Short-term business loans

Most businesses will need to borrow money at some stage either to help with cashflow, or to pay for expansion costs, and a short-term business loan can provide the ideal solution. Although recent years have seen a reduction in the number of business loans on offer, there are still plenty of options available to explore.

The providers below are ranked by the following scenario; taking out a loan of £10,000 over 6 months. Ranked by the least you would need to pay back in total over the period.

Short-term business loans

    • Provider/Product name Business Loan

      Funding Circle

      Business Loan

    • Description

      UK’s leading peer-to-peer business lender

      Fast and simple business loans from £5k to £1 million - without the banks.

      Borrow from a community of thousands of people together with the Government-backed British Business Bank, local councils and universities.

      Quick & convenient process:
      > Apply online in as little as 20 minutes
      > You'll hear from Funding Circle within two working days of completing your application 
      > Loan terms from six months to five years. No early repayment charge.

      Flexible loans: borrow for working capital, expansion, property, asset purchase and one-off business expenses.
      Now open for non-limited companies (sole traders and partnerships) to apply for a loan.

    • Go to site

    Business Funding Scheme

    Local Government is lending millions through Funding Circle to support UK businesses.

    Minimum criteria: Two years+ filed accounts at Companies House or formally prepared accounts for non-limited businesses, minimum turnover of £50k and a good credit score.

    • Provider/Product name Business Loan

      ezbob

      Business Loan

    • Description

      A quick and simple 10 minute online application makes £50,000 available to you at the click of a button

      Credit decisions are based on business performance not just your personal credit score

      You choose the length of the loan, up to one year. Early repayment is acceptable with no penalties and no hidden fees

      Requirements: One year trading history + £100,000 in annual sales

    • Go to site

    EU Funded

    Chosen by the European Investment Fund (EIF) to be a certified EU financial intermediary under the EPMF Guarantee scheme

    Backed by the UK Governments Angel Co-Fund and appointed Financial Intermediary by the European Union and European Investment Fund. 
     

    • Provider/Product name Business Loan

      iwoca

      Business Loan

    • Description

      Award-winning business loans to invest in new opportunities or bridge cash flow gaps.

      > Borrow £1,000 - £50,000 with flexible repayments
      > Rates from 2% - 6% per month (no other fees)
      > Free early repayments

      Sign up in minutes with none of the paperwork associated with traditional providers. Their expert account managers will immediately look at your application so they can get you funded within hours.

      Get approved today for free.

    • Go to site

    Top-rated lender on independent review site Trustpilot.

Short-term Business Loans

A short-term business loan can be invaluable for businesses that need a cash boost if they are expanding, or if they need a bit of extra help to manage their cashflow.

This type of loan usually has a term of six-months, so will need to be repaid quickly. You can usually choose a fixed rate of interest, so you know repayments will be the same every month, or a variable rate, which could mean your repayments change over time.

Advantages of short-term business loans

The main advantage of opting for a short-term business loan is that you know your business will only have to make repayments for a limited period of time. You will also usually pay less interest overall than if you opted to repay what you owe over a much longer term, such as five years.

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Disadvantages of a short-term business loans

Choosing to take out a short-term business loan may mean that you will be able to pay off what you owe quickly, but bear in mind that your repayments will be much higher than if you opted to repay your long over a medium or long-term period. Interest rates can be very high on short-term borrowing, so it’s worth comparing lots of different loans to ensure you find the right deal for your business’s needs.

What else you need to know

Difficult economic conditions in recent years have made it harder for businesses to borrow money. To apply for a business loan, your business may be required to have a minimum monthly turnover, and you may have to show a set number of accounts, usually two or more years.

Remember too that the actual rate of interest you will be charged on a short-term business loan will depend on your business’s individual circumstances, the amount you want to borrow, and over what period you intend to pay off what you owe.

Alternatives to a short-term business loan

If you don’t think your business will be able to pay off any borrowing over a year or less, then you might want to consider a medium or long-term business loan which can be repaid more slowly.

Other options include using a business credit card for any immediate expenses. These can also be a useful way to manage staff spending. You could also speak to the provider of your business bank account about arranging a business overdraft which can provide you access to funds as and when you need them. You can usually arrange an overdraft for a 12 month period, at which point it will have to be renewed.

Businesses can also raise funds though cashflow finance, which allows then to borrow against the value of their unpaid invoices, or they can borrow against their assets such as any equipment or property.

Moneysupermarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a commission by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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