Lump sum of capital funded in 24 to 72 hours, repaid over 3 to 24 months with daily or weekly debits. Faster than a regular term loan, structurally different from an MCA. Here is when short-term wins, when a longer loan wins, and the rates to expect.
What a short-term business loan actually is
A short-term business loan is a lump sum of capital repaid over 3 to 24 months. Most are structured with daily or weekly ACH debits, not the monthly payment schedule of a traditional term loan. Amounts run $5,000 to $500,000 typical, and the application-to-funded timeline is 24 to 72 hours for clean files. Most short-term loans are unsecured (no specific collateral pledged) but still require a personal guarantee. The funder holds a UCC-1 against your business receivables.
This is a structurally distinct product from your standard 1-5 year business term loan. The shorter timeline means lighter underwriting, faster funding, and higher cost. It is also distinct from a merchant cash advance: short-term loans use APR-based pricing and report to business credit bureaus, while MCAs use factor rates and do not report.
Short-term loan vs regular term loan vs MCA
Compared to an MCA (4-24 month factor-rate product), the short-term loan looks similar but works differently:
When a short-term loan wins
You have a clear short-payback use
Inventory load before a peak season, marketing campaign with measurable ROI in under 6 months, opportunity buy on a supplier discount. The use generates revenue within the term, so the daily/weekly debit gets covered by the new cash flow.
You're building business credit
Short-term loans report to business credit bureaus (D&B, Experian Business, Equifax Business). Responsible on-time payment builds the business credit history that opens better products later. MCAs don't report.
You might pay off early
Most short-term loans give you a real prepayment savings (you stop paying interest on the remaining balance). MCAs usually do not, the full factor rate is locked in regardless of early payoff. If there's a chance of paying early, short-term loan wins.
You need over $250K
Most MCAs cap around $250K-$500K. Short-term loans go higher. For files over $300K with strong credit and revenue, short-term loan pricing usually beats MCA pricing at the same amount.
When a short-term loan loses
Use of funds has 12+ month payback
Major renovation, hiring ramp, real estate. The daily or weekly debit hits before the investment pays off. Use a regular term loan with monthly payments and a longer amortization.
Your FICO is under 580
Most short-term loan funders draw the line at 580. MCA is the more accessible product at 500-580 FICO because it underwrites primarily on bank deposits.
Revenue is unpredictable or seasonal
A fixed daily debit during slow months is brutal on cash flow. A line of credit that draws only when you need it is dramatically cheaper for seasonal patterns.
You can wait 30+ days
If speed isn't critical, an SBA Express loan or a longer-term loan at 10-18% APR will cost dramatically less than a short-term loan at 25-40% APR equivalent. The speed is the premium you pay.
Typical rates and qualifying thresholds
By term length
- 3-6 month term: 25-50% APR equivalent. Highest cost because funder has least time to recover. Best for files with very short payback or no other option.
- 6-12 month term: 18-40% APR. The middle range and the most common term we see.
- 12-18 month term: 14-30% APR. Lower-cost zone if you can support a longer commitment.
- 18-24 month term: 12-25% APR. Bordering on regular term loan rates. The funder has more time to recover so pricing improves.
By file strength
- Best rates (12-20% APR): 700+ FICO, 24+ months in business, $50K+ monthly revenue, clean bank statements.
- Standard rates (20-30% APR): 620-700 FICO, 12-24 months, $20-50K monthly revenue, occasional NSF acceptable.
- Higher rates (30-50% APR equivalent): 580-620 FICO, 6-12 months, $10-20K monthly revenue, recent credit issues.
What you need to qualify
- FICO: 580+ standard. 550+ at specialty funders with strong revenue compensating.
- Time in business: 6+ months. 12+ months opens better rates.
- Monthly revenue: $10,000+ floor. $25,000+ sweet spot. $50,000+ opens the best terms.
- Bank statements: 3-6 months. Funder wants to see deposit count above 5/month, average daily balance above $2,000, NSFs below 5 in 90 days.
- Personal guarantee: Required for almost all short-term loans.
- No active bankruptcy. Recent defaults on prior business debt usually disqualify for 12+ months.
How the process works
- 2-minute application. Business basics, owner info, requested amount. Quick application.
- Send bank statements. Last 3-6 months as PDFs from your online banking.
- Offers in 24-48 hours. 2-4 specialty short-term funders return offers. We present the strongest.
- Sign + fund. Electronic signature. Wire arrives same business day after signing.
The honest math on a short-term loan
A $75,000 short-term loan at 25% APR equivalent over 12 months with daily payments looks like this:
- Daily debit: about $370 per business day (250 business days/year)
- Total repaid: about $93,750
- Total interest cost: $18,750
- Effective monthly cash burn: ~$7,800
That math works when you used the $75K to generate at least $93,750 in incremental revenue within 12 months, ideally faster. If the use doesn't produce that much revenue that quickly, you're paying for the speed and convenience but losing on total cost. Common ways the math goes wrong: using short-term loans for long-payback projects, stacking on top of existing MCAs, or borrowing during a revenue decline rather than ahead of growth.
Can you use a short-term loan to fund a startup in three months?
Usually not, and it is better to know that now. Nearly every short-term business loan funder requires at least six months of trading history and roughly $10,000 a month in deposits, because the underwriting is built on bank statements you do not have yet. At three months old, the honest answer is that you are funding this from somewhere else.
The reason is structural rather than arbitrary. A short-term loan is priced off deposit consistency — how many deposits land each month, what your average daily balance looks like, how many negative days and NSFs appear in the last 90. Three months of statements from a business still finding its customers cannot answer those questions, and no amount of personal credit substitutes for them. Funders that do advertise day-one approval are almost always underwriting the owner personally, which means a personal loan or a business credit card wearing different branding.
What actually works in the first three months is a different shelf of products: an SBA microloan through a nonprofit intermediary, equipment financing where the equipment itself is the collateral, a business credit card underwritten on your personal file, or founder and family capital. Each of these underwrites something other than trading revenue, which is the whole problem at three months. Our guide to funding with a thin or damaged credit file covers the same constraint from the credit side.
How to get a short-term business loan with under a year in business
Between six and twelve months in business you are fundable, but only by a subset of funders and at the top of the price range. Expect 580+ FICO, $10,000 or more in monthly deposits, and three to six months of bank statements as the entry ticket — then expect the offers to sit in the 30% to 50% APR-equivalent band until you cross twelve months.
Three things move the outcome at this stage. First, statement hygiene: funders read deposit count, average daily balance and NSF count before they read anything else, so a month of clean statements is worth more than a month of waiting. Second, asking for an amount your deposits support — a request at 80% of monthly revenue reads as reasonable, one at 300% reads as a decline. Third, submitting to the right funders rather than all of them; each application to a direct funder is a separate conversation, and scattering them across the market leaves a trail that later funders can see.
That last point is where a broker earns its place. The Broker Shop is a broker, not a funder — we take one file and put it in front of the funders whose published guidelines your business actually meets, including the specialty funders who work comfortably at six to twelve months. It is free to apply and checking your options won't affect your credit score.
Under a year in business is common, not unusual: in the Federal Reserve Banks' 2026 Small Business Credit Survey report on employer firms, 38% of firms applied for a loan, line of credit or merchant cash advance in the prior 12 months, and among all financing applicants 42% received the full amount they sought, 36% received some or most of it, and 22% received none. Partial approval is the single most likely outcome, which is a good reason to know in advance what amount you can actually work with.
Frequently asked questions
See what you qualify for
One 2-minute application is matched to the funders whose guidelines you meet. It's free, and checking your options won't affect your credit score.
See What I Qualify For →Sources: Federal Reserve Banks — 2026 Report on Employer Firms, Small Business Credit Survey (share of firms applying for a loan, line of credit or cash advance; full, partial and zero approval outcomes) · U.S. Small Business Administration — Microloan program