Short Term Financing for Business – All The Options Explained

If your business is seeking additional finance to grow, or cover a short-term whole in cash flow, then a short term business loan can provide a quick injection of cash when it’s needed most. Short term business financing loans aren’t your only option either – we’ll cover these in detail – but we’ll also explore some of the other ways that short term financing for small business can happen. This is a complete guide to the best short term business funding options available now.

The Expedited Application That Allows You to Compare the Best Short Term Business Loans?

Test your eligibility in under 60 seconds with a short term business loan marketplace. Lend.com.au will compare the best short term business loans and match you with only the most relevant loan options, based on your short term financing requirements and business profile. Taking into account the industry and financial health of your business. Not only increasing your chances of approval but ensuring your search for a short term business loan stays short.

Pros
  • Funding: $5,000 to $500,000
  • Smart Matching by LendScore™
  • Instant Responses to Application
  • 97% User Satisfaction
  • Unsecured Business Loans Focused
  • Bank-Level Encryption
Cons
  • Not a lender by itself

What is a Short Term Business Loan?

Short term business loans are generally offered on terms between 1 month – 24 months. Though you will find the odd online lender providing ‘short term business loans’ all the way through to 36 months. The major lenders will generally grant somewhere between $5,000 – $300,000 with security being required for short term loans over $100,000. You will find some lenders offering short term business loans all the way through to $500,000. 

Short term business loan rates can be anywhere from 5% though most businesses should expect to pay at least double digits, i.e. 10% plus. Some business lenders present their rates on short term business loans as factor rates, which are usually anywhere between 1.1 – 1.4.

The Best Short Term Business Loans Lenders

#1 Prospa - Editorial Rating 97% - The Business Favourite

If we go by client feedback alone then it’s Prospa who provides the best short term business loans. Prospa is in a league of its own when it comes to the total number of businesses funded in Australia (over 29,000) and the client feedback it has received – a 4.9/5 trust score based on over 6,000 reviews. Aside from being one of the most trusted brands in the industry, the firm also offers a great deal of flexibility and has positioned itself as one of one of the quickest providers of short term business loans online.

Prospa Review

#2 GetCapital - Editorial Rating 93.1% - Wide Variety of Short Term Business Finance Options

Particularly appropriate for larger SMEs, GetCapital has a wide variety of funding solutions that can help for short term financing. GetCapital provides short term business loans, credit lines and even a business overdraft which you can link to your existing transaction account – no need to open a new one. With Shift Payments, they also have their own invoicing financing solution which can speed up your working capital cycle.

GetCapital Review

 

#3 OnDeck - Editorial Rating 90.7% - Global Lender Offering Straightforward Short Term Business Loans

A global juggernaut that has issued over $13 billion in short term loans online, OnDeck has a simple and straightforward offering. With a simple application process, short term business loans can be approved in as little as one business day. In addition OnDeck even offers a free business credit score check – ensuring borrowers have a clear picture of their financial profile and the type of business loans they are eligible for.

OnDeck Review

These are just a small sample of the Aussie lenders providing short term business loans online. The market has grown rapidly, we have over 30 online lender reviews on SmallBusinessLoansAustralia so far and we’re regularly adding more. Some specialise more in secured loans, whilst others have expertise in invoice finance, the lenders listed on this page specialise in short term financing for business. You can also consider applying for short term business loans with a bank or business loan broker.

Short term business loan rates can vary quite substantially from bank-to-bank but if your business is in good financial health and you have a long relationship with a bank then you might be able to achieve the best financing rates with your bank. The only issue is that applications can take weeks or even months to process and you have no indication if your application will be successful – by the time your loan is approved your financial position and business requirements may have even changed.

You can also consider applying through a business loan broker. You will incur additional fees but gaining their expertise should help your business find cheaper short term business loan interest rates and they will know which lenders are a good fit for your business profile and requirements. We can definitely see the value a business loan broker adds but it’s why we also recommend a business loan marketplace in the first instance, such as Lend.com.au. They’re free to use, your credit score will not be impacted by applying and you can receive multiple loan offers in one place. These should be from lenders who fit your borrowing requirements and business profile as well. 

Short Term Business Loans New Zealand?

A quick note on short term business loans in New Zealand – a number of the leading online business lenders in Australia can certainly assist businesses in New Zealand too. A short term business loan in NZ is definitely possible through online business lenders as well as banks. Prospa launched its short term business loans in New Zealand in 2019 and even has offices in Auckland.

Alternative Options for Short Term Financing for Business

Credit Cards

A business credit card works just like a personal credit card – it’s a short-term, unsecured facility that can be used to make business purchases either online or through a card terminal. The industry average for interest rates on a business credit card is roughly 18-19% which won’t be all that much higher than a short term business loan but your credit card limit is likely to be significantly less than the size of the business loan you are looking for. If you need to access cash (i.e. transfer funds from your credit card balance to your transaction account) you can also expect to pay a higher interest rate of 21% upwards.

Line of Credit

A business line of credit provides quick and flexible access to funds from a pre-agreed credit facility. The borrowing limit on your business line of credit is agreed when you open the facility so you don’t have to worry about seeking credit approval each time you require finance. Instead, you can just draw and redraw on your existing facility, providing that your total borrowing stays below your limit. Applications for a line of credit can be just as fast as a short term business loan when you apply with a specialised online business lender.

Invoice Finance

Invoice Finance is an increasingly popular form of short term funding for small business. It’s a way for businesses to borrow money based on the invoices due to them. Invoice Finance typically works best for B2B companies with payment terms of 30, 60 or 90 day durations. When issuing your invoice you simply notify the lender, they advance you 80-90% of the value of the invoice and the rest is settled when your customer pays (less invoice financing fees, which usually start at around 2%).

Business Overdraft

An business overdraft can always come in handy when your business encounters unexpected expenses – perhaps it’s an urgent repair or a small amount of stock you need to replace. Whatever it is, a business overdraft is usually sufficient to provide that quick injection of working capital that your business needs. Usually, a business overdraft is provided by the bank that handles your business transactions but it doesn’t always have to be this way. It’s worth highlighting GetCapital’s business overdraft – building on open banking technology you can plug a GetCapital business overdraft into your existing transaction account.

Short Term Business Loans Advantages and Disadvantages

The best short term business funding option for your business will depend on the industry in which you operate, the financial health of your business, and how long you need the funds for. Still, there are various pros and cons to short term business finance which are likely to apply no matter the business you operate.

AdvantagesDisadvantages
  • Fast approval and funding.  If you use an online lender you should receive a response within 24hours and if successful funds disbursed to your account same day.
  • Short term loans are generally multi-purpose and can be used on any business expense.
  • There for you in emergencies (particularly pre-approved facilities such as a line of credit).
  • Flexibility to make the most of opportunities that arise.
  • Interest rates are likely to be high, particularly for unsecured short term small business loans.
  • Rates can be displayed in either factor or interest rate, sometimes making it difficult to compare your options.
  • Repayments can be daily, weekly or monthly. Must be sure to avoid missed payment fees on daily repayments.

 

Short Term Business Loans Australia – Concluding Remarks 

A short-term business loan is typically used when businesses need to cover sudden expenses or to capitalise on an immediate opportunity. Short term financing for business can be for virtually any business purpose, although it may not always be your best option. If you’re looking to finance equipment or finance a fit out then you may prefer a lending product specifically designed for this. Short Term Business Financing Loans are best used for your short term working capital requirements.