Picture this: You run a busy clothing store and your only cash register just broke. Or the holiday season is coming up, and you need to hire extra workers. But you don’t have the cash to fix the register or hire the workers. In both cases, a short-term business loan can help. You get money you need now and, with the profits you make, repay it over a short period of time.
Short-term business loans typically come in small amounts ($5, 000 to $250, 000), carry repayment terms of a few months to a year or two, have looser qualifications and can provide fast cash at a much-needed time. They can be a solid option for handling an unexpected expense, financing a small expansion or managing cash flow gaps. Short-term business loans, however, generally have high borrowing costs — something to bear in mind when you’re shopping around.
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In contrast, long-term business loans are typically larger ($250, 000 to $1 million or more) and have a repayment period of five to 15 years or longer, making them better suited to a real estate purchase, a business acquisition or refinancing debt.
OnDeck offers the best short-term business loan if:
- You have a credit score of 500 or higher
- Your business makes at least $100, 000 in annual revenue
- You need money for a short-term expansion
OnDeck is a good option for a small-business owners who need fast cash for a small expansion, such as hiring employees. The lender provides short-term business loans repaid daily or weekly over three to 36 months. The online application can be completed in as little as 10 minutes, with funding arriving as soon as 24 hours. To apply, borrowers need to supply OnDeck with a business tax ID number, Social Security number, a driver’s license number, and credit card and bank statements.
ONDECK LENDING TERMS:
- APR: 9% to 98%
- Term loan amount: $5, 000 to $500, 000
- Term loan duration: 3 to 36 months
Besides meeting the company’s minimum qualifications, your business must not be on the company’s restricted industries list, and you can’t have had any bankruptcies in the last two years.
Kabbage offers the best short-term business loan if:
- Your personal credit is poor
- Your company earns $60, 000 or more in annual revenue
- You need money to manage cash flow gaps
With Kabbage’s line of credit, you borrow only the money you need and pay fees just on the money borrowed — flexibility that makes it a better option for managing cash flow than for a larger expense, such as an expansion. Be aware that each time you borrow against the line of credit, Kabbage generates a new six- or 12-month term loan with its own fee structure.
It’s also fairly easy to qualify. Although Kabbage does check your credit score, it doesn’t weigh your score as heavily as other factors, such as your average monthly revenue. The application doesn’t require any paperwork, and you can get access to cash once approved, which can take anywhere from a few minutes to several days at most.
KABBAGE LENDING TERMS:
- APR: 32% to 108%
- Line of credit amount: $2, 000 to $100, 000
- Line of credit duration: 6 or 12 months
Dealstruck offers the best short-term business loan if:
- You have a credit score of 600 or higher
- Your business is profitable and earns at least $150, 000 in annual revenue
- You want to finance recurring inventory purchases
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