Short-Term Financing
Short-term business loans
A short-term business loan is repaid in months rather than years — commonly three to twenty-four — and often on a weekly or daily schedule instead of a monthly one. That schedule, far more than the headline rate, decides whether the loan fits your business.
Definition
What actually makes a loan “short-term”
Three things separate short-term business financing from the rest, and only one of them is the length of the loan.
Lenders and marketplaces use “short-term” loosely. In practice the label describes financing repaid inside roughly two years, and the two features that follow from that compressed window are what change how the loan behaves in your bank account. Where that sits against the rest of the market — and what the approval data says about how long business loans really run — is set out in our guide to business loan terms.
1 — The term
Repayment measured in months. Most short-term business financing runs between three and twenty-four months. Past that, you are into business term loan territory, where terms are quoted in years.
2 — The frequency
Payments are frequently debited weekly, and on some products daily, rather than once a month. A monthly figure you have mentally budgeted for may arrive as fifty-two smaller ones.
3 — The pricing
Short-term products are often quoted with a factor rate rather than an interest rate, which means the total you repay is largely fixed the day you sign rather than accruing as you go.
Where this page uses a dollar figure, it is an illustrative calculation, not a Fundur quote. Fundur is a financing marketplace, not a lender, and does not set pricing.
The comparison people skip
What leaves your account, and how often
Most financing comparisons line products up by how much you can borrow and how fast. The more useful axis for short-term borrowing is the repayment schedule — because that is the part your cash flow has to absorb every week.
| Financing type | Typical term | Payment frequency | How the cost is set | What ends the obligation |
|---|---|---|---|---|
| Working capital loan | 3–24 months | Weekly or monthly | Interest or factor rateTotal often set at signing | The final scheduled payment |
| Business line of credit | Revolving | Monthly, on what you have drawn | Interest on the drawn balance onlyUndrawn capacity accrues no interest | Repaying the balance — the line stays open |
| Revenue-based financing | 3–24 months | Daily or weekly | Factor rate applied to the advance | Delivering the agreed total |
| Invoice factoring | Per invoice | Not a schedule — settles when your customer pays | A fee per invoice against the advance | Your customer settling that invoice |
| Business term loan | Years | Monthly | Interest on the balance over the term | The final scheduled payment |
The line most people read past
Two offers can carry an identical total cost and still land completely differently, because one debits your account fifty-two times a year and the other twelve. Ask for the payment amount and the payment frequency before you compare anything else.
Structures as described on Fundur’s own product pages. Terms, frequencies and pricing vary by lender and by business; the table describes how each structure ordinarily works, not an offer.
Worked example
The same $25,000 cost, four very different loans
Here is $100,000 financed at a factor rate of 1.25 — a $125,000 total repayment, so a $25,000 financing cost — repaid in equal weekly instalments over four different terms. The cost in dollars never changes. Almost everything else does.
| Term | Payments | Each payment | Financing cost | Approximate APR |
|---|---|---|---|---|
| 6 months | 26 weekly | $4,808 | $25,000 | ~90% |
| 12 months | 52 weekly | $2,404 | $25,000 | ~46% |
| 18 months | 78 weekly | $1,603 | $25,000 | ~31% |
| 24 months | 104 weekly | $1,202 | $25,000 | ~23% |
An identical $25,000 is anywhere from a 23% APR to a 90% one
The financing cost is the same figure in every row. What changes is how long you had the money — and paying $25,000 for six months of capital is roughly four times as expensive, annualised, as paying $25,000 for twenty-four months of it.
APR here is the annualised periodic rate that makes the scheduled weekly payments equal the $100,000 financed, solved numerically and verified by two independent methods. It excludes any origination or third-party fee, which would raise it. To convert a specific quote, use the factor rate calculator.
The decision
Why a shorter term is not automatically cheaper
With a conventional interest-rate loan, paying it back faster saves you money. With factor-rate financing, it does not. Getting these two backwards is the single most expensive misunderstanding in short-term borrowing.
The table above holds a factor rate still and shortens the term, and the annualised cost climbs. Hold an interest rate still and do the same thing, and the opposite happens — because interest only accrues while you owe the balance, so repaying sooner means less of it.
| Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 6 months | $17,354 | $4,123 | $104,123 |
| 12 months | $8,979 | $7,745 | $107,745 |
| 24 months | $4,801 | $15,231 | $115,231 |
| 60 months | $2,327 | $39,610 | $139,610 |
Two opposite behaviours, one word
At a fixed interest rate, a shorter term costs less in total and more per payment. At a fixed factor rate, a shorter term costs the same in total and far more per year of use. Before you compare two offers, establish which of the two you are actually being quoted.
When a short term is the right tool
- The money is repaid out of revenue you can already see — a signed contract, a booked season, an invoice with a due date.
- The cost is matched to something that earns more than it costs, and earns it soon.
- You want the obligation gone quickly rather than carried on the balance sheet for years.
- You can carry the payment in your slowest week, not just your average one.
When it is the wrong one
- You are buying something long-lived — property, or major equipment that will earn over years. Match the term to the asset’s life instead.
- The repayment depends on revenue you are hoping for rather than revenue you have contracted.
- The payment only works in a good week. A weekly debit does not pause for a bad one.
- You are refinancing a short-term balance with another short-term balance. That is a cycle, not a fix — see business debt consolidation.
Matching the structure
Which short-term option fits the situation
“Short-term business loan” is a category, not a product. Four different structures sit inside it, and the right one usually follows from what you are covering rather than from how much you need.
A one-off cost, repaid from revenue
Working capital loan
A lump sum repaid in fixed instalments over three to twenty-four months. The straightforward answer when the need is a single sized event — payroll, a supplier, a repair — that revenue will cover shortly.
Working capital loansA need that keeps coming back
Business line of credit
An approved limit you draw against, repay and draw again. You pay interest only on what you have actually drawn, which suits recurring or unpredictable gaps better than a fresh loan each time.
Lines of creditRepayment that flexes with sales
Revenue-based financing
An advance repaid from a share of revenue, usually debited daily or weekly. Payments move with your sales rather than sitting fixed — which cuts both ways, and the cost is typically among the highest.
Revenue-based financingMoney already earned but not yet paid
Invoice factoring
If the gap is customers who take 30, 60 or 90 days to pay, factoring advances against those invoices instead of adding a scheduled debt. There is no repayment term — the invoice settles it.
Invoice factoringOne more case: bridging to money you already know is coming
A bridge is the one short-term structure defined by its exit rather than by its shape. Everything above is chosen by what the money is for. A bridge is chosen by what will repay it — a specific sum, arriving on a date you can point at, that has not arrived yet.
That difference matters in underwriting. Ordinary short-term financing is repaid out of trading, so the lender is reading your revenue. A bridge is repaid out of a named event, so the question becomes how certain that event is and when it lands. The financing itself is the same machinery this page has already described: a few months to two years, fixed instalments, priced for speed.
The three that come up most
Waiting on a slower approval elsewhere — an SBA loan is measured in weeks, and payroll does not wait for it. Waiting on a sale or a closing that already has a date. Or waiting on one large invoice or contract milestone, where factoring is often the cheaper answer because it advances against the invoice instead of adding a second obligation.
The test is simple, and it is worth being honest with yourself about. If you can name the source, the amount and roughly the date, a bridge is doing what it is designed to do. If the repayment depends on trading recovering, it is not a bridge — it is ordinary short-term borrowing, and it should be judged on the payment schedule above rather than on a story about what happens next.
Not sure which structure applies? The financing comparison sets loans and lines side by side, and business loan rates and costs explains how interest rates, factor rates and APR relate to one another.
Questions
Short-term business loan questions
How short is a short-term business loan?
In practice, repaid within about two years. Most short-term business financing runs from three to twenty-four months, and a good deal of it sits between six and twelve. Anything quoted in years rather than months is generally treated as a term loan instead.
Are payments weekly or monthly on a short-term business loan?
It depends on the product. A working capital loan is commonly repaid weekly or monthly; revenue-based financing is often debited daily or weekly; a business line of credit is usually billed monthly on the balance you have drawn. The frequency matters as much as the amount, because a weekly debit has to clear in your slowest week, not your average one.
Does paying a short-term loan off early save money?
Only if it is priced with an interest rate. Interest accrues while you owe the balance, so clearing it sooner means less of it. If the financing is priced with a factor rate, the total you repay was largely fixed when you signed, and paying early usually shortens the schedule without reducing the amount — unless the agreement contains an explicit early-repayment discount. Ask specifically, and get the answer in writing.
Why is the APR on a short-term loan so high?
Because APR annualises the cost, and a short-term loan gives you the money for a short time. A $25,000 financing cost on $100,000 is roughly a 23% APR spread over twenty-four months and roughly 90% compressed into six — the same dollars, a quarter of the borrowing window. A high APR on a genuinely short loan is not automatically a bad deal, but it is the only figure that lets you compare it with anything else.
Is a short-term business loan the same as a working capital loan?
They overlap heavily but describe different things. “Short-term” describes the repayment window; “working capital” describes what the money is for — the everyday operating costs a business covers before revenue arrives. Most working capital loans are short-term, but so are revenue-based financing and several other structures.
What do lenders look at for short-term business financing?
Short-term products generally weight recent revenue and cash flow more heavily than long-dated credit history, because the repayment window is short and the lender is underwriting your next few months rather than your next few years. Time in business, deposit consistency and existing obligations all matter. Business loan requirements sets out what is typically asked for and how it varies by product.
See the terms you actually qualify for
One application, compared across lenders — with the payment amount and the payment frequency stated up front, so you can judge the schedule and not just the rate.