Short-Term Business Loans

Short-term business loans can be found primarily at banks, online lenders or the U.S. Small Business Administration (SBA). SBA loans are government-backed loans that are issued by a lender — most commonly a bank. Those loans, along with any small business loan from a bank, can be notoriously difficult to receive approval for. Online lenders, such as OnDeck, are an option for small business owners looking for a faster and easier application process.

Short-term small business loans can help a business in many ways. Some of the most common include urgent expenses such as invoices, equipment or inventory. Filling in seasonal cash flow gaps, covering payroll and hiring staff are other ways short-term business financing can be used.

When it comes to interest rates, short-term financing will generally have higher interest rates than comparable financing with longer repayment terms. However, because longer-term loans are repaid over more time, the total amount of interest paid can be higher.

A short-term business loan is just that — a business term loan with a short repayment period. When used for business lending, short-term business loans are commonly referred to as small business loans or term loans. When used for personal lending, “installment loan” is a common way of referring to a term loan, because it is repaid in installments. So it can be said that term loans and installment loans refer to the same thing, but may be called something different depending on the loan’s customer and purpose.

All business lenders will do some kind of credit check prior to making a lending decision, but this question typically refers to whether the credit pull is a “hard” credit pull or “soft” credit pull. A soft inquiry won’t affect your credit score, so therefore would have no credit impact. OnDeck always does a soft inquiry unless your credit file is restricted, in which case we would contact you to lift the restriction, which may result in a hard pull.

OnDeck doesn’t offer “bad credit loans.” However, a lower credit score doesn’t always mean you can’t qualify for business financing. Our short-term business loans can provide an alternative source of funding for small business owners who have had difficulty getting approved for a business credit card or traditional small business loan from a bank.

All lenders have requirements for applicants to meet to qualify for short-term business loans. These commonly include your time in business, annual revenue and personal or business credit score. These factors will help to determine details such as the loan amount, repayment terms and interest rate. For more information on business loan requirements, check out our blog post Business Loan Requirements.