Short term business loans

Short term business loans

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Short-term loans are designed to meet the immediate financing needs of small to medium-sized businesses looking to enhance their business activities. Unlike long-term business loans, this type of loan has a much quicker repayment period.

What is a Short-Term Loan?

What is a Short-Term Loan?

A short-term business loan is a type of loan that provides a lump sum upfront to a borrower and has a repayment period ranging from three months to three years. The short repayment period makes this loan the better option for covering immediate cash flow gaps or emergency funding.

Small and growing businesses often prefer short-term loans for their quick funding time and the easily met requirements. These loans can be extremely beneficial during a growth period, fluctuating cash flow times, or when there is a need for seasonal purchasing.

There are a variety of short-term loans available that many businesses utilize to meet their immediate funding needs.

Types of Short-Term Loans & Financing Options

Short-term loans can come in various forms, each with its benefits to help fund a growing business.

Working Capital Loan: This type of funding is used to finance a company's everyday operations. Many businesses with high seasonality or cyclical sales may rely on working capital loans to help with periods of reduced business activities.

Lines of Credit: A line of credit also comes in various forms, each of which has its distinctions. It provides the borrower with a set amount of money to use for expenses, typically with the ability to make withdrawals throughout a given time.

Merchant Cash Advance: This is another type of cash flow loan, with repayment terms, depending on your credit and debit card sales. A Merchant Cash Advance provides borrowers with an upfront sum of cash in exchange for a percentage of their future sales or fixed payments through Automated Clearing House (ACH) withdrawals.

Invoice Factoring: This is a type of invoice financing where a business will sell their outstanding invoices to a third-party factoring company as a way of improving cash flow and revenue stability. The factoring company will pay a majority of the invoice with an up-front lump sum and will then collect the funds from your customers as payment.

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Only U.S.-Based Businesses are Eligible.

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Advantages of Short-Term Business Loans

Much like a traditional loan, a short-term loan is a stable, predictable, and straightforward vehicle from which to borrow money. They are faster to apply for, easier to qualify, and more quickly funded than most business loans. This is due to the limited paperwork required, creating less hassle for you and a quicker processing time for your application.

Short-term loans have almost no limitations on their uses - borrowers can decide when, where, and how to spend the funds once they receive them within 1-2 business days.

Some instances where a short-term loan can benefit your business include:

  • Account Receivables vs. Payables: Short-term loans can help cyclical businesses bridge cash flow gaps.
  • Short-Term Operational Costs: If you need to hire extra help during the holiday season or require a particular piece of equipment to cover a large job, a short-term loan can help get the job done.
  • Cash Flow: When you don't have the funds now but can depend on money coming in soon, a short-term loan can help you get over the hump and operate your business as usual.
  • Emergency Repairs - The unexpected occurs from time to time. Whether it's a computer crash or malfunctioning packaging equipment, you can get funds to cover your costs when an emergency arises.

Short-Term Loan Requirements

Short-term loans are not intended for large, significant needs such as purchasing real estate or acquiring another business. They come in a variety of shapes and sizes - therefore, they will likely have their qualification criteria.

Fortunately, compared to other loan choices, a short-term loan is not difficult to obtain. The general qualifications for the application process may require the following:

  • Basic personal and business information, including a driver's license, voided business check, proof of ownership, business license, etc.
  • Personal and business bank statements
  • Financial statements such as your balance sheet and profit and loss statement
  • Personal and business credit score
  • Personal and business tax returns

Once approved, businesses can obtain their funds within 1-2 business days.

Other Loan Options - If a Short-Term Loan is not right for you

Other Loan Options - If a Short-Term Loan is not right for you

There are some significant drawbacks to utilizing a short-term loan. Due to its shorter payback times, rates can be higher than traditional loans. They cannot be used to fund a long-term project - failure to complete payments can cause a potential hit to your credit score.

Short-term loans work best for businesses in an emergency requiring funds that couldn't otherwise be spared. If you feel you do not fall under this category, First Union Lending can provide other funding options to help your business based on your requirements and qualifications.

Other loan options we offer:

Choose First Union Lending As Your Premier Lender

At First Union Lending, we have an unwavering belief that small and medium-sized businesses deserve the right to access the capital they need to succeed.

Our goal is to build long-term, lasting relationships by providing business owners with what they need when they need it. We pride ourselves on being educated, knowledgeable, and caring when it comes to how we conduct business. We have voluntarily acquired much of the same licensing required by traditional banks to cement our fiduciary responsibility to our clients and our work culture.

We are here to consult, help you save, and guide you and your business to success.

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