Description of a Short Term Business Loan

A short term business loan is a loan obtained by a business with a short, fixed repayment period, usually between 90 to 120 days.  The amount of money borrowed is also set at a specific number, and repaid with interest over the term, which can extend out as long as 3 years in some situations.

Short term business loans are not to be confused with business lines of credit, which act like credit cards and allow the borrower to charge up, payoff, and charge up their line again.  Once a short term business loan has been repaid it is closed out.  The borrower would need to apply and be approved for another loan to be able to access additional money. Most business owners apply for short term business loans to cover short term needs, like payroll, accounts payable, or to cover a gap in cash flow until customers pay their invoices.

Short term loans are made for lower loan amounts, usually $100,000 or less and are generally less risky loans that longer term amortized business loans.  As such, qualifying for a short term business loan can be much easier than getting a longer term loan, a revolving loan, or even a business line of credit.