# Short term business loans

Source: https://businessloanbroker.ai/business-loans/short-term-loans/
Site: BusinessLoanBroker.ai (powered by Levr)

> Short term business loans run 3 to 24 months, fund in days and are repaid daily or weekly. The real cost in APR, who qualifies, and cheaper options.

A short term business loan is a lump sum repaid over three to 24 months, usually by automatic daily or weekly withdrawals. It funds in one to three days and approves businesses that banks turn away. The cost is the catch: a fee quoted as a factor rate of 1.1 to 1.4 often works out to 30% to 80% APR. It makes sense for a short gap with a clear payoff, and almost never for an ongoing shortfall.

## Key facts
- **Amounts:** $5,000 to $500,000, most under $150,000
- **Typical cost:** Factor rate 1.1 to 1.4, roughly 30% to 80% APR
- **Terms:** 3 to 24 months, repaid daily or weekly
- **Time to fund:** 1 to 3 business days
- **Minimums most lenders use:** 6 months in business, $100,000 annual revenue, 550 to 600 credit score

## What is a short term business loan?

It is a term loan compressed into months instead of years. You receive the money up front and repay a fixed total, usually through automatic withdrawals every business day or every week. Online lenders dominate this product, and most quote the cost as a flat fee or [factor rate](https://businessloanbroker.ai/glossary/factor-rate/) rather than an interest rate.

The daily or weekly schedule is what makes it different from a bank loan. It keeps the lender's risk low, which is why approval is fast and loose, and it also means the payments hit your account before most of your customers have paid you.

## Who qualifies for a short term loan?

Most online lenders want six months to a year in business, roughly $8,000 to $10,000 a month in bank deposits, and an owner credit score of 550 to 600 or higher. They care more about deposit volume and account balance than profit, which is why a business with thin margins can still be approved.

- Declined most often: businesses with frequent negative balances, more than three to five overdrafts a month, or an existing daily payment loan already in place.
- Under six months in business: a few lenders will consider you with strong deposits, but see [financing under one year](https://businessloanbroker.ai/situations/under-one-year/) for better fits.
- Credit under 550: look at a [merchant cash advance](https://businessloanbroker.ai/business-loans/merchant-cash-advance/) or [bad credit options](https://businessloanbroker.ai/situations/bad-credit/), and expect a higher factor rate.

## What does a short term loan really cost?

A factor rate hides the real cost because it ignores time. A typical example: you borrow $50,000 for 12 months at a factor rate of 1.25. You repay $62,500 in 52 weekly payments of about $1,202. The fee is $12,500, which sounds like 25%, but because the balance is falling every week the APR is roughly 45%.

The same $12,500 fee on a six month term is closer to 90% APR. Add an origination fee of 2% to 5% and the number rises again. Always convert the offer to APR before you compare it with anything else; our guide on [APR versus factor rate](https://businessloanbroker.ai/guides/apr-vs-factor-rate/) shows how.

## How do you qualify, and what documents do you need?

The file is light. Most lenders ask for three to six months of business bank statements, a voided check, your business formation documents and a government ID for each owner. Loans above about $150,000 usually add a recent tax return and a year to date profit and loss statement.

What gets you approved at a better factor rate is a bank account that looks calm: steady deposits, few overdrafts, and an average balance above the proposed payment. The full list is in our [document checklist](https://businessloanbroker.ai/guides/document-checklist/). If your statements show another daily payment loan, say so up front; lenders find it anyway, and hiding it is the fastest route to a decline.

## How long does a short term loan take?

Typically one to three business days from application to money in your account. Decisions often come within hours because underwriting is largely automated from your bank statements. Connecting your bank account directly, rather than uploading PDFs, is usually the fastest route.

Funding slips when the lender needs to verify a landlord, confirm a tax balance or see a signed return. If you need the money for a fixed date, apply a week ahead and read [fast funding](https://businessloanbroker.ai/situations/fast-funding/) for what else shortens the clock.

## When should you choose something else?

Choose a [line of credit](https://businessloanbroker.ai/business-loans/line-of-credit/) if you qualify for one, because you pay interest only on what you draw and the APR is usually half or less. Choose a [term loan](https://businessloanbroker.ai/business-loans/term-loans/) if the purpose is a purchase that pays back over years rather than months; a 12 month payment on a five year asset will strain cash flow. If you are waiting on slow paying customers, [invoice financing](https://businessloanbroker.ai/business-loans/invoice-financing/) is usually cheaper than borrowing against the whole business.

Do not take a second short term loan to cover the first. Stacking is the most common path to a business that cannot make payroll.

## How do you apply for a short term loan?

Apply once here and your file goes to short term lenders and to every other lender type that fits, so you see the cheaper options side by side with the fast ones. It is free for your business, and we are paid the same whichever lender you choose. You can also ask your AI assistant to apply for you through our [MCP server](https://businessloanbroker.ai/agents/), using your bank statements to complete and submit the application.

| Option | Amounts | Typical cost | Speed | Best for |
|---|---|---|---|---|
| Short term loan | $5,000 to $500,000 | 30% to 80% APR | 1 to 3 days | A short gap with a clear payoff |
| Line of credit | $10,000 to $1M | 8% to 60% APR | 1 to 10 days | Recurring needs, pay for what you use |
| Merchant cash advance | $5,000 to $500,000 | Factor rate 1.1 to 1.5 | 1 to 3 days | Card heavy businesses with weak credit |

## Questions and answers
**Is a short term loan the same as a merchant cash advance?**

No. A short term loan is a loan with a fixed payment and a set end date. A merchant cash advance is a purchase of future sales, repaid as a percentage of each day's receipts, so payments move with revenue. Loans are usually cheaper; advances are easier to get.

**Can I get a discount for paying off early?**

Sometimes. Many short term lenders charge the full fixed fee regardless of when you repay, while others waive part of the remaining fee. Ask for the prepayment terms in writing before you accept.

**Will daily payments hurt my cash flow?**

They can. A $1,000 daily payment is $20,000 or more a month leaving the account before you collect from customers. Make sure your average daily balance covers the payment with a cushion, or choose a weekly schedule.

**What happens if I miss a payment?**

Most lenders retry the withdrawal, charge a returned payment fee and may call the loan in default after several misses. Because you signed a personal guarantee, the lender can then pursue you personally. Call the lender before a miss, not after.

## Related
- [Business lines of credit](https://businessloanbroker.ai/business-loans/line-of-credit/)
- [Business term loans](https://businessloanbroker.ai/business-loans/term-loans/)
- [Merchant cash advances](https://businessloanbroker.ai/business-loans/merchant-cash-advance/)
- [APR versus factor rate: how to compare them](https://businessloanbroker.ai/guides/apr-vs-factor-rate/)
- [Fast business loans: funding in 24 to 72 hours](https://businessloanbroker.ai/situations/fast-funding/)

## Apply
Apply for the business: https://apply.businessloanbroker.ai/signup?utm_source=direct&utm_medium=organic&utm_content=md-short-term-loans
MCP server for AI agents: https://mcp.businessloanbroker.ai/mcp (docs: https://businessloanbroker.ai/agents/mcp/)