Short‑Term Business Loan: how it works, costs, pros & cons
What is a short‑term business loan?
A short‑term loan provides a lump sum you repay in fixed installments over months (often 6–24). Payments are predictable and usually weekly or monthly.
How costs work
Costs are expressed as an interest rate or fixed fee with a set schedule. The APR depends on total cost, term length, and frequency. Early payoff terms vary by provider.
Pros and cons
- Predictable payment schedule
- Often lower cost than MCA
- Good for one‑time purchases or projects
- Less flexible than a revolving LOC
- Payments continue even during slower weeks
- Prepayment terms vary (discounts or fees)
Eligibility & documents
- Time in business, revenue, and cash‑flow consistency
- Bank statements, ID, EIN; financials as requested
- Personal guarantee or collateral may be required
When a short‑term loan beats an MCA
For defined projects with predictable ROI and when you can handle fixed payments, a short‑term loan can cost less than an MCA.
FAQs
Often yes for short‑term loans; some providers use factor‑style pricing. We’ll show total payback and schedule in writing.
Commonly 6–24 months. We’ll align term with your project timeline where possible.
Policies vary. Some offers include early‑pay discounts; others require full payback. We’ll state this upfront.
Once approved and signed, funding is often within 1–3 days.
We use soft pulls to start when possible; we’ll ask before any hard pull.
See how MCA, LOC, and short‑term loans stack up by cost, cadence, and flexibility.
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