Starting a business might be difficult for beginners as businesses need good capital to start. Working capital is a large sum of money. So small businesses, in particular, often apply for loans to acquire money immediately. These loans are referred to as short-term business loans.

Short-term business loans are those that last for one year or less. You can repay your borrowed money in a short amount of time. Short-term financing loans are usually applied to small businesses to provide immediate funds without committing to long-term debt.


How Can Short-Term Financing Help Your Business?

Small businesses often prefer short-term loans over long-term finance, which might ask for higher interest rates and unfavourable terms. The most common usage of short-term loans is for buying inventory for seasonal businesses.

An example would be a retail store that sells holiday merchandise. The store needs to stock up inventory in advance for the holiday season but will pay only after the holiday, so a short-term loan is applicable.

Another use would be for working capital. Working capital is money used for paying off business expenses and keeping the business going. Short-term loans cover the fund deficiencies, payroll, and other expenses. You can even use it to pay off your bills.


Types of Short-term Business Loans

Trade Credit

This loan is a less formal type of financing that gives you funds to pay later, usually delivered with no hassle. Some lenders have favourable terms that allow for a discount to happen. Since it is less formal than the other short-term loans, it only needs the purchase order and invoice as the required paperwork.

Short-term Loan

Short-term loans are business loans that last for about one year and are mostly needed by small businesses. They are used by business owners that need fast money minus the long-term commitment required by other types of loans. However, since it is a short-term loan, the borrowed money should be repaid by the end of that short timespan. These types of loans are usually very easy to apply for and are instantly approved. If you’re in need of a large funding in a short amount of time, this would be your best bet. You can reach out to for a variety of short-term loans for your business.

Business Line of Credit

This loan offers the business a continuous flow of cash when needed. Usually used by companies with excellent credit history as the business line of credit has reasonable interest rates and doesn’t use any collateral. Plus, a monthly payment will only be needed when the business goes past the line of credit.


Accounts receivable factoring is commonly used when a business does not qualify for a short-term business loan or business line of credit. Factoring is a type of loan used by a company that sells uncollected invoices to a third party at a discounted price. This third party is referred to as a factor. The money collected from the sold invoices is used to pay off the borrowed money.

Merchant Cash Advance

A type of loan that uses business credit card receipts as collateral in making loans like paycheck cash advance in other people. This loan usually applies to businesses with stable credit card receipts since the interest rate is higher than the usual short-term loans. However, this loan usually lasts shorter than the others.


Enquire With Us About Short-Term Loans

Short-term financing significantly helps when you’re in dire need of funds. And if you’re someone who doesn’t like their debt piling up, this type of business loan suits you the most. To know more in-depth details about short-term business financing, visit your local bank or lending company and ask for a discussion.