Join the dots with a short term business loan
Borrow £1000-£500,000 with flexible repayments. Repay earlier at no cost, interest only accrues while you have the funds.
Loved by over 90,000+ small businesses since 2012
What is a short-term business loan?
What is a short-term business loan?
Short-term business loans let you borrow money over months, not years. It means you can cover your costs and grab opportunities without getting tied into lengthy loan agreements.
These loans are useful for investing in stock or equipment at short notice. Imagine you run an ice cream shop and summer is forecast to be hot. With a short-term business loan, you could buy more ice cream machines to meet the demand. Once you’ve profited from the summer boom, you’d use some of that money to repay your loan.
And it’s not just useful for investing in stock or equipment, as short-term loans can help support and grow your business in different ways. For example, by paying unexpected bills and easing cash flow, financing office expansions and relocations, and paying for your workforce and for recruitment programmes.
What are the different types of short term loans?
There are different options for short-term business loans, and choosing the right one will depend on individual circumstances and needs. Here are some of the possibilities:
Term loans
These loans are repaid over a set period, normally by regular monthly payments, and can be secured or unsecured. Interest is typically charged on the loan.
Invoice finance
Invoice finance is a type of asset-based lending. Money is borrowed against payments that are due to be received from the business’s customers (ie, sums that have been invoiced but are yet to be paid).
Bridging loans
A bridging loan is used to fill a funding gap, often to support a business while it waits for other funding. It’s a way of securing immediate funds but usually incurs higher interest.
Merchant cash advances
A merchant cash advance is an unsecured form of funding that may suit businesses with seasonal peaks and troughs. A loan amount is agreed and then repaid as a percentage of the merchant’s receipts, with interest.
Revolving credit facility
In contrast to a short-term business loan, a revolving credit facility is an ongoing form of finance that enables you to withdraw money repeatedly and repay it over time because the credit facility remains open to fund your business.
If you need a short-term business loan, an iwoca Flexi-Loan is one of the best options for those who wish to borrow between £1k and £500k for up to two years. There are no early repayment fees with a Flexi-Loan, and you can ask for top-ups.
Applying for a short-term business loan
Apply in minutes
Our short term business loan is designed with small businesses in mind, so we'll just need the basics about your business to make a decision.
Use your funds
We'll approve you based on your business performance. Typically, the funds will be in your account in hours, just transfer as much as you need to your bank account.
Repay or top up
We don't charge early repayment fees: we only charge interest for the days you have the money. If you need more funds, applying for a top up is easy.
What is the application process for a short term business loan?
The application processes for short-term loans differ between lenders. However, when working with a digital or alternative lender, you can expect a simplified, streamlined process compared to traditional business loans.
Here's a step-by-step guide to give you an idea of what to expect:
- Choose a lender: Begin by comparing short-term business loan providers to deice which products best suit your needs in terms of time frame, amount and payment structure.
- Gather your information: Most lenders will require basic business details (trading address, contact information, time in business, etc.) and financial information like company accounts and/or a cash flow forecast. Digital lenders can integrate this data via your cloud accounting software, saving time and manual work.
- Complete the online application: Many lenders have online applications. You'll often input your basic details and information about the loan you require. Y
- Await a decision: Short-term lenders such as iwoca aim for fast decisions, sometimes within 24 hours.
- Review and accept the terms: If approved, carefully read the lender's offer. Check the interest rate, repayment amounts, any fees, and the full terms of the loan before accepting.
- Receive the funds: Once you've signed the loan agreement, the lender will typically transfer funds into your business bank account quickly, sometimes on the same day.
Does my business qualify for a short-term business loan?
Eligibility varies from lender to lender, so it’s hard to say whether you’ll qualify for a short-term business loan. It will depend on individual circumstances and the nature of your business. Some lenders have a business loan calculator that shows how much you can borrow and what your loan repayments might be.
As previously mentioned, you must provide some basic information about your business to set the ball rolling. However, you should first consider whether a short-term loan is right for your business and whether the alternatives may provide a better solution.
Fund your future with a business loan
No early repayment fees
If you want to repay early that’s great. We’ll never charge a fee for that. In fact, more than 20% of our customers repay ahead of schedule in their first six months.
Easy application
We’ve designed our application process to be as slick as possible: link your bank account and get going in minutes.
No hanging around
Once you’re approved, we’ll ping the money straight to your account. And if you need more later, you can apply for a top-up.
Short-term business loans FAQs
Here is a bit more information we think might help. If you want to know more about flexible business loans, or iwoca, check our FAQs.
Can I get a short-term business loan with no personal and business credit checks?
Before a lender offers you a loan, it will consider your financial situation and evaluate your business. Lenders need to be confident that you can repay what you’re borrowing. A credit check is one of the main ways to determine your creditworthiness, so you should find out if this is a requirement before you apply.
Can I get a business loan with bad credit?
Getting a short term loan with a bad credit score depends on the provider, even if you have been turned down elsewhere. Credit scores are only one measure of your ability to repay and your risk profile.
While your credit score may reduce the sum you can borrow for a short-term business loan, it may still be possible with collateral or a loan guarantor. Alternatively, you may still be able to borrow, but at a higher interest rate than would otherwise be the case.
What are the typical interest rates with short term business loans?
As already mentioned, interest rates for short-term business loans are usually higher than alternatives, as you’re likely to pay more for the speed and flexibility of the product. Different lenders charge different amounts, so you need to look carefully at the details of your chosen loan and make comparisons.
To give an example, iwoca’s Flexi-Loan has a representative APR of 49%, which equates to a monthly interest rate of 3.33%. If you borrowed £10,000 at that rate, you’d make 12 monthly repayments of £1,025, or could repay early to save on interest.
What are the alternatives to short-term business loans?
There are several alternatives to a short-term business loan, and choosing the right one for your needs will depend on your circumstances. A longer-term business loan is likely to have a lower interest rate, and allow you to borrow more. If you’re looking to fund a long-term growth strategy, then this might be a better option for your business.
Will I need a personal guarantee?
With short-term business loans, the need for a personal guarantee varies from lender to lender, and will depend on your business credit and trading history. If you’ve been trading for a long time and have a credit history, you may be able to get a short-term business loan with no personal guarantee.
How do I apply?
If you’re in need of short term financing for your business, iwoca is here to help.You can apply for a loan in minutes, with decisions based on your actual business performance. Once approved, the funds can be in your account in hours.
Here are other financing options that could suit your needs
The iwoca story
Over the past eleven years iwoca has grown from a small start-up to one of the fastest-growing business lenders in Europe. Now we're a team of around 400 in London and Frankfurt working towards the goal of funding one million small businesses.
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Questions? We're here to help
Call us at 020 3778 0274 from Monday to Friday (9am - 6pm). We can take your business loan application over the phone, or answer your questions about applying online.
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