It’s not uncommon for situations to arise where business owners need to borrow money on an expedited timeline. Traditional bank loans and SBA loans almost always move too slowly to work in these scenarios.


Fortunately, short term loans are available to provide an ideal solution. Because they’re normally issued by non-bank lenders such as alternative funders and hedge funds, you can skip the mountains of paperwork and lengthy underwriting process. It’s actually very common to get same-day approvals and have the funding hit your account in just a couple of days.


Short term loans usually have a funding maximum of $1,000,000. And as they’re built for speed, these loans have term lengths ranging from 4 to 24 months.


Given their borrower-friendly timelines, don’t be surprised if you pay more for a short term loan than you would for a standard-issue loan product. The interest rates often begin around 12%, but it all depends on your unique situation. Repayment is conveniently handled via an ACH debit on a weekly, semi-monthly or monthly schedule.


There can be substantial prepayment discounts on short term unsecured loans. Additionally, your payments can build business credit and the interest can be tax deductible. Be sure to consult with a financial advisor on the best way to deduct the interest when it’s time to file your taxes.


What Is an Unsecured Loan?

Any time you borrow money from a lender, there’s a risk that it won’t be paid back. To protect themselves from loss, lenders often require you to “secure” the loan with collateral. Common examples include vehicles, homes, or real estate. If you fail to repay the entire loan, the collateral goes to the lender to serve as compensation. With an unsecured loan, the lender doesn’t require collateral from you. The lender takes on more risk with this arrangement, and you don’t have to risk your personal property by tying it to the loan.


Using a Short Term Unsecured Loan

In addition to speed, these loans are also known for their versatility. In fact, there generally are no restrictions on the use of funds. Your short term unsecured loan can be used for a wide array of business purposes. Perhaps you’ve come across a business opportunity that requires fast action. Or you might use the funds to hire employees, bolster cash flow, or purchase equipment. The point is, you’ve got options.


Just remember that short term unsecured loans typically cost more than regular term loans. So it’s wisest to use them in situations where the faster timeline eliminates other options.



Applying for a Short Term Unsecured Loan

Once you’ve done your due diligence and confirmed that a short term unsecured loan is the best option, it’s a very quick and easy application process. Typically you will only need to submit:


  • A completed application
  • 3 months business bank statements
  • Business tax return (for higher loan amounts)

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