Short-term business loans operate over a much smaller period than long-term loans, with payment periods ranging from 3-18 months. Where a long-term loan requires monthly or quarterly payments, a short-term loan is paid daily or weekly.
Compared to long-term loans, applying for and being accepted for a short-term loan is generally easier. While these same factors are reviewed—industry, business finances, credit score, time in business—they aren’t scrutinized as harshly, with many lenders being able to fund your business within three days of being accepted. Short-term loans typically have higher interest rates, varying widely but generally between 7-50%.
Where long-term loans are used for serious business undertakings, short-term loans encompass a wider variety of tasks. They can cover immediate expenses, and unexpected emergency situations, or fill in for any temporary income gaps. Overall, they’re ideal for businesses that need immediate funding to help fill in for something they don’t have the working capital to handle.