Short-Term Loan Options: When You Need Fast, Flexible Capital
When you need money for business but don’t want to deal with contracts that span years, short-term loans rescue you. They’re flexible, cover the expenses at hand, and you can clear them in a reasonable time frame.
But these loans only benefit you if their repayment terms/schedules are doable and they offer enough capital for your needs. Imagine securing a short-term loan of $10,000 because it gets approved fast, but in reality, you need $100,000. You’ll still have to manage the rest, probably from another option.
Therefore, we’ll list some fast loan options along with what they offer so you can decide when to opt for any of them. Keep reading and manage your finances better.
What is a Short-Term Loan?
A short-term loan is business financing that you borrow and repay quickly, mostly within 18 months. It covers your immediate expenses rather than long-term growth plans.
These loans mostly have simple and fast approval processes. Notably, because of their short-term periods, you have to repay frequently.
Here are some situations where short-term loan options make sense:
- Covering a sudden cash flow gap
- Paying for emergency repairs
- Managing seasonal expenses
- Seizing time-sensitive opportunities
- Buying inventory
What are Some Short-Term Loan Options for Businesses?
Data shows that almost 37% of businesses in the US applied for a loan or advance in the last 12 months. This shows that more than one in three companies rely on short-term funding options to keep the wheels moving.
These loans are supposed to make things easier, but a wrong choice can do the opposite. Suppose you go for a loan with daily repayments when your clients pay invoices once a month. You’ll hardly make timely payments, and even if you manage that, your cash flow will suffer.
Such mistakes happen in rushed decisions, but we don’t want that. Therefore, ROK Financial offers some well-thought-out short-term loan options. Here are some loans you can secure when time is short:
Business Line of Credit
A business line of credit is a flexible funding option that lets you draw a set amount of money when your business needs it.
Instead of taking a big loan, you’re approved for a credit limit, which can be between $10,000 and $5 million if your credit score is around 600 or higher. You can withdraw money as needed, and once you repay it, you can borrow again without reapplying.
Also, you only pay interest on the amount you use; it’s more cost-effective than a lump-sum loan. These loans are known for their speed and convenience as their approvals can happen in 1–2 days, and repayment terms are 6 to 18 months, so you can clear the balance quickly.
When you’re expected to handle unpredictable expenses, like covering payroll when a client payment is delayed, this loan fits the bill (quite literally). For example, if a big order arrives but your cash is stuck in unpaid invoices, you can draw what you need to fulfil it and repay once the customer pays.
Merchant Cash Advance
A merchant cash advance means you receive a lump sum of money upfront in exchange for a portion of your future credit card sales or daily revenue. So it’s not technically a loan, but rather an advance on your future revenue. This model is increasing in popularity, and according to the Business Research Company, the global merchant cash advance market will reach $19.73 billion by the end of this year.
It’s easier to qualify for because your future money works as collateral for this model. Interestingly, there’s no minimum FICO requirement for a merchant advance at ROK Financial; the approvals can happen the same day, and your funds arrive shortly after.
Repayment for this advance is simple. A portion of your daily, weekly, or monthly sales is automatically deducted to pay back. It means that if your sales are strong, you’ll repay faster, and vice versa. Most MCAs are paid off within 6 to 18 months, so your debt remains short-term and manageable.
This funding option is best suited for situations where quick cash is needed, like stocking up on discounted inventory. For example, if a supplier offers a major discount but you must pay immediately, a merchant cash advance can work best. It’s fast, accessible, and moves with your revenue.
Invoice Financing/AR Financing
When you borrow money against your unpaid invoice, it’s called invoice or accounts receivable (AR) financing.
You don’t have to wait for weeks or months for clients to pay. This model lets you use those outstanding invoices as collateral to get money when needed. Notably, you can secure this advance in two ways:
- You either sell the invoices to a financing company (called factoring).
- Or you borrow against them while still collecting payments yourself.
In both cases, the funds you receive are a large percentage of the invoice value, along with a small fee. To qualify for this loan at ROK Financial, you need at least $100,000 in B2B accounts receivable aged up to 90 days and $500,000 in annual gross sales.
After the approval process is done, funds can hit your account in 2 days, which means you experience quick access to working capital when cash flow is tight.
This financing suits businesses that complete projects or deliver goods long before payment is received. Suppose you run a manufacturing company. You shipped a big order, but won’t be paid for 60 days. In this case, invoice financing can bridge that gap so you can still pay suppliers or take on new orders without waiting for invoices to clear.
Conclusion
Business moves fast, and your available cash should keep up. That’s why ROK Financial helps you with models that are made for real-world businesses. We look at where your business is and match you with funding that fits. If you’re done wasting time on slow, one-size-fits-all lenders, find smarter options here that’ll help you act fast and grow without stress.
FAQs
1. How do I know which type of business loan is right for me?
It depends on what you need the money for and how fast you can repay it. If you want ongoing access to cash, choose a line of credit. If it’s a one-time expense, a merchant cash advance works better. And if you’re buying equipment, go for equipment financing.
2. Can I get approved if my credit score is low?
Yes, many lenders offer options for low credit, like merchant cash advances or revenue-based financing. Even at ROK Financial, many loans don’t require a high credit score.
3. What documents do lenders ask for during the loan process?
Lenders need your business bank statements, tax returns, and financial statements. They’ll also ask for your proof of identity and basic company details like time in business.
