Want An Easy Process? Then You Want A Short Term Loan.
When unexpected expenses arise, a short term loan for your business can be a vital tool. With a quick & easy application process, the funds can be used for almost any business use. Compare short term loan options with Upwise.
What is a Short-Term Business Loan?
Short-term business loans or cash advances are lump sum loans that are designed to be paid back over a set time frame at a set cost in less than 18 months. Short term capital financing can be structured as a purchase and sale of future receivables with a factor rate or as a business loan with an interest rate.
Short term loans can be a flexible financial vehicle and can be used for financing short-term working capital needs—including but not limited to payroll, managing cash flow, dealing with unexpected needs for extra cash, bridging larger financing options, paying off debt, business working capital, business expansion or capitalizing on unforeseen business opportunities.
Short-Term Loan Details
Short Term Loan Pros vs Cons
How Does a Short Term Loan Work?
A short term loan is like the Swiss Army Knife of loans – it’s handy, flexible, and able to get you out of a bind. You can use it to cover unexpected costs, survive a slump, finance a short term project, or even capitalize on a new business opportunity. It’s definitely the loan you want in your back pocket.
It’s pretty simple, you borrow a lump sum of money over a short term, typically under 2 years. With a fixed interest rate, you pay back the loan in daily, weekly, bi-weekly or even monthly payment installments. Once the loan is paid 50% in, most short term lenders will allow you to borrow additional funds.
Who Qualifies for a Short Term Loan?
Here’s the low-down on qualifying:
Short-term business lenders emphasize cash-flow in the business bank account more than lenders of traditional term loans. Strong cash-flow can sometimes overcome other applicant information that would disqualify a business for a traditional term loan such as credit.
Understand that the interest rate or factor rate you’ll pay and the amount of capital you qualify for will be based on your average monthly business revenue, time in business, industry, business payment history, and personal/business credit rating. For questions, regarding if you qualify for a short term loan please contact us, and we will give you a dedicated short-term business loan expert to answer all your questions.
Short-Term Loan Requirements
* Note: These short term loan requirements are based on previous Upwise customers and is just an average.
What Does a Short Term Loan Cost?
Short-term business loans are paid off quickly, most often with daily or weekly payments.
Where you source the capital, will determine your cost. Make the Wise decision with Upwise.
Short-term loans also often come with factor rates instead of interest rates: a factor rate is a number that, when multiplied by your total loan amount, gives you how much you’ll be paying back.
A factor rate is a set cost of capital of the given term approved by the short term loan lender such as Upwise.
See the below example of a sample Upwise short term advance.
Short-Term Business Loans & Factor Rates
Some lenders will structure the contract as a purchase and sale of your future receivables..
Say you’ve taken out a $100K short-term business loan and the Upwise offer has a 1. 18 factor rate.
1.18 multiplied by $100K will determine the total amount you’ll need to pay back to maturity = $118K.
For this specific customer, underwriting approved this file for a 12 month term, which is a common approved term amongst small business owners searching for short term business loans.
Given that there are 21 payment days or business days in a month, since payments are taken Monday through Friday, never on weekends or holidays. That equals 252 payments per year on a daily payment program.
To calculate your payment, divide the number of payments (252) by the total payback to maturity $118k.
The amount of each of those business day payments would be $486.25.
Payments are broken down into micro daily or weekly payments. You’re paying a higher rate than a longer term loan for the quick and easy approval and funding process.
How to get a Short-Term Business Loan
We make it easy, simply apply online and we’ll be in touch to go over your options.
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Documents You'll Need to Apply
- Completed Application
- Driver’s License
- Voided Business Check
- Business Bank Statements (Last 6 Months)
- Credit Score
You may also be requested to provide the following for larger dollar amounts over $100K:
- Balance sheet
- Profit & Loss Statements
- Business Tax Returns
- Personal Tax Returns
- Account Receivables Report (if securing AR)
- Inventory List (if securing inventory)
*See above for short term loan requirements.
Short Term Loans
No matter how much planning you do, small business ownership is full of surprises. Thinking on your feet and coming up with quick solutions is often the difference between shutting your doors and shutting out the competition. When time is money, a short term loan can get you financing in as little as 24 hours.