A short-term business loan is a loan that helps a company meet its working capital requirements. A short-term business loan can be used to purchase inventory, improve the business, or pay employees without the need for a long-term loan. You can find it online or at a bank. There are many forms available with different rates and qualifications.
We compared the top six lenders based on their maximum loan amounts, application processes, funding times, and other factors.
What Is a Short-Term Business Loan?
A short-term business loan is a loan that provides immediate cash to a small business. A short-term loan for a business can be used to fund inventory purchases, working capital, business improvements, and bill payment.
Rates, terms, and qualifications can vary depending on the loan type, geographical location, and loan amount. Short-term business loans are generally approved quickly and funded within six months. Repayment terms can range from six months to two years. These loans will have a higher interest rate than long-term loans.
Also read: 7 Simple Steps To Getting A Business Loan
Top 6 Short-Term Business Loan Providers
1. Kabbage
American Express recently acquired Kabbage, a technology company that connects small businesses with cash flow solutions. This includes short-term business loans as well as payment processing loans. It offers small business tips, resources, and online banking services. It was created to assist small businesses in obtaining the funds they require quickly and with less paperwork than traditional banks.
Online applications for a short-term loan can be made and approved on the same day. If you have any questions, you can apply online and speak with a representative. Funding is usually completed in three business days. If funds are deposited to your PayPal account, it will take less time. Although terms vary, they are generally between 6 and 18 months.
Once your loan is funded, you are free to draw on the funds whenever you want and you won’t have to pay any prepayment penalties. Kabbage does not charge loan origination fees but rather charges monthly fees equal to a percentage of the balance. Before you accept the loan, review the payment schedule to see what to expect.
Kabbage does not have a minimum credit score, but it does require you to be in business for at least one year and have gross revenues of more than $50,000. You can get short-term loans for businesses up to $250,000.
Kabbage has a good industry reputation and most customers have positive reviews. Customers appreciate the fast funding times, but some customers find it difficult to get in touch.
Advantages
- Questions answered by experts in-house
- There are no origination fees nor prepayment penalties
- Access your loan online quickly with a card or an app
Disadvantages
- Requirements for minimum business revenue
- Business requirements: Minimum time
2. Accion
Accion was established in 1961 by a California law student as a grassroots community development program. Accion has evolved into a nonprofit organization that helps entrepreneurs create income, and jobs, build assets, as well financial success through ownership. It prides itself on being more than a lender.
Typically, loans are six months to three years in duration. To be eligible for a loan, you must have paid off all your debts. There is no minimum credit score, but typically one in the middle 500s is required. Instead of focusing on specific qualifications, the company will look at the overall financial picture and business needs. Startups will need to demonstrate that they have not been in bankruptcy or foreclosed recently and have a strong business plan.
Because there is no minimum time required and no income requirement, short-term business loans can be obtained from $300 to $250,000. The company will also tailor terms and repayment plans to meet the needs of the business and offer support and advice throughout the process.
Advantages
- There is no minimum time limit in business
- There are no minimum annual revenue requirements
- One-on-one lending
Disadvantages
- Maximum loan amount: $250,000
- Location-specific qualifications requirements can vary depending on the location
3. SnapCap
SnapCap was founded in 2012 to assist growing companies with financing. LendingTree is their parent company and has provided funding in excess of $975 million to more than 375 industries.
SnapCap will require you to have a minimum credit score of 500, $100,000 in annual business income, and a minimum of one year of experience in order to qualify for a short-term business loan. Rates will vary depending on the loan type, your overall business financials, your industry, and the term of the loan. To repay the loan, the company will need to make daily or weekly payments. These are called ACH withdrawals.
The company offers unsecured loans of up to $1,000,000 with terms between 3 months and 3 years. The site allows you to search for loans and ask questions without affecting credit. You can also respond to the Express Review page with your questions and receive an approval within 24 hours.
After you submit the online application, a specialist in lending will contact you to discuss loan details, terms, interest rates, amounts, and repayment structures. Funding can be done as fast as one day. With an online process, the entire process can be automated and made paperless. Throughout the term of your loan, a dedicated loan specialist will be there to assist you.
Advantages
- A minimum credit score
- Up to $1 Million in Loans
- Approval in a matter of hours
Disadvantages
- Annual revenue requirement
- Customer service is not available 24/7
4. OnDeck
OnDeck was founded in New York City in 2006. Since then, it has funded loans in excess of $13 billion. It uses proprietary software and an algorithm that compiles financial information to determine a company’s eligibility for a loan. The company offers both term loans and business credit lines, as well as multiple loan types and terms. A team of U.S.-based loan advisers is available to answer your questions and help you through the loan process. It has been responsible for funding more than $13 Billion in loans.
A short-term loan for business can be applied online or by phone. Most loans are approved within 10 minutes. Some loans can even be funded on the same day. This is a great option if you have an immediate need for money. The loan amount for a business slime credit will range from $6,000 to $100,000, with a 12-month repayment period that resets after each withdrawal.
Term loans range from $5,000 to $250,000. A lump sum of cash is required upfront. Once the loan has been paid in full, you can apply for additional funds. The terms can last up to 18 months. Rates and credit scores will be considered. They can vary depending on your industry and the location of your business. However, rates are generally 9%.
Customers love the quick approval time and have given it positive reviews.
Advantages
- Minimum credit score
- Up to $1 Million in Loans
- Approval in a matter of hours
Disadvantages
- Annual revenue requirement
- Customer service is not available 24/7
5. StreetShares
StreetShares was founded by an army veteran in 2013. He was fed up with the lending traps and wanted to help, small business owners and veterans. It’s based upon a peer-to-peer lending model but does things differently. It matches borrowers with lenders using affinity-based lending. This allows them to match borrowers who might have similar characteristics, such as alumni from the same school or veterans. This model is used by the company because the borrower feels a stronger connection to the lender and is, therefore, more likely to repay them.
Online applications for small business loans or credit lines can be made. If you are approved, you will be matched with a lender. Online prequalification is possible. You will be asked for a personal statement and any other information that may be relevant to your business and situation.
You must be in business at least one year, have a minimum annual revenue of $75,000 and have a credit line. This is lower than the requirements of most lenders and more feasible for small businesses just starting out.
Rates will vary depending on what type of loan you are applying for, but they typically start at 8%. For a business credit line, a minimum credit score of 600 is required. A term loan will require a credit score greater than 540. The term of a short-term business loan is three to three years.
Advantages
- Quick funding
- Up to $250,000 in Loans
- Future loans eligible for discounts
Disadvantages
- Origination fee
- Weekly or daily payments
- Some loans have a prepayment penalty
Also read: 10 Small Businesses Tax Deductions You Need To Know
6. LendingClub
LendingClub, a peer-to-peer marketplace, offers loans and credit lines for businesses in all 50 states of the United States except Iowa. LendingClub was established in 2007. It pairs borrowers with both institutional investors and individual investors. The company offers personal loans, business loans, and auto refinancing. It also provides patient solutions.
Small businesses are often turned down by banks when they need business loans. These business loans are available in a range of $5,000 to $500,000 and are a great solution for companies that have more than $250,000. This is the limit for most short-term loans.
It takes only minutes to get an online quote and won’t impact your credit score. If you are approved online, you can choose a loan offer, review the terms, and then confirm your details. A client advisor will assist you throughout the loan process. The funds will be automatically deposited into your bank account once you have submitted the online application. The time it takes to get the funds into your bank account will vary depending on which type of loan you have and how much you are borrowing.
Customers love the fact that interest rates start at 4.99%, and payments are made monthly. Prepayment penalties are not applicable and terms can range from one year to five years.
Advantages
- Up to $500,000 in Loans
- Monthly repayment schedules
- Quick funding
Disadvantages
- Two years minimum in business
- Origination fees charged
Final Verdict
The best short-term business loans offer a variety of loan types with different terms and rates. One company provides financing for startups without revenue requirements, while another requires that the company be in business for at least two years. Some companies will lend to borrowers with bad credit, while others require excellent credit scores.
Leave a comment