Short term business loans

Short term business loans generally come with shorter repayment periods, higher interest rates, a faster approval process and smaller loan amounts. They can be both unsecured business loans and secured business loans and business owners are often asked to provide a personal guarantee. Some of these loans are extended without a specific purpose specified, while others are extended specifically to purchase inventory, another company, or property.

• High interest rates: Their short term nature makes them riskier for lenders as the borrower has less time to meet the repayment terms, this means short term financing often comes with higher interest rates.

• Smaller loan amounts: Since there is less time to repay the loan, lenders may be less inclined to offer large loan amounts.

• Credit score: Missed repayments and defaults result in dropped personal and business credit scores which can impact your ability to borrow in the future.

• Debt trap: Short term loans can create a cycle of debt, in which borrowers consistently take out funds beyond their means to repay and then rely on new debt to repay the historic debt.

To use our service, you’ll need to be over 18, your business should be based in or operate within the UK, and you should have a trading history spanning at least 6 months. We do work with businesses looking for bad credit business loans and we also help finance start up companies.

Many lenders don’t work with gambling companies, weapons and chemicals manufacturers, banks, and businesses engaged in illegal activities. If you’re unsure whether or not you fit into any of these categories, feel free to get in touch with us directly and we’ll assess whether or not we can assist you in finding a suitable lender.

Finding ‘the right’ lender is a case of personal preference, availability, and circumstances, but some good things to keep an eye out for include:

• Fair interest rates: Consider whether or not the offered interest rates align with your goals. Assess not only how much you’ll be charged, but how much you could be charged if something were to go wrong, if you were unable to repay on a given day, or if you wanted to repay early.

• Transparency: Search for a lender who is transparent in their dealings with you. They should share the cons as well as the pros and ensure you are fully aware of and prepared for the agreement you are entering into.

• Reviews: If you can, see if you can find any reviews, whether online or in person, from historic customers. This can help you get a better grasp on how your chosen lender treats their customers and if that aligns with your expectations.

You will likely be charged a mixture of interest rates and fees. Interest rates vary greatly depending on your creditworthiness (a measurement of how likely you are to repay the loan based on your financial history and current circumstances), the lender, the loan type, whether you are planning to put up a personal guarantee or not and whether or not you intend to put up any assets as collateral.

You may be required to pay admin fees, broker fees, and exit fees and the interest rates may be variable (meaning the change based on the current climate) or they could be fixed (meaning they’re pre-agreed in advance).

In the UK, start up loans backed by the government come with a fixed interest rate of 6%. Some revolving credit facilities come interest-free if repayments are made within the month. Unsecured loans had an average interest rate between 7% and 20% whereas secured loans ranged from 4% and 20%. A Growth Guarantee Scheme is being offered by the government which could potentially bring down interest rates for some loan types. Reach out to our team to find out more about getting on this scheme.

• Find a lender: You can do this by using a broker, like Funding Options by Tide. We help match eligible borrowers to suitable lenders and provide the expert support you may need to find the most suitable lender for you.

• Gather your documents: Put together some cash flow projections and other relevant documents and make sure you have all information to hand, for example, your company address and other details.

• Submit an application: Narrow down your choice to one suitable lender and one short term business loan type and then hit apply. If you need support with your application, feel free to reach out to our team of experts.

• Wait for a decision: Short term loans often come with shorter waiting times, given their more urgent nature, however, you will likely still need to wait for a decision. This waiting time could take anywhere from a few minutes to 24 hours or a few months, and the lender will likely run a credit check on you or your business, possibly both.

• Withdraw the funds: If you’re approved, the funds will be released and it’s time to use them for their approved purpose.

That will depend on your loan type, personal circumstances, and the lender. For example, if you’re seeking a bridging loan for property development and using the property as collateral, you will likely gain access to more funds than if you’re seeking an unsecured start up loan. At Funding Options by Tide, we help borrowers apply for funding between £1,000 and £20M.

Possibly. Whether or not you’ll need to put up a personal guarantee will depend a lot on the lender, however, given the riskier nature of shorter term loans, it’s likely you’ll be asked for one. If you would prefer not to put up a guarantee, let our team know and we’ll see if we can help match you to a lender offering an alternative solution.