Best Short Term Business Loans of 2022

What is a short term business loan?

For the most part, short-term business loans work the same way as traditional business loans. The difference is that you usually have less than a year to pay off what you owe instead of years, although some short-term options can give you up to three years to pay off the debt.

The most common types of short-term business loans are term loans, lines of credit, and invoice factoring. Term loans are for a specified amount over a specified period of time, such as a year. A line of credit allows borrowers to draw down a full amount when needed and can be reused after it is repaid. Invoice factoring pays a percentage of the expected revenue value.

Who should get a short term business loan?

Short-term commercial loans are best suited for short-term financing needs. For example, you might consider one if you are experiencing cash flow irregularities, have a promising business opportunity that you cannot afford right now, or need to cover some unforeseen emergency expenses.

However, it is important to check the eligibility requirements before applying. Many short-term commercial lenders require you to be in business for a year or more, and you may need $50,000 or more in annual income.

Short-term business loans may not be a good idea if you’re borrowing a lot of money that you can’t repay in a short period of time – this includes business owners who want to invest in expansion or a specific project that probably won does not bear fruit immediately.

How much does a short term business loan cost?

Short-term business loans tend to cost more than traditional business loans. Some loans are unsecured, which poses more risk to the lender, who charges a higher interest rate to compensate.

Unfortunately, it can be difficult to pin down exact numbers, as most short-term commercial lenders aren’t very transparent about upfront pricing. You’ll usually need to apply and get an offer to figure out exactly how much it’s going to cost you. We found short-term loans with rates as low as 6.99%.

How We Choose the Best Short-Term Business Loans

We considered many different variables to put together our list of the best short-term business loans, such as fast financing, low credit rating requirements, competitive interest rates, and financing options.

When it comes to financing options, we wanted to look at a variety, including term loans, lines of credit, and invoice factoring, because not all businesses will want or be eligible for the same type of funding.

Finally, we wanted to give borrowers an idea of ​​what repayment looks like, ranging from daily payments to weekly payments to monthly payments. And depending on your needs, we’ve included lenders with a range of repayment terms, from months to years.

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