Capital When
Time Is Critical.

What Are Short-Term Business Loans?

Short-term business loans — also called revenue-based financing — are fast-access capital products with repayment terms of 3 to 18 months. Unlike traditional bank loans with multi-year terms and extensive paperwork, short-term loans are underwritten primarily on your business's recent cash flow and monthly revenue deposits.

The defining characteristics: fast approval (often same-day or next-day), flexible credit requirements (500+ FICO), and repayments that occur daily or weekly via automated bank debits. They fill the gap between urgent capital needs and the slow timelines of traditional lending.

How Short-Term Business Loans Work

1. Apply online in 5–10 minutes with basic business information and recent bank statements
2. Same-day or next-day decision — underwriting is primarily cash flow based, not credit-score based
3. Review your offer — advance amount, payback amount, term, and daily/weekly payment
4. Funds deposited directly to your business bank account within 24–48 hours of acceptance
5. Repay via automated ACH debits — daily or weekly depending on your offer structure

Most short-term loans use a factor rate rather than an interest rate to express cost. A factor rate of 1.25 on a $100,000 advance means you repay $125,000 — the $100,000 principal plus $25,000 in fees. Factor rates don't compound, which is an important distinction from interest-bearing products.

Short-Term Business Loan Cost Reference

Use our MCA calculator to convert factor rates to approximate APR and calculate daily payment amounts for any combination of advance, factor rate, and term.

Short-Term Loans vs. MCAs vs. Business Lines of Credit

Short-term business loans occupy the middle ground between merchant cash advances and longer-term products:

Short-Term Loan vs. MCA: Key Difference

The main difference between a short-term loan and an MCA is how repayment is structured. A short-term loan uses a fixed daily or weekly ACH debit — the same amount regardless of revenue. An MCA uses a percentage of your daily revenue (holdback), so payments flex with your actual sales.

Short-term loans with fixed payments are better for businesses with consistent revenue. MCAs are better for seasonal or variable-revenue businesses where flexible payments reduce cash flow risk. See the complete guide to merchant cash advances.

Common Use Cases for Short-Term Business Loans

• Bridge financing: Cover operations while waiting on a large contract payment or invoice
• Seasonal inventory: Stock up ahead of a peak season with a fast turnaround loan
• Payroll gap: Bridge payroll during a slow period without disrupting your team
• Equipment repair: Emergency repair or replacement when downtime means lost revenue
• Marketing push: Fund a time-sensitive campaign with a clear, short ROI horizon
• Tax payment: Cover a tax liability while preserving operating cash flow

When NOT to Use a Short-Term Business Loan

Short-term loans are high-cost capital by design — they trade lower rates for speed and accessibility. They are not the right tool for:

• Long-term investments: Using a 12-month loan to fund a 5-year asset creates a cash flow mismatch. A term loan or equipment loan is better.
• Refinancing existing short-term debt: Stacking short-term advances increases your daily debt service and is a warning sign that your business needs a different capital strategy.
• Situations where you'd qualify for better: If you have 650+ credit and 2+ years in business, a term loan or SBA loan is almost always cheaper.
• Revenue shortfalls with no clear recovery path: Short-term loans are designed to bridge a gap, not solve a structural revenue problem.

Frequently Asked Questions: Short-Term Business Loans