Using Short Term Business Loans to Cover Expenses

Using Short-Term Business Loans to Cover Expenses
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Many entrepreneurs and small business owners struggle with learning the details of the different kinds of business financing options that are available to them.

Matching the proper type of funding with your needs is essential to contain costs and set yourself up for the best possible chance of success. It’s no coincidence that a majority of small businesses fail in the first 5 years, at as many as 40% of small business owners cite funding issues as the source of their failure. 

In this guide, we’re going to take a look at Short Term business loans, one of several small business funding options that are available today. Specifically, we’ll talk about what Short Term business loans are, and how they differ from other entrepreneurial and small business funding options. 

We’ll explore how to use Short Term business loans to cover expenses, highlighting the kinds of expenses that are best served by this kind of funding, and why. Additionally, we’ll provide a comprehensive rundown of the pros and cons associated with Short Term small business loans, and briefly mention some other Short Term business funding options.

You may not be an expert in small business finance and funding, but in no time, with our help, you’ll know all about using Short Term small business loans to help manage your business expenses. 

What is a Short Term Business Loan?

First, it’s important to define exactly what a Short Term business loan or Short Term small business loan actually is. The two terms can be used interchangeably. 

In essence, Short Term business loans are typically standard business loans, which may be collateral-free (unsecured) or require collateral (secured). The reason they are denoted as Short Term business loans largely stems from their loan term or duration.

What is a Short-Term Business Loan

Regular business loans often run on a period of a few to several years, sometimes 10 years or more on the upper end. By contrast, Short Term small business loans have a period of months to a year, maybe 18 months or 2 years at the very upper end. 

As the name implies, they’re designed as a Short Term business funding method, to provide your business with cash for immediate or Short Term expenses, and then to be repaid in fairly short order.

What Kind of Expenses are Short Term Business Loans Used For?

Based on their Short Term nature, Short Term business loans are ideally matched to Short Term expenses. They can be used for operating expenses, especially in times of limited cash flow.

However, they are best to put use for expenses that will, in short order, lead to a return on investment. This is due to their much more rapid pace of repayment, and more frequent payment requirements, than a loan for a similar amount spread over a much longer repayment period.

What Kind of Expenses are Short-Term Business Loans Used For

So, what kind of expenses are Short Term small business loans most often used for by entrepreneurs and business owners?

Some examples include:

  • Inventory purchasing or purchase order financing, to enable business owners to order goods from suppliers, which will, in turn, be sold or converted into finished goods and sold to customers, generating profits on a time scale of months.
  • Short Term cash flow needs based on business expansion, marketing campaigns, temporary increases in labor needs, and so on.

    This can be part of a normal business expansion, or temporary based on seasonality, cyclical trends, or new business opportunities you wish to seize.
  • Short Term business finance is a great choice when unexpected bills or expenses hit, and disrupt your otherwise carefully-planned budgets.

    So long as you have a healthy cash flow and plenty of receivables on the horizon, there’s no reason not to take out a Short Term small business loan, pay your urgent or unplanned bills (such as equipment repair in your production facility), and then repaying it in short order.
  • Often, entrepreneurs working with partners or a group of investors can find Short Term business funding as a good option to generate enough cash quickly enough to buy out those partners or investors.

Of course, there are many other potential uses for Short Term business loans. There are typically no restrictions on how they can be used, but, as we’ve stressed, they are best suited for Short Term needs. 

Otherwise, the pace of repayment will be hard to keep up with, and the savings that can be realized on interest over longer-term loans may be offset by missed payments, late fees, or extension penalties.

The Pros and Cons of Short Term Small Business Loans

There are some key pros and cons related to Short Term small business loans, which tend to apply in almost all cases, regardless of the specifics of your business or industry. In brief, these include:

The Pros and Cons of Short-Term Small Business Loans


  • Short Term business loans can save you money, as with faster repayment and a shorter period of the loan balance being outstanding, the less money you’ll end up paying.
  • You can often find unsecured (no collateral required) Short Term business loans, which present less risk to the borrower than secured loans.
  • Short Term business loan rates are competitive. Though they may be higher in APR terms than longer-term loans, the repayment period or duration of the loan nets out to mean less interest paid and a lower cost of borrowing overall.
  • There are typically no restrictions on how Short Term business loan funds can be put to use to help your business.


  • Depending on your cash flow situation, it can be hard to keep up with the repayment on Short Term business loans. Longer-term loans may require a monthly payment, whereas Short Term small business loans often require weekly or even daily repayments.
  • Like most loans, you receive cash up-front with Short Term business lending. If your needs are not immediate, that can mean paying interest for weeks to months before you actually need the funding, and you may end up borrowing more than you actually need if expenses are uncertain.
  • Short Term business loans are a bit more of a risk for lenders, given the faster repayment cadence and the stress that can place on borrowers. As a result, the requirements to qualify for Short Term business lending are usually higher than those for longer-term business loans.

    This can include higher credit score requirements, longer time in business requirements, more significant revenue requirements, or a combination of any of those criteria. They’re generally not available to brand-new start-ups, but reserved for more established small businesses.

Other Short Term Business Finance Options from BizFly Funding

There are several other Short Term business finance options to choose from in many cases, aside from Short Term business loans. Merchant funding, such as accounts receivable advances, maybe a good choice if your customers or third-party financiers offer them. 

Other forms of merchant funding, such as a merchant cash advance is easy to qualify for, though it may cost you more than a Short Term business loan.

Other Short-Term Business Finance Options from BizFly Funding

A line of credit isn’t really short- or long-term in nature, but rather revolving and ongoing, allowing you to draw against the line and repay it as needed for your operations. For recurring or highly variable expense needs, it can be a better choice than a straight-up loan. 

No matter which Short Term business funding option you think would work for your business, consider applying at BizFly Funding. BizFly Funding is a private, non-bank lender, that works exclusively with small business clients. 

They offer a full range of Short Term and long-term small business funding options, including Short Term business loans, long-term business loans, lines of credit, merchant cash advances, debt consolidation loans, loans for women-owned businesses, and much more. 

With affordable Short Term business loan interest rates, a fast online application process, and exceptional customer service, BizFly Funding makes it easy to get the funding you need to help your business succeed! 

Learn more at

Frequently Asked Questions about Short Term Business Loans

Banks and private lenders both offer Short Term business loans. Typically, the requirements to qualify for a Short Term small business loan at a bank are much stricter than those of private lenders.

Banks are also more likely to require collateral for a secured loan, whereas private lenders are more willing to offer unsecured Short Term business loans. 

Like all loans, Short Term small business loan interest rates will vary based on a number of factors, including the lender, whether or not the loan is secured, the duration or loan term, the amount borrowed, and even factors like the credit score or business financials of the borrower. 

At BizFly Funding, rates start as low as 9%.

If you’re considering BizFly Funding as your source for a Short Term business loan, simply log on to, and fill out the online application. 

It takes 30 minutes or less in most cases. 

All Short Term business finance options have tradeoffs, and pros and cons associated with their choice. 

The important thing to remember is to match your expenses and needs with an appropriate kind of business funding.

Don’t take out a Short Term business loan for far-off and uncertain future expense amounts, and don’t rely on a line of credit for a fixed, Short Term expense you need addressed right away. 

Mismatched funding and expenses are often the root cause of any waste or above-average costs associated with Short Term business funding. 

All loans and credit products can have an impact on your credit, either positive or negative. Increased outstanding loan amounts may hurt your credit in the short run. However, making repayments consistently on-time will improve your credit. 

The biggest risk to your credit when you are considering a Short Term business loan is defaulting (failing to repay the loan), as that will hurt your credit significantly.

Provided you make your repayments on time, however, Short Term business loans can be a good way to boost your credit in a relatively short period of time. 

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