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Work out how much you require for your business. Remember, you will always have to pay back more than you borrow
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Work out how much you require for your business. Remember, you will always have to pay back more than you borrow
Compare available deals and decide which loan is right for you before applying. Consider the interest rate, length of the loan and potential fees or charges
Once approved, you should receive the money for a short-term business loan quickly. It will be sent to your nominated business account
Make scheduled monthly payments, including interest, until you have cleared the loan. Set up a direct debit so you don’t miss any repayments
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.
The eligibility criteria for short-term business loans is often less stringent than for long-term business loans, but there are some requirements:
Your business will need to be based in the UK to be approved for a short-term business loan
A potential lender will check your credit rating to ensure your company operates responsibly
Lenders may favour loaning money to businesses that have already been trading for a while (e.g. at least 18 months)
You may need to provide a minimum monthly or yearly turnover to show that your company is performing well
Before applying for a short-term business loan, it’s worth considering the advantages and disadvantages.
Quick approval: The approval process for shorter-term loans tends to be quicker than longer loans. It can often happen the same day
Less strict criteria: Short-term business loans are often seen as less risky for lenders, which means that the eligibility criteria are less stringent
More cost-effective: Repaying a business loan over months, rather than years, can mean lower interest to pay overall
Expensive instalments: Because you pay back the loan in a shorter period, the instalments are likely to be higher than a longer-term loan
Smaller loan amounts: You may find that the amount of money you can borrow is less than with longer-term options
Higher interest rates: Due to the speed and convenience of short-term business loans, you could end up paying higher interest rates
There are different factors to consider when choosing the best short-term business loan for your firm’s needs, including:
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
The shorter the loan term, the more you’ll repay each month, but you also won’t pay as much total interest
The higher the interest rate, the more you’ll need to pay back, so it’s worth shopping around to find the best deal
What fees and charges you face depend on the terms and conditions of the loan, so understand what you’re getting into before signing up
The loan application process for a short-term business loan should be relatively quick, and you may even be able to complete it within minutes.
Almost all small business loan applications can be undertaken online. To speed up the process, have all the relevant information to hand, such as the details for your limited company’s bank account.
Check the criteria of the loan before you make the application, as terms and conditions will differ. For example, you may be asked to provide a personal guarantee as a company director. Understand this before you begin the application process so it runs as smoothly as possible.
Having a poor credit score can hinder your chances of getting the best deals, but there are lenders who are still willing to offer you short-term business loans. Just bear in mind that because you have a bad credit history you may not be able to borrow as much as you would like. What’s more, you may have to pay higher interest rates and therefore larger regular instalments too.
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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.
We’ll help you compare business loans in an easy, straightforward way to ensure you get the best business loan for your firm
We’ll ask a few simple questions about how much you want to borrow, your business, and what the money will be used for
We’ll show you a list of potential deals including the interest rate and how much your monthly repayments might be
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
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.
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.
Yes, you can. However, you need to be the registered owner or director of the company you’re borrowing the loan for.
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.
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.
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
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.
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.
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