Short Term Lending Options for Small Business Owners in 2020

November 2019

Short-term small business loans provide working capital to address an immediate, temporary financial issue. There are a lot of reasons that owners of small businesses seek a short-term infusion of funds, for example:

  • You may need a short-term loan to improve your cash flow during slow periods to help you meet payroll and pay bills.
  • You may need to hire additional temporary help during the holiday season, or during other periods when your business peaks.
  • You may need to manage the financial consequences of an emergency, such as equipment breakdowns, theft or a natural disaster.
  • Or you may want to take advantage of a sudden opportunity or may have a new offer that requires you to upgrade your business capacities or inventory quickly.
  • You may need to fill a cash flow gap between your account receivables and payables.

How do I qualify for a short-term small business loan?

As a small business owner, you typically have a better chance of being approved for a short-term loan from a bank than you would a long-term loan. are the exception. Since a short-term loan must be repaid within a year – and often within 3-4 months- the risk to the bank is reduced. The bank doesn’t have to do future financial projections, they can make a decision based on your current revenues, the economy as a whole and your credit history.

If you are applying for a loan from a bank or credit union, you’re more likely to be approved if you have a good personal credit score – 720 and up. Your business should have earned healthy revenues for the last 3-5 years.

With a credit score of less than 720, you will definitely need collateral to qualify for a short-term loan from a bank. Those with excellent credit history, or an established relationship with a banker at your credit union or local bank, may qualify for an unsecured loan.

Bad credit or no credit? You’ll likely find short-term loans – any loans, really – from a bank difficult to access. You may qualify if you can deposit the amount of the requested loan in a secured savings account. It sounds counterintuitive – if you had the money, why would you need a loan? – but you may be able to get a friend or family member to loan you the necessary sum if they know it will just be used as security for as short-term loan. And if you do have the money to secure a loan, it’s a great way to build your credit history.

Where can I get a short-term small business loan?

Banks and Credit unions

Be aware that even if you meet the criteria, you’ll need to devote a lot of time to preparing your loan application and waiting to find out if you’ve been approved. If you need funds quickly, a bank or credit union may not be the best option. If you have an existing professional relationship with a financial institution though, you may be able to expedite the process – talk to your banker.

Small Business Administration

SBA loans are a great choice if you have an excellent credit history and time. These loans aren’t easy to qualify for, and typically require significant documentation. But if you can plan ahead and have a strong credit history, SBA loans – which are funded by banks and credit unions and guaranteed by the SBA – are a great choice as rates tend to be low.

Line of credit

If you have existing credit, have collateral that you can use to secure a one-time increase in your credit line, and a great credit history its worth exploring this option with your bank or credit union. This can be the fastest way to obtain a short-term loan quickly.

Short-term loan alternatives for small businesses

If you don’t qualify for a short-term loan from a bank, don’t worry - you still have options. Alternative funders are happy to work with businesses that have been open for three months or more and have revenues as low as $5000 a month, and funds are typically available within 72 hours. Business owners don’t need to have great credit scores to qualify for funding either.

One easy way to get started with alternative lenders is by getting pre-qualified by One Park Financial, which then gives you access to a funding expert who can discuss your business needs and options to determine what funding types best meet your needs.

One Park Financial works to help owners of small and mid-sized women-owned businesses access the funding that meets their needs. Established in 2010 and founded by entrepreneurs, One Park Financial understands the challenges associated with small business loans. Visit or call 855.218.8819 and connect with a funding expert today to discover the options that make sense for you and your business.