Short term business loans

Even the most successful companies, regardless of their size may come upon a time where a quick, short term cash injection is necessary. Our short term business loans could be the solution for your company.

Smart Funding Solutions can help you get a short term unsecured business loan. If you’d like more information then feel free to read our informative guide below, alternatively, if you’re looking to apply – simply fill in our online form and our friendly team will contact you to guide you through the process. You’re also able to apply online and receive indicative terms within 24 hours of completing the application process.

Short term business loan providers are less likely to detail how the business finance should be used, meaning, if you you’re planning to invest in some new equipment, are trying to grow your business, or your business could do with a quick cash-flow injection to keep everything flowing – then a short term business loan could be the most effective solution.

Many business problems and hurdles are unplanned and such as in life, unforeseen circumstances can arise which could be solved quickly and easily with a short term business loan. They’re often not negative hurdles too, for example, if your business experiences a sudden surge in sales and you require additional stock, or an expansion to cope with the demand, then you would also likely consider a short term loan for your business.

Short term business loans are relatively easy to obtain, they’re often as flexible as you need them to be in aspects such as the amount, or length of the loan and can be organised quickly to solve business issues that can only be rectified with finance.

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How short term business loans work:

Unlike standard business loans, which can be paid back over a period of 5 years or more, short term business loans are typically repayable over just 3 to 24 months. Short term business loans are also capable of being both secured and unsecured, depending on the lenders criteria and your business requirements.

The advantages of short term business loans:

The main advantages of short term business loans are:

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Cost Effectiveness

Loan interest rates are normally calculated over set periods of time, the longer the business loan repayment period is, the more interest you are likely to be charged in the long-run. With short term business loans you aren’t tied in for long periods of time, meaning the interest repayments are often much lower, or the total interest repaid is, because the interest is repaid over months instead of years.
Lower interest rates and short loan terms mean they’re often the cheaper option for businesses, because there’s less risk for both the business and the lender.

Higher approval rates

Higher approval rates

Because the risk level to lenders is much lower, as a result of the repayment period being much shorter, lenders are more inclined to provide short term business loans. If your business has struggled to find traditional funding from mainstream lenders, then a short term business loan may be more applicable and give you a higher chance of approval, due to the less stringent credit worthiness requirements.

Flexible applications and repayments

Flexible applications and repayments

One of the main benefits of short term business loans is their flexibility in how they can be used. Many long term loans have fixed business applications and the funding can only be used for very specific reasons, whereas, short term business funding can be used for a variety of purposes, for example: to aid cash flow one week, then purchase additional stock the next week. Some short term business loan products have very flexible repayment amounts, also making this type of business funding attractive.

Express approval

Express approval

Due to the funding amount often being smaller and the background checks normally being less strict than long term loans, the applications are normally approved much faster than a standard business loan. This is again what draws companies to short term business loans, especially those looking for emergency business loans.

The disadvantages of short term business loans:

The primary risks of short term business loans are:

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Smaller loan amounts

You may find that the funding you receive from a short term business loan is less than your business actually needed to fulfil the purpose of the loan.

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Higher interest rates

As mentioned above, due to the convenience and speed in arranging a short term business loan, you could end up paying more in interest than you would have if you have chosen a long term business loan.

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Types of short term business finance:

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Revolving Credit Facilities

Known to many as a ‘line of credit’, revolving credit facilities are extremely similar to business overdrafts, in that you’re offered a fixed sum of credit that your business can access and repay as needed, on an ongoing basis. Their flexibility allows you to drawdown business funds as and when the business needs them, making them a favourite for many businesses that are seeking short term business loans. One of the major benefits of a revolving credit facility is that there are no fees or penalties for paying back the borrowed sum earlier than planned. They come with a fixed interest rate, but it’s only charged on the funds you have borrowed, not the total you’re able to drawdown.

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Invoice Financing

Invoice financing is a solid solution for businesses that are continually invoicing customers. They’re asset-backed finance that allows businesses to tap into cash that is tied into outstanding invoices.
This means that lenders will advance you a percentage of the total invoice amount, usually within the same day – as opposed to your business having to wait for those invoices to be paid on time by the companies you’ve invoiced, especially when some companies have a habit of consistently paying invoices late, which can cause cash-flow nightmares for many SMEs.

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Merchant Cash Advance

Merchant cash advances have no fixed monthly payments which is a huge bonus for the many businesses that use them as short term business loans.
They’re an unsecured method of raising funds that are backed by your company’s future debit and credit card sale transactions. This type of short term business funding is available to any company that accepts card payments, whether that be offline in a retail store/hospitality venue, or online via your e-commerce website. This makes them one of the most flexible solutions on the market for businesses looking for short term loans.
Another benefit of a merchant cash advance (also known as a MCA) is that your repayments are in line with your business transaction performance. So if your business is having an extremely good month, the MCA is paid back substantially quicker, but if your business is having a difficult period, then there’s less pressure on the business because there’s no fixed monthly payment contract to adhere to.
The percentage you pay back on each advance is determined by you and the lender and normally stands at between 10% & 20% of the total sale value.

Does my business qualify for a short term business loan?

Businesses of all shapes and sizes are able to qualify for short term loans – it doesn’t matter if you’re a start-up or an enterprise level corporation. You’ll need to be UK business registered in England, Wales, Scotland or Northern Ireland and meet a minimum monthly turnover requirement in order to be able to apply for a short term business loan.

You may find with some providers of finance, that they will only lend to your LTD companies – so it’s always beneficial to look over the lenders’ criteria before applying if you’re a sole trader or partnership or speak to us at Smart Funding Solutions, and we’ll be happy to assist you. In a lot of cases, you can receive your funds within 24 hours of acceptance.

Applying for short term business loans when the business has bad credit

It is possible to apply for short term business loans with poor credit. Bad business credit may be affecting your credit worthiness which may prevent you from getting business funding using a mainstream lender but, there are still plenty of lenders that will consider your finance application. We have many lenders on our panel that are happy to consider your application for a short term business loan even if your credit history and credit rating aren’t perfect.

Even businesses with County Court Judgements may be considered, depending on a number of factors. It is best to contact us and allow us to review your individual application for a short term business loan.

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How does it work?

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A member of the team will be in touch to collect some basic information. This helps us understand the type of funding that would best suit your business.

We find the best funding for you

We use the information you provided to source the best funding options for you and your business using our panel of over 250 lenders.

We present your options

We’ll then present you will all of the funding options available to you and give you time to decide which one you would like to proceed with.

Do short term business loans have credit checks?

At Smart Funding Solutions, we do not credit check your business at our applications stage. We will understand your business financials and determine which type of short term business loan would be most beneficial to your company if you’re accepted. We then propose this to our panel of direct lenders who may conduct a credit check at this stage, before proceeding with your application. We’ll supply you with the eligibility criteria before moving to the application stage. Most business loans will need to be personally guaranteed by shareholding directors and business owners, a loan with no personal guarantee nowadays is a rarity.

Typical short term business loan interest rates

Whilst long term business loans may hold lower interest rates than short term ones, the interest rate you’re given on the business loan would depend on your company’s credit history. The length of the loan can cause short term business loan interest rates to be higher, or lower than traditional business loans.

At Smart Funding Solutions, we always advise you to check whether the interest is repaid annually, or monthly as this does vary between lenders and will affect the total cost of your loan. We also always advise that you check a free quote from us, which will identify the options available to your business and give you a more accurate indication of how much your repayments would be.

We will always disclose interest rates upfront and in detail, along with any fees attached to the type of short term business loan you have selected for your company.

The alternatives to short term business loans

Short term business loans are not always appropriate for all businesses and that’s why at Smart Funding Solutions, we look at all of the options available to your business and present you with the information allowing you to make an informed decision.

The alternatives to short term business loans are:

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Medium & long term business loans

Working in a similar way to short term business loans – medium and long term business loans are usually fixed between 1-25 years in length. You can read more about secured & unsecured loans here

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Business overdraft

Business overdrafts, much like a revolving credit facility, allow you to purchase assets and items such as stock for your business and enable you to repay the borrowed amount at a later date with interest added, depending on the length of time the funds are borrowed for. Business overdrafts require the business to have a bank account and they’re normally renewed/reviewed every 12 months to increase or decrease the size of the overdraft depending on a number of factors.
If you’ve been unsuccessful at applying for a business overdraft in the past, then you may have more success in applying for a business revolving credit facility, which we would be happy to assist you with.

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Business credit card

Almost identical to how a personal credit card works, you’re able to use a business credit card to purchase items and assets for the company and repay them down the line with interest. The interest rate on a business credit card varies from provider to provider and could even be viewed as a higher overall cost of credit.
The amount available on a business credit card heavily depends on the business credit score and performance of the business, along with your own personal credit score.

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Choose Smart Funding Solutions

Whether you’re looking for a short term business loan, or a more traditional form of business funding, we at Smart Funding Solutions will understand what type of funding for your business would most benefit from and assist you in your application. You can apply online today here. We have a finance provider and funding options for any business purpose, helping you to maintain your business cash flow and helping many businesses grow. Head over to our frequently asked questions page for further information.
Smart Funding Solutions are authorised and regulated by the financial conduct authority, FRN: 972740.

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Frequently Asked Questions

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A Short Term Business Loan is a business loan that must be repaid within a relatively short period, usually less than a year, sometimes stretching up to two years.

Just like other loans, after approval and agreement, you borrow a lump sum of money and then repay it, along with the interest, within the agreed term.

These loans are usually quick to secure, require less paperwork, and are easier to obtain compared to long-term loans. They’re beneficial for solving temporary cash-flow problems, handling emergencies, or seizing sudden business opportunities.

Every lender has different requirements but generally, you’ll need to have been trading for a certain period (often at least a year), have a good credit score, and provide proof of ability to repay the loan.

This greatly depends on the lender and the strength of your application, but typical loans can range from a few thousand pounds to several hundred thousand.

This depends largely on the lender and the specific circumstances of the application, but generally, decisions can be given within 24 hours, and funds released shortly after.

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Interest rates can vary widely and are usually higher than those on long-term loans, reflecting the shorter repayment period and higher risk to the lender.

Yes, in addition to the interest you may need to pay application, origination or administration fees. Also, ensure to check the terms for any potential late payment or early repayment fees.

Typically you make regular repayments (weekly or monthly), which are made up of part of the loan’s principal amount and the interest.

Often, yes. However, some lenders may charge an early repayment fee, so it’s best to check the specific terms of your agreement.

If you fail to repay your loan, you may be subject to late payment fees and it can negatively impact your credit rating. In extreme cases, legal action may be taken.

While they can be beneficial in specific situations, the higher interest rates and quick repayment terms might not make them the best choice for all businesses. If you’re unsure, seek independent financial advice.

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