The Short-Term Lenders You Need to Know
Every business needs capital to grow. Sometimes a business loan is necessary to move the needle.
But sometimes, you don’t need a large influx of capital, just a small infusion of cash can help you achieve one-off projects, or help you put out fires when emergencies pop up.
When that’s the case, short-term loans are often your best bet. Short-term loans give you a lump sum of capital, repaid over a three-month to 18-month period with fixed, regular payments.
In this guide, we break down all the short-term lenders out there, so you know which ones to use for your business financing needs.
|Lender||Best For||Loan Terms||Minimum Credit Score|
Quick short-term lines of credit
Short-term loans that are easy to qualify for
Low interest short-term loans
Large loan amounts
Short-term lines of credit that are easy to qualify for
Loan type flexibility
Up to 1 year
The Top 7 Short-Term Loan Lenders Available
So, you have a one-off, short-term business need to accomplish, and you think a short-term loan could be the right fit for you.
Which lenders are out there for you to work with?
Here’s a complete list of the top short-term lenders on the market.
1. OnDeck Capital
OnDeck offers lines of credit and short-term loans. They’re known as an established lender offering quick short-term loans as large as $250,000. Like most short-term lenders, terms last from three to 24 months. Rates on an OnDeck loan can range from 8.5% to 79%.
It’s important to note that OnDeck has an origination fee for their short-term loans. The first time you take out a short-term loan with OnDeck, you’ll have an origination fee of 2.5%. Your second loan will have an origination fee of 1.25%, and all loans after that come with no origination fee.)
Borrowers that need fast access to cash for their business will benefit from the ease and speed of their one-page application. With such a simple application, you can get the funding you need very fast. To apply with OnDeck, you’ll only need three months of business bank statements, a voided business check, and a copy of your driver’s license. After your loan application with OnDeck is processed, you’ll can get the funds in your bank account as soon as the same day you apply.
OnDeck Is Good For...
OnDeck is a particularly good short-term loan lender for borrowers who think they’ll be able to pay off their loan earlier than their full loan term’s end.
OnDeck Is Not Good For...
Who should avoid working with OnDeck? Well, first off, borrowers with established credit scores and a little more time in business should consider options with slightly longer-term lenders—you’ll likely get better rates.
Beyond that, OnDeck has a fairly substantial list of industries they won’t work with. So before you pursue a loan with this short-term loan lender, be sure to check if OnDeck funds businesses in your industry.
2. CAN Capital
CAN Capital is another big player among the non-bank short-term loan lenders. CAN Capital is one of the oldest alternative lenders in small business lending, and there’s certainly a level of trust that comes with such an experienced lender in a relatively new industry.
CAN Capital offers both short-term loans and term loans. The short-term loan has terms of three-24 months in length and is repaid through small, fixed daily repayments from the business checking account. Their price is quoted as a factor rate, ranging from 1.15 to 1.48, with 1.22 being their median rate for short-term loans.
As far as short-term loan lenders go, CAN Capital is one of the easier lenders to qualify for. They set their requirements at the following: at least $4,500 per month in annual revenue, a minimum credit score of 550 if you’ve been in business for six or more years, and 600 otherwise, and a minimum of three months in business showing revenue.
Plus, they process short-term loan applications quickly, with funds in your bank account after six days, on average.
CAN Capital Is Good For...
Brand new businesses and smaller startups have a notoriously hard time finding capital to grow their companies. Many lenders simply don’t want to work with businesses until they’ve established and proven themselves. Even the accessible short-term loan lenders avoid working with businesses with less than six to 12 months under their belt.
CAN Capital, however, is a notable exception. CAN will work with small business owners with only three months in business, as long as those three months have brought in consistent revenue. (They certainly prefer to work with businesses who have been around for more than a year.)
CAN Capital Is Not Good For...
A CAN Capital loan gets repaid with fixed daily payments. And depending on how short your loan term is, those payments can be pretty steep. For that reason, CAN Capital isn’t the best lender to work with if you have irregular or consistently tight cash flow. You’ll still have other expense obligations to meet, and you could struggle having your cash flow tied up in loan repayments.
If this is the case for your business, you might be better off pursuing short-term loan lenders or medium-term loan lenders who offer weekly repayments instead of daily repayments.
ForwardLine provides short-term loans that function well as working capital loans. Loan amounts range from $5,000 to $150,000, with terms between six and 15 months. Rates are relatively affordable, ranging from 14.50% to 26.50%.
They’re able to remain affordable because they won’t work with business loan brokers, middleman, or referrals that will tack onto the cost of your loan.
Like other short-term loan lenders, ForwardLine relies on technology and their “ForSight” algorithm to do most of the work for the application process. In the end, you’ll spend much less time on a ForwardLine application than you would with other online lenders, and especially traditional financing institutions.
ForwardLine also looks at more than just your credit score and business assets when underwriting your loan. They take a more holistic look at all the data out there to determine whether your business is stable (and has been stable) and will be strong enough in the future to pay them back. Because of this, ForwardLine is a particularly good option for traditionally unqualified business owners without collateral to offer or strong business financials.
ForwardLine Is Good For...
ForwardLine offers particularly low interest rates for business owners looking for short-term loans.
If you can get a rate quoted on the lower end of their interest rate scale (between 14.50% and 26.50%) you might have a harder time finding a lower rate with a different short-term loan lender out there.
They’ll also work with borrowers with bad credit, setting a minimum credit threshold at 540.
ForwardLine Is Not Good For...
Separating themselves from many of the short-term loan lenders, ForwardLine only works with businesses who have been established for three years. (And if you’re in the furniture retail, wholesale, and construction industry, the minimum time in business is 10 years.)
4. Rapid Finance
If you need a short-term loan of significant value, Rapid Finance is a good short-term lender to consider.
This online-only lender offers three different types of term loans, ranging from four months to up to a year and a half.
The shortest-term loan is the Standard loan. This loan ranges from $5,000 to $1 million with a 1.16 to 1.30 factor rate and terms ranging between four months and one year. Next is the Select loan, which can range from $15,000 to $1 million with a factor rate from 1.12 to 1.31 and terms ranging from six to 15 months.
Lastly there’s the Preferred Loan, which has loan amounts between $15,000 to $500,000 and comes with factor rates from 1.11 to 1.25 and terms from nine to 18 months.
Rapid Finance also provides businesses with merchant cash advances up to $500,000.
To qualify for funding from Rapid Finance, you’ll need to have a credit score of at least 550, two years of business history, and at least $120,000 in annual revenues. There’s no prepayment penalty with Rapid Finance, and you do not have to put up collateral to obtain a loan.
Rapid Finance Is Good For...
Use Rapid Finance if you have large funding needs. For example, if a sudden business opportunity pops up that you need a large amount of financing to capitalize on, Rapid Finance is a good option.
What’s more, as the name suggests, Rapid Finance can get you funding quickly. On average, the time to fund is two business days.
Rapid Finance Is Not Good For...
Like CAN Capital, Rapid Finance requires daily or weekly repayments. Given how much you’ll likely be borrowing, this means you’ll have same steep payments to deal with. What’s more, you’ll need at least two years of business history to qualify for a loan from Rapid Finance, which can be restrictive to some businesses.
If you need a short-term line of credit, your best option is Fundbox. With this short-term lender, you can acquire between $1,000 and $100,000 in a revolving line of credit on terms between 12 and 24 weeks.
Interest rates on a Fundbox line of credit product start at 4.66% for a 12-week repayment plan. Converted into a weekly rate, you’ll end up paying 0.5% to 0.9% of the drawn amount per week.
Outside of lines of credit, you can also acquire invoice financing from Fundbox. This loan product has similar terms.
The application process for Fundbox is one of the most appealing aspects of this service. To apply, all you need to do is connect your business bank account to their system. Fundbox will them review your financial history and either approve or deny you within minutes.
To qualify, Fundbox will want to see a minimum 500 credit score, $25,000 in annual revenue, and at least three months of business history on the books.
If approved, you can receive your funding in as little as 24 hours. Repayments will be drawn daily from your business bank account, without you having to do anything.
Fundbox Is Good For...
Fundbox is an excellent option for those looking for a short-term line of credit. Lines of credit can be very useful for business owners, because they provide them with a continuous source of funding. As long as you pay back what you use, you’ll gain access to the entire pool of funds once more to use up until your term expires.
Fundbox Is Not Good For...
If you have a decent credit score and a little bit more business history, you’re better off seeking financing elsewhere. Although Fundbox’s qualification standards are minimal, their rates are fairly high, and they also require daily repayments.
Therefore, if your business has stronger credentials, you could probably qualify for something with a lower cost of capital.
6. National Funding
If you’re seeking a short-term equipment financing loan, National Funding is a good option for you. They offer up to $500,000 to aid in the purchasing of equipment on terms ranging from six-15 months.
Note that you will be charged a factor rate with National Funding in the neighborhood of 1.17 to 1.36.
With National Funding equipment financing, the equipment you purchase serves as collateral on the loan. That means you don’t have to put up any of your personal business assets to receive financing. However, if you fail to pay back the loan, National Funding will seize the equipment as repayment.
To apply for funding, you’ll have to fill out a simple application. National Funding will then vet your business by performing a soft credit pull. You can receive funding in as little as three business days. However, like CAN Capital, Rapid Finance, and Fundbox, your repayment schedule will be daily.
To qualify for equipment financing from National Funding, all you’ll need is a 500 credit score, one year of business history, and $100,000 in annual revenues. You’ll also need three months of bank statements and a minimum bank balance of $1,500 to apply. National Funding also requires a personal guarantee from the borrower.
Lastly, National Funding offers a 6% prepayment discount if you pay back the loan early, within 100 calendar days of receiving the funds.
National Funding Is Good For...
National Funding is a perfect short-term lender for those seeking equipment financing. You don’t have to have high credentials to qualify for a loan from National Funding, and the equipment itself collateralizes the loan, so you won’t have to risk and business assets (although National Funding does make you sign a personal guarantee).
National Funding Is Not Good For...
There’s also the issue of the personal guarantee, which means you are putting up some kind of collateral. However, this is the cost you pay for financing with such low qualification requirements.
The last short-term lender we’ll recommend is BlueVine. This is a desirable short-term lender to work with if you’re looking for a variety of different types of financing.
Through BlueVine, you can acquire invoice factoring, a short-term loan, or a short-term line of credit. With a term loan or line of credit from BlueVine, you can secure loan amounts between $5,000 and $250,000 on terms of up to one year. Their invoice factoring product can advance you up to $5 million on terms between one and 13 weeks. BlueVine charges interest rates between 4.8% and 51%.
To qualify for invoice factoring, your business will need a 530 minimum credit score, $120,000 in annual revenues, and three months of business history on the books. A short-term loan or line of credit require a 600 minimum credit score, $100,000 in annual revenues, and six months of business history.
There is no minimum bank balance requirement, and BlueVine will overlook if your business has had a bankruptcy in its past. Funding can be obtained in as little as two business days.
BlueVine Is Good For...
Use BlueVine if you want to work with a short-term lender that will offer you a lot of flexibility in your loan options. The loan amounts you can qualify for with BlueVine are also quite generous.
BlueVine Is Not Good For...
Compared to other short-term lenders we’ve mentioned, BlueVine isn’t the most readily available form of financing, especially if you’re seeking a short-term loan or line of credit. Having said that, you can likely secure better terms with BlueVine than you would be able to with a lender that has lesser standards for qualifying.
Short-Term Loan Lenders vs. Traditional Bank Lenders
About 10 years ago, the list of short-term lenders you could go to for financing wouldn’t be too long.
In fact, there would be about one type of lender on the list: a bank.
Traditional banks—both big and small—have always been the big players in small business lending.
But banks are extremely hard for small business owners (then and now) to qualify for. Only the most eligible borrowers—with stellar personal credit scores running established businesses with strong financials—will qualify. On top of that, traditional banks only offer two general types of financing, typically: term loans and lines of credit.
Needless to say, a business owner’s options at a bank were limited, and they still are today.
But that’s where short-term loan lenders and other alternative lenders come in. Short-term lenders have entered the small business financing market to offer two things that banks haven’t: a different type of loan (short-term loans, instead of long-term loans), and fast and accessible loans.
As alternative, non-bank lenders, short-term loan lenders are different than bank loan lenders in a lot of key ways.
Short-term loan lenders are much, much fast than bank lenders.
Since they’re not traditional banking institutions, these alternative lenders aren’t affected nearly as much by the government’s regulations. (Banks are heavily regulated because banks make loans using money from personal checking and savings accounts). Non-bank short-term loan lenders get money from other sources—like hedge funds, or accredited investors.
Most notable, short-term lenders require much less paperwork—they don’t ask for a business plan or full sets of financial documents, for example.
This helps speed the process up as you’ll spend less time gathering documents and they’ll spend less time processing those documents.
And finally, short-term lenders use technology to process applications and underwrite loans. The technology aspect plays a big role in its speed. With fast and efficient underwriting programs and highly automated applications, short-term lenders can process many small business loan applications without spending much time or energy.
Banks, on the other hand, don’t use as much technology to process loan applications, as many of the big banks for small business loans don’t have online applications.
According to a study by Harvard Business School, most major alternative lenders like these short-term lenders offer loan applications online, on a desktop, or via a mobile application that take 30 minutes to complete. (Short-term loan lenders are even faster.)
On the other hand, applying for bank loans can take up to 25 hours. And that’s not even accounting for the additional weeks—often months—of waiting for a decision, meeting with the bank loan officer multiple times, giving in physical paperwork, and more.
For busy small business owners, that time and energy can be a serious barrier to acquiring financing. Short-term lenders offer entrepreneurs the ability to secure a loan without sacrificing as much time and energy.
A major differentiator between short-term lenders and bank lenders is their accessibility, and therefore affordability.
Banks can charge low interest rates because they’re so selective with who they work with: by only lending to business owners with long and successful track records, banks minimize the risk that their loans won’t get paid back.
Short-term loan lenders, on the other hand, accept business owners with shorter times in business, much lower credit scores, and less proven revenues and cash flow.
In order to minimize their risk in lending to you, alternative lenders are forced to charge higher rates. That way, even if they only get a portion of the loan repayments, they won’t be in as dangerous a position.
With these non-bank lenders, your interest rate depends on the typical factors like credit score, time in business, and annual revenue.
But there’s a much wider range, and short-term loans are so accessible and fast that they tend to come with the higheest interest rates around.
Frequently Asked Questions
Choosing the Best Short-Term Loan Lender
Which of these lenders is right for you?
Well, when it comes down to it, the best lender for you is the most affordable lender that gets your business financing needs accomplished.
Because there are so many different short-term loan lenders on the market, you need to shop around to compare and contrast offers.
In the end, you should be working with a trustworthy lender that offers the lowest cost of capital while meeting your financing needs at the same time.