShares
Why We Chose it: StreetShares is a community lending platform that offers short-term business loans and lines of credit to newer businesses with lower revenues.
Loans for businesses with lower revenue
No prepayment penalty
Lower credit requirements for term loans
Weekly repayment schedule
Funding limited to a percentage of annual revenue
StreetShares was started by an army veteran in 2013 who was tired of lending traps and wanted to help veterans and other small business owners have access to capital. While it’s based on a peer-to-peer lending model, it does things a bit differently. It uses affinity-based lending and matches lenders to borrowers who may have things in common like alumni of the same school or veteran status. The company uses this model because the borrower is more likely to feel a greater connection with the lender and more obligated to pay them back.
You can apply for a small business loan or a line of credit online and then will get matched with a lender if you qualify for a loan. You can instantly get pre-qualified online and will also be asked to fill out a personal statement about why you need the money and anything unique and interesting about your situation and/or business.
To qualify for a loan or line of credit, you need to be in business for at least one year and make $75,000 or more in annual revenue. This is lower than most lender’s requirements and is more realistic for most small businesses that are just starting out.
Rates vary depending on the type of loan but typically start at 8%. A minimum credit score of 600 is usually required for a business line of credit and a credit score above 540 is needed for a term loan. Short-term business loan terms are three months to three years.
Best for Large Loans : LendingClub
Why We Chose it: LendingClub offers larger short-term business loans than most other lenders. It quickly funds loans and doesn’t charge prepayment penalties.
Loans up to $500,000
Monthly repayment schedules
Minimum of two years in business
Origination fees charged
LendingClub is a peer-to-peer marketplace that offers business loans and lines of credit in all U.S. states except Iowa. The business was founded in 2007 and pairs both individual investors and institutional investors with borrowers. It offers personal loans, business loans, auto refinancing, and patient solutions.
The company often offers business loans to small businesses that have been turned down by banks. Business loans range from $5,000 to $500,000, making these a good solution for businesses that need more than $250,000, the cutoff for most short-term business loans.
You can get a quote within minutes online and it won’t affect your credit score. Once you apply online, if you’re approved, you can select a loan offer and review the rates and terms and then confirm your details and provide any documentation to a client advisor who will guide you through the entire loan process. After this, the funds are automatically deposited into your bank account. Times vary depending on the type of loan and the loan amount.
Interest rates are competitive and start at 4.99% and payments are made monthly which customers like. There are no prepayment penalties and terms range from one to five years.
Our best short-term business loans all offer different types of loans with varying rates, terms, and borrower qualifications. One company offers financing for startups with no revenue requirements and another company requires at least two years in business. Some of the companies will work with borrowers with poor credit and others require good credit scores.
All of the companies are strong contenders, but we recommend checking out Kabbage first. An industry leader in small business loans, they offer various types of loans, simple applications, and fast funding times.
|Best Short-Term Business Loans|
|Loan Company||Why We Chose it||Maximum Loan Amount|
|Kabbage||Easy online application and fast funding||$250,000|
|Accion||No minimum time in business—ideal for startups||$250,000|
|SnapCap||Lends to borrowers with low credit scores||$1,000,000|
|OnDeck||Same-day funding on some loans||$250,000|
|StreetShares||Business with low annual revenue||$250,000|
|LendingClub||Businesses that need larger loans quickly||$500,000|
Frequently Asked Questions
What Is a Short-Term Business Loan?
A short-term business loan is a loan that can provide immediate cash to a small business. A short-term business loan can be used for a variety of purposes including working capital, purchasing inventory, paying bills, and making improvements.
Rates, terms, and qualifications vary based on the type of loan, geographic location, and loan amount but these loans typically get approved fast, fund quickly, and have repayment terms ranging from six months to two years. You should expect to pay a higher interest rate with a short-term loan and loan amounts are typically smaller than long-term business loans.
Note that due to the COVID-19 pandemic, some companies have halted their loans to small businesses. Make sure you carefully read the lender’s policy to find out if you can still get funding and if not, when the company plans to resume lending.
When Should a Business Get a Short-Term Loan?
A business should get a short-term loan if they need funds for something specific immediately. Some instances where a short-term loan comes in handy are:
- Provide working capital
- Purchase inventory
- Fill orders
- Advertising and marketing
- Meeting payroll
- Hiring new employees and training them
- Purchasing business equipment
- Making renovations or improvements to your space
What Is the Difference Between a Short- and Long-Term Business Loan?
The major difference between short-term and long-term business loans is the term of the loan. The term is a set period of time that the loan must be paid over. Typically, term loans are paid monthly and each payment will include principal and interest.
Short-term loans vary in length but are usually six to 24 months and often fund more quickly than a long-term business loan. Short-term loans usually have higher interest rates and lower loan amounts than long-term loans. A long-term loan has a longer amount of time to repay the loan, typically between three and 10 years but some may be longer.
What Types of Short-Term Business Loans Are Available?
The following types of short-term business loans are available:
- Traditional term loan: Typically you borrow a lump sum and then make monthly payments which include interest and principal; can be obtained from a bank or online lender
- Business line of credit: You can draw from a specified amount of capital and pay interest only on what you draw
- Merchant cash advance: A lender fronts your business a set amount of capital in exchange for a percentage of your debit and/or credit card sales and you repay the loan daily or weekly
- Invoice factoring: Your business receives an advance of capital that is secured by unpaid invoices which can help your cash flow until invoices are paid
How We Chose the Best Short-Term Business Loans
We researched more than 10 different short-term business loans and chose the top six. We recommended companies that are reputable with industry experience, knowledgeable agents, and lend in multiple states. We also took into consideration the types of loans available, the minimum and maximum loan amounts, as well as the application process, and funding times. In addition, we compared rates when available and lender fees.
All of our top choices offered large loan limits with competitive rates, easy application processes, and quick approval.