Short-term business loans are business loans designed to cover immediate funding needs your organisation might have. Terms typically range from one month to three years, offering amounts up to $300,000 or more with security. Because of their short duration and streamlined application process, they’re often easier to qualify for than traditional loans and can deliver funds quickly when your business needs them most.
How do short-term business loans work?
Short-term business loans are designed for speed, flexibility and accessibility. Many lenders offer streamlined online applications with approvals possible in as little as 24 to 48 hours, making them ideal when your business needs quick access to funds.
These loans can be either:
- Unsecured, requiring no collateral but typically carrying higher interest rates
Or
- Secured, backed by an asset such as equipment, property or inventory, which may allow for larger loan amounts or lower rates
As with any business loan, lenders will assess your business’s monthly revenue, trading history and credit profile – but approval criteria are generally more relaxed than for long-term finance. This makes short-term loans an appealing option, whether you’re a startup or an established business.
Why apply for a business loan with Savvy?
Business lenders you can compare
How much can I borrow with a short-term business loan?
Borrowing amounts for short-term business loans typically start from $5,000 and can go up to $300,000 or more, particularly with a secured loan. Some lenders may offer higher limits depending on your business’s financial profile and the collateral you provide. However, while a lender might advertise a maximum amount, you may not be approved for the full figure. Your loan offer will depend on how much your business can realistically afford to repay based on its cash flow and existing liabilities.
Factors that influence how much you can borrow include:
- Your average monthly revenue: some lenders may offer a loan equivalent to one month’s turnover or more.
- Time in business: established businesses may qualify for higher amounts.
- Creditworthiness: both business and personal credit scores may be assessed.
- Whether the loan is secured: using an asset as security can increase your borrowing capacity.
You’ll also need to ensure you can comfortably meet the weekly or fortnightly repayments, which tend to be higher than those on long-term loans due to the shorter duration, as well as any fees, such as establishment fees and ongoing account-keeping fees.
What can I use my short-term business loan for?
Short-term loans are well-suited to a wide range of practical needs, including:
- Covering payroll or rent during seasonal downturns
- Repairing or upgrading equipment
- Funding marketing campaigns or expansion efforts
- Paying off urgent or unexpected bills
- Financing a one-off project, event, or conference
- Consolidating business loan debt to simplify repayments
- Pay off a business tax debt
The pros and cons of short-term business loans
Pros
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No security required
Many short-term business loans are unsecured, meaning you won’t need to provide collateral. This is ideal if you don’t have business or personal assets to put up as security.
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Available to newer businesses
Some lenders will consider businesses with as little as six months of trading history, making these loans accessible to startups and newer ventures needing a financial boost.
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Fast application and approval
Applications are typically quick and easy to complete online, with some lenders offering approval and funding within 24 hours.
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Lower total interest paid
Due to the shorter loan term, you’re likely to pay less total interest than you would over the life of a long-term loan – even if the rate is higher.
Cons
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Higher interest rates
Short-term loans usually come with higher interest rates than traditional loans, which can increase the cost of borrowing.
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Lower borrowing limits
Loan amounts are generally smaller, which may not be suitable if you need funding for large-scale projects or purchases.
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Strain on cash flow
Short repayment terms mean higher instalments, which can put pressure on your business’s day-to-day cash flow if not managed carefully.
How to apply for a short-term business loan through Savvy
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Tell us about yourself and what you want to buy
Start by filling out our simple online application form. This will tell us details like what you want your loan for, how much you need and your business’ structure, revenue and trading time.
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Send through any required documentation
We may require further information in some cases to verify parts of your application. If this is the case, we’ll ask you to submit additional documents via our online portal.
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Discuss your next steps with a Savvy consultant
Once we get all the info we need, we’ll get to work comparing options from our lender panel. A member of our consultant team will give you a call to talk about your options.
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Have your application submitted for formal approval
After you give us the all-clear, we’ll get to work preparing your application to submit to your lender. This can be formally approved as soon as within 24 hours.
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Sign your contract and settle the deal
Once you receive approval, you’ll be sent all the required contracts and forms you’ll need to sign, which can be done electronically. We’ll handle settlement and your funds will be transferred once it's all wrapped up!
Short-term business loan eligibility and documentation requirements
To qualify for a short-term business loan, you’ll typically need to meet the following criteria:
- Be at least 18 years old
- Be an Australian citizen or permanent resident
- Have an active ABN
- Be registered for GST
- Have been trading for at least six months
- Meet a minimum monthly revenue threshold (this varies by lender, but may start from around $6,000)
Lenders will also usually ask for the following:
- A valid form of photo ID (e.g. driver’s licence or passport)
- Proof of your ABN and GST registration
- 3 to 6 months of business bank statements
- Your most recent tax return (personal or business)
Requirements may vary depending on the lender, the amount you’re applying for, and whether the loan is secured or unsecured. Having these documents ready can help speed up your application and improve your chances of approval.
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