The benefits of a short-term business loan
Your business loan can be a truly short-term finance agreement, with terms as short as three months available for businesses looking to repay as soon as possible.
You won’t need to supply any collateral for your business loan, opening the door for business owners who don’t have eligible assets or don’t want to put their home up as security.
Business loans are designed to be flexible to your needs, so you can take out a small business loan as low as $5,000 or a larger loan up to $500,000 and repay them over as short a term as you can afford.
You only need to have as few as six months under your belt as a trader to qualify for a business loan, helping you access much-needed funds in the early stages of your business ownership.
Your application can be completed in a matter of minutes and approved and financed within just one business day, sealing a fast turnaround and giving access to the funds you need.
If you’re in a position to pay above the minimum amount per instalment, you’re able to do so, with many lenders offering penalty-free early repayments on their loans.
Because of the shorter length of time over which you’re repaying your loan, you won’t have to pay as much interest overall as you would for a longer term.
Learn about short-term business loan options
Loans come in all shapes and sizes and there’s normally a loan product for every situation. Short-term loans can be handy solution for various business problems, but what choices are there on the table? Find out about short-term business loans and how to compare your options here.
What are short-term business loans and how are they different to others?
A short-term business loan refers to a business loan used as a short-term solution to a problem rather than a long-term investment for your business. They’re designed to be paid off within one to three years and deal with smaller amounts that can be paid off more quickly, from micro loans as small as $5,000 up to $300,000.
While a long-term loan might be suited to large scale projects like buying a property or opening up a new outlet for your business, short-term loans are more suited for things like upgrading equipment, consolidating debt, paying wages or even providing the upfront finance to run an event or conference.
There are many different types of business loans that could be regarded as short-term loans, so your business has a wide variety of temporary finance options on the table.
If you’re looking for a short-term loan to provide finance for your business, Savvy is a great place to start. With our rate tables, you can compare the best options on the market to see which is the perfect fit for your business situation. You can also use our business loan repayment calculator to work out the costs of different loans based on terms, rates and other factors.
What types of short-term business loans can I get?
In Australia we have a great variety of choices for both lenders and short-term finance, so you’ve generally got plenty of loan options to compare. So, what are some of the short-term loan possibilities?
Unsecured loans – These are the most versatile short-term loan option, especially for small businesses. Unsecured business loans are available from a wide variety of lenders and don’t require any deposit or collateral. They can be for anywhere from a few thousand dollars to $200,000 to $300,000 and can be used for a variety of business expenses, such as upgrading your premises, paying employee wages and buying extra stock. They’re also one of the easiest short-term loans to get approved thanks to their lack of security requirements, making them a good option to explore if your business struggles with bad credit.
Equipment finance – Equipment finance is a short-term finance option to give your business access to equipment that you couldn’t otherwise afford. The lender retains ownership of the equipment, but you get to keep it on your premises and use it throughout your agreed-upon term. It’s like renting, except that the equipment can be highly specialised – such as state-of-the-art medical imaging facilities or special-purpose agricultural vehicles.
Hire purchase – Hire purchase is a little like equipment finance, except the interest rates are generally higher. The trade-off is that once you’ve paid off the loan, you get to keep the equipment, so it’s like rent-to-own on a grand scale.
Chattel mortgage – A chattel mortgage is similar to equipment finance or hire purchase, but it functions more like a home or car loan in regards to collateral: you’re borrowing money to buy a significant piece of equipment, but then you’re using that same piece of equipment as security for the loan. Unlike hire purchase, you officially take ownership of the equipment at the beginning of the loan – not at the end.
Types of business loan
The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.
If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.
Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.
Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.
A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.
Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.
A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.
With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.
Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.
An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.
You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.
Why compare business loans through Savvy?
What other options do I have for short-term business finance?
Business credit card
A business credit card is similar to a personal credit card, except that it’s tied to your business’ finances rather than yours. It gives you the same flexibility with borrowing money at need – normally at pretty steep interest. Just like a personal credit card, it’s best suited to expenses that can be paid off quickly – preferably within a couple of months.
Frequently asked questions about short-term business loans
Helpful business loan guides
Still looking for the right finance for your business?
Explore a range of business loan options suitable to your financing needs and apply online through Savvy today.