UK-based business
Your business will need to be registered and operating in the UK to be approved
What is a short-term business loan?
A short-term business loan is a type of financing that provides businesses with a relatively small amount of money for a short period, typically up to a year.
These loans are designed to address immediate financial needs, such as bridging cash flow gaps, managing unexpected expenses.
Short-term business loans can be used to take advantage of time-sensitive opportunities, such as advertisement campaigns or software development.
How do short-term business loans work?
Decide how much you need to borrow: Work out how much you require for your business. Remember, you’ll always have to pay back more than you borrow
Apply for a short-term business loan: Shop around to find a deal that suits your business, and look at interest rates, loan term, fees and repayment flexibility before applying
Receive the funds into your account: If you’re approved, the money could land in your business bank account on the same day or within a couple of working days
Pay off the loan over several months: You’ll make regular monthly payments covering both the loan amount and interest - setting up a Direct Debit can help you stay on track with repayments
What can I use a short-term business loan for?
You can use short-term business loans for:
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Unexpected or emergency costs
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Gaps in cash flow
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Buying new stock or supplies
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Upgrading tools, vehicles or equipment
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Hiring temporary staff
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Taking on a new client or contract
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Launching an advertising campaign
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Paying tax bills or settling invoices
Is my company eligible for a business loan?
The eligibility criteria for short-term business loans is often less stringent than for long-term business loans, but there are some requirements:
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A decent credit history
A credit check will help lenders assess how reliably your business manages money
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Some trading history
Lenders are likely to prefer businesses that have been running for at least 12-18 months
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Proof of income
You might need to show your turnover to prove your business is doing well
When should I get a short-term business loan?
You could consider a short-term business loan if you face emergency expenses. Whether you have to cover the costs of repairing your premises, tools, equipment, or fleet, short-term business loans can give you the financial boost you require to address your business needs promptly.
A small business loan may also be useful if your company experiences an interruption in cash flow. Or if your firm is presented with a promising opportunity, but you need some extra money to pursue it.
But whatever your reason for taking a short-term business loan, it’s always wise to ensure that you’ll have enough funds in your business bank account in the coming months to repay the borrowed money.
How much can I borrow with a short-term loan?
Short-term business loans are generally used for smaller sums, from a few thousand up to £250,000. Some lenders might offer more, but the specific amount you can borrow will depend on your business’s financial health, credit score and trading history.
What are the pros and cons of short-term business loans?
Before applying for a short-term business loan, it’s worth considering the advantages and disadvantages:
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Pros
Quick access to cash: Applications are often fast, and if you’re approved the money could arrive within hours
Easier to qualify: Lenders may be more flexible with newer and smaller businesses for short-term business loans
More cost-effective: As the overall loan term is shorter, you might end up paying less interest overall
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Cons
Higher repayments: Shorter terms mean you’ll pay more each month than you would with a longer loan term
Smaller loan amounts: You might not be able to borrow as much as with a long-term loan
Higher interest rates: Due to the speed and convenience of short-term business loans, you could end up paying higher interest rates
How to choose the best short-term business loan
There are different factors to consider when choosing the best short-term business loan for your firm’s needs, including:
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How much you want to borrow
If you keep the amount you borrow to a minimum, you’ll pay less interest in the long run, and can extend the loan later
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Deciding the length of your loan term
A short term term means higher repayments but less interest overall, while a longer term loan spreads the cost but may cost more in total
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Choosing lower interest rates
The higher the interest rate, the more you’ll need to pay back, so it’s worth shopping around to find the best deal
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Understanding fees and charges
Look for early repayment penalties, arrangement fees or late charges that could bump up the overall cost
How long is the application for a short-term business loan?
Most small business loan applications can be done online in just a few minutes. To make sure things go smoothly, keep these with you during the application process:
Your company’s registration details
Your business bank account information
Basic details about how much you want to borrow and why
Some lenders may also ask for a personal guarantee from a director, so it’s worth checking the small print before you start.
Can I get a short-term business loan with bad credit?
Yes, it’s possible to get a short-term business loan with a poor business credit score, but your options may be more limited:
You might be offered a smaller loan amount
Interest rates and fees could be higher
Repayments might be less flexible
How do you repay a short-term business loan?
The most straightforward way to repay a short-term business loan is to set up a regular direct debit, often monthly, to meet the repayment terms of the deal. This should ensure you never miss a payment and run the risk of incurring late or missed repayment fees.
If you find the business is cash-rich enough to repay the loan early, you may be able to save on interest payments. However, there are likely to be early repayment fees in place, so factor these in before making your decision.
If you’re struggling to keep up with repayments on the loan, contact the loan provider asap and explain your situation. They may be able to offer a more flexible repayment plan to help you service the loan, but keep an eye out for any additional charges this might bring.
What are my alternatives to short-term business loans?
If you want to borrow quickly through your business, alternative finance options to a short-term business loan include:
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Business credit card
This gives you the ability to spend up to a certain limit. If you can get a 0% deal you will also have several months to pay it off before interest kicks in.
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Business overdraft
You could contact your bank to arrange a business overdraft, which means you can spend more than you have in your account.
How to compare short term business loans with MoneySuperMarket
We’ll help you compare business loans in an easy, straightforward way to ensure you get the best business loan for your firm
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Tell us what you're looking for
We’ll ask a few simple questions about how much you want to borrow, your business, and what the money will be used for
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Compare deals
We’ll show you a list of potential deals including the interest rate and how much your monthly repayments might be
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Apply in minutes
Once happy with your choice, you can click through to apply quickly and easily online. Then you just need to wait for your funds to arrive
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Why do short-term business loans cost more?
Short-term business loans tend to cost more than other forms of business borrowing because a swift application process with less stringent eligibility criteria means lenders don’t have the opportunity to carry out in-depth checks. The price is increased to reflect the risk they are taking out by giving money to borrowers they don’t know well.
Are short-term business loans a good option for start-ups?
Lenders tend to offer short-term business loans to businesses which have already been trading for a while. However, this doesn’t mean that a new company cannot get access to short-term business funding – especially if your business is already making a decent profit. If you feel a start-up loan could be more suitable, our guide can help.
Can I apply for a short-term business loan in my own name?
Yes, you can. However, you need to be the registered owner or director of the company you’re borrowing the loan for.
What are my alternatives to short-term business loans?
If you want to borrow quickly through your business, alternatives to a short-term business loan include:
Business credit card. As with a personal credit card, this gives you the ability to spend up to a certain limit. If you can get a 0% deal you will also have several months to pay it off before interest kicks in
Business overdraft. You could contact your bank to arrange a business overdraft, which means you can spend more than you have in your account.
The best option will depend on what’s right for your business, taking into account factors, such as the interest rate, and how much you’ll pay back overall.
What is the APR on business loans?
APR stands for Annual Percentage Rate and is the interest rate you will pay back over a year once any fees and charges have also been considered. It is a way to represent the true cost of borrowing. The APR on business loans can vary depending on the type of loan, the current market situation, the provider, and the borrower’s credit rating.
How is a short-term business loan different from a traditional loan?
There are no major differences between a short-term business loan and a traditional loan other than with a short-term loan you might
Pay it off more quickly
Receive the initial funds faster
Face a higher interest rate
Make weekly rather than monthly repayments
How long will it take to be approved for a short-term business loan?
Approval times differ from provider to provider, but short-term business loans are generally approved more quickly than longer term deals for larger amounts. This could mean it’s approved in just a few minutes, with the money in your business account within hours.
What happens if I am unable to make repayments on my loan?
If you’re unable to keep up with your repayments you are likely to face an additional charge and have to pay more interest on what you have borrowed. If you feel this situation could arise you should contact your loan provider as soon as possible to see if the loan can be restructured. They might be able to extend the term, meaning you can make lower monthly repayments (although you might end up paying more back in total). Being unable to make repayments will also damage your credit rating, making it harder or more expensive to borrow in the future.
Can I repay my short-term business loan early?
In many cases, you’ll be able to repay your loan early if you have the funds to do so, and it might even save you money on interest. However, some providers charge early repayment fees which could eat into your savings, so be sure to check if it’s worth it - and look for a lender that allows early repayment if flexibility is important.
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Reviewed on 8 Dec 2025 by
