Best Short-Term Business Loans of 2021
What is a short term business loan?
For the most part, short term business loans work the same as traditional business loans. The difference is that you usually have less than a year to pay off what you owe instead of several 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 made for a specified amount over a specified period, such as one year. A line of credit allows borrowers to withdraw a full amount when needed and can be reused once paid off. Invoice factoring pays a percentage of the value of the expected income.
Who Should Get a Short Term Business Loan?
Short-term commercial loans are best suited for short-term financing needs. For example, you may want to consider one if you are having cash flow irregularities, have a promising business opportunity that you cannot afford at the moment, or need to cover unforeseen emergency expenses.
However, it is important to check the eligibility requirements before applying. Many short-term commercial lenders require that you have been in business for a year or more, and you might need $ 50,000 or more in annual income.
Short term business loans may not be a good idea if you are borrowing a lot of money that you cannot repay in a short period of time, especially business owners who want to invest in expansion or a project. specific that 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 for the lender, who charges a higher interest rate to compensate.
Unfortunately, it can be difficult to come up with exact numbers, as most short-term commercial lenders are not very transparent about pricing up front. You’ll usually need to apply and get an offer to figure out exactly how much it’s going to cost you. We have found short term loans with rates as low as 6.99%.
How we choose the best short term business loans
We’ve taken many different variables into account to build 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, as not all businesses will want or qualify for the same type of financing.
Finally, we wanted to give borrowers an idea of what the repayment looks like, which ranges from daily to weekly to monthly payments. And depending on your needs, we’ve included lenders with a range of repayment terms, from a few months to a few years.