Short Term Business Loans

Need some short term funding to cover a cash flow crisis or replace equipment your business can’t operate without? Mozo compares some of the latest short term business loan deals to help find the right loan for you.

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What should I look for when comparing short term business loans?

If you’re looking for a short term business loan, chances are you need funds fast. But while funding speed is important, you’ll also want to consider loan terms, interest rates, fees and lending requirements. Make your search simple by comparing these features and more on a range of loans from different lenders in the table below.       

Can I apply for a loan through Mozo? 

Found a short term business loan that suits your needs in the table below? Taking the next step and applying is a piece of cake. All you’ll need to do is hit the blue Go to site button next to your loan of choice and you’ll be directed straight to the lender’s application page.

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Page last updated October 26, 2020

Short term business loan comparisons on Mozo - rates updated dailyMozo has robust processes to ensure our site is updated to reflect the latest information from providers. There may be the odd occasion where updates are delayed, so please confirm information before purchasing.

Search promoted business loans below or do a full Mozo database search. Advertiser disclosure.

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*Example cost figure provides indicative minimum total repayments over 6 months on a $10,000 loan. Actual costs will vary depending on individual risk score as assessed by the lender.

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Business Banking Resources

Reviews, news, tips and guides to help find the best business loan for you.

Finding the best short term business loan

Gone are the days of walking into a branch to take out a loan, because finding the best short term business loan for your needs could be as simple as filling out an online application. Let’s step back a minute though, because with so many different loans on the market featuring a wide variety of rates, fees and features, nailing down the right loan to suit your needs requires narrowing down the field. That’s why we’ve put together some handy information you’ll want to know before you begin to compare short term business loans.

What is a short term business loan? 

A short term business loan is exactly as advertised: a business loan that can be taken out over a short period, generally 3- 24 months. As you might expect, short term loans also tend to have faster repayment schedules, so you may need to pay interest on a daily or weekly schedule instead of fortnightly or monthly. Aside from that, they’re very similar to a regular business loan because they can be used to fund a whole range of purposes including:  

  • Covering unexpected costs
  • Filling seasonal cash-flow holes
  • Paying for emergency repairs
  • Awaiting a client to pay an invoice

Short term business loan fees and features to look out for

There are a fair few things to think about when it comes to comparing short term business loans including rates, fees and other features, all of which can have a big impact on the amount you pay over the course of the loan. 

Interest rates      

The interest you end up paying on your short term business loan is likely to be the biggest cost you’ll fork out, so snagging a loan with a low rate can make all the difference. Short term business loan rates can vary significantly between lenders though, as can how they’re expressed, because some lenders will display rates as a daily, weekly, fortnightly, monthly or annual figure. That’s why it’s important to make sure that you’re comparing apples with apples when it comes to looking at rates. 

It’s also common for some lenders to offer interest rates on a business-by-business basis, meaning you’ll be offered a personalised rate depending on a number of factors including your loan size, loan period and your financial history.    

Loan fees

Like any loan, there are likely a few fees you’ll need budget for. Some of the most common fees you might be charged include:

  • Establishment fees: Also known as application or upfront fees, establishment fees are one-off payments you are charged at the start of the loan which cover the cost of setting up your loan file with the lender.
  • Service fees: These are also known as ongoing fees and are charged on either a monthly or annual basis or the life of the loan. 
  • Late payment fees: Many lenders charge late payment fees if, you guessed it, you fall behind on your repayments. 

Repayment features

Depending on the type of loan you choose, you may have an extra repayments option - this allows you to make extra repayments to your loan. Not only will this help you save on interest, you’ll be paying your loan off faster. However, some lenders may charge a fee to do this and can set a limit on how much extra you can repay.

Another feature your loan may come with is a redraw facility. With a redraw facility, you’ll be able to withdraw any of your extra repayments, which you can put towards an unexpected bill or other unforeseeable cost.

Banks vs online lenders 

Fees and features are one thing, but when it comes to choosing the right short term business loan it’s worth knowing the difference between the different types of lenders on the market. Business loans generally fall into two different categories: those available from banks and those available from online lenders, with each having their respective benefits and drawbacks. 

Banks and credit unions

Chances are you’re already familiar with many of the big name banks and credit unions which offer short term business loans to Australian businesses, including ANZ, CommBank, NAB, Suncorp, St.George and Westpac.  

  • Benefit: Convenient to stick with a lender you have an existing relationship with
  • Benefit: Banks and credit unions often offer more competitive rates
  • Drawback: The application and approvals process can be time consuming
  • Drawback: Banks may be stricter with vetting business applicants      

Online lenders

Springing up in the last ten years, Australia now has a heap of new up-and-coming lenders offering more competition in the business loans space. These include names like Prospa, Moula, Capify, Get Capital and many more. 

  • Benefit: Fast online applications and funding
  • Benefit: Greater access to unsecured business loans
  • Drawback: Interest rates can be steeper
  • Drawback: Don’t always offer the opportunity to speak face-to-face

How much can I borrow with a short term business loan?  

While every lender will need to do their due diligence in order to make sure your business satisfies their lending criteria and you can afford to pay back the loan, businesses will generally be able to take out short term business loans from as little as a few thousand dollars all the way up to hundreds of thousands.   

To give you an example, the short term business loans in the table above typically start from around $5,000 and go up to $500,000.

Your short term business loan FAQs answered 

What are the pros and cons of using a short term business loan?

It’s important that you weigh up the pros and cons of short term business loans before making a decision. One of the pros about using a short term business loan is the quick approval and access to funding, so you may have the funds in your account within one business day. And since you’ll be approved quickly, you’ll also be able to take advantage of any business opportunity, or to fill a gap in your accounts receivable or put it towards urgent costs.

On the other hand, short term business loans can come with higher interest rates and fees. This is usually to cover the cost of loss of long term interest, since you will be making your repayments on a daily or weekly basis - which is another to keep in mind before you apply.

What types of short term business loans are available?

Like a personal loans, short term business loans are available as secured or unsecured. However, there is also the option to take out a commercial loan. All three loans have pros and cons, which you will need to weigh up before you decide on the one that’s right for you.

Secured short term business loans: A secured loan will require an asset to be used as security, like your home or car, and in return you will often receive a lower interest rate. Just keep in mind that if you default on the loan, your lender has the right to repossess the asset.

Unsecured business loans: Unsecured business loans don’t require any security, but they do generally come with higher interest rates.

Commercial loans: A commercial loan is your third finance option, which usually comes in the form of a business overdraft or a line of credit. A line of credit is an established agreement between you and your lender that gives you access to a predetermined amount of credit whenever you need. 

Should I get a short term business loan with a fixed or variable rate? 

There are two types of short term business loan rates available: fixed or variable. And even though you may be in a rush to get some much-needed finance, you’ll need to compare the benefits and drawbacks of both before making your decision.

Fixed interest rates: A fixed rate means your repayment amount will never change because you’ll be locking in your rate for the whole loan term. However, fixed rates do tend to be on the higher side.

Variable interest rates: A variable rate does the opposite and will change according to market conditions, such as interest rate movements. These types of loans also come with other repayment features, like the ability to make extra repayments and to make us of a redraw facility. Just remember, if rates rise, so will your repayments.

Is there anything I should be aware of before I start my application?

Whether your business is large or small, your lender will take a number of factors into consideration during the application and approvals process, and you may need to provide a range of information:

Business eligibility: Some lenders will have different eligibility requirements, like having been in business for a minimum of 6 months or having a minimum annual turnover (e.g. $100,000).

Financial documents: Lenders often require proof of your financial position, so don’t be surprised if you’re asked to provide anything from bank account statements to tax returns and even proof of your cash flow. 

Personal credit history: Lenders will also take the personal financial history of a business owner, or any business directors, into account during the approval process. 

Turnaround time: One other factor to be aware of is the time it can take to get approved for a business loan. Depending on your financial situation, you may need to access the funds quickly, so it may be worth considering lenders with quick application and approval processes. 

What could cause my loan application to be rejected?

Before you submit your application, it’s important you’re aware of the common mistakes that could see your application rejected. This could include:

Frequent changes to your business structure: Lenders will ask to see your current business structure, so if your business has undergone multiple reconstructions you could have your application rejected.

No loan purpose: Once you submit your application, you will be asked to specify the purpose of the loan. If you don’t have a business plan that demonstrates what you intend to use the loan for, your lender may see this as a red flag.

Borrowing too much: As your lender determines your borrowing capacity, they will look into your business account details, so if you’re asking for more than you can afford, your lender may reject your application.