Quick answer
Short-term business loans run from a few weeks to about two years. They bridge a specific gap, such as waiting on a payment, funding stock or clearing a tax debt, and are repaid from a known event. Secured versions over property allow larger amounts and flexible interest handling. Unsecured versions are faster for smaller amounts but usually carry frequent repayments.
Key points
- Terms from a few weeks up to about 24 months
- Secured or unsecured, depending on the amount
- Interest can be prepaid, capitalised or paid monthly
- The exit must be clear before you sign
- Term
- Weeks up to about 24 months
- Secured
- $20,000 to $5,000,000
- Unsecured
- Typically $5,000 to $500,000
- Repaid by
- Sale, refinance or expected income
A short-term business loan is a tool for a specific job. It covers a gap with a known end, then disappears. Used that way, it’s one of the most useful forms of finance a business can have. Used to cover an ongoing shortfall, it can make things worse.
What short-term loans are used for
- waiting on a large invoice or progress payment
- funding stock ahead of a busy season
- clearing an ATO debt before enforcement escalates
- settling a purchase before a property sale completes
- covering a one-off cost, like an urgent repair
- buying time while a bank refinance is arranged
The common thread is a predictable repayment event. If you can point to when and how the money comes back, a short-term loan fits.
Secured or unsecured
Secured short-term loans use property as security, through a first mortgage, second mortgage or caveat. They allow larger amounts, from $20,000 to $5,000,000, and flexible ways of handling interest. See our page on short-term property loans for more on terms and structures.
Unsecured short-term loans rely on the business’s cash flow. They’re quick, typically $5,000 to $500,000, and usually repaid by daily or weekly debits over three to 24 months.
Choosing the term
The right term is the time until your repayment event, plus a buffer. Too short, and you risk extension fees or default. Too long, and you may pay for months you didn’t need, depending on early repayment terms.
| Repayment event | Suggested term |
|---|---|
| A specific invoice with a due date | Due date plus 1 to 2 months |
| A property sale, already listed | Expected sale plus 3 months |
| A property sale, not yet listed | 9 to 12 months |
| A bank refinance after accounts are lodged | 12 months |
| Seasonal income | Through the end of the peak season |
How interest is handled
Secured short-term loans offer three common approaches:
- Prepaid. Interest for the term is deducted from the advance upfront. No repayments during the term, but you receive less cash.
- Capitalised. Interest is added to the balance and paid at the end. You keep more cash now, but owe more at the end.
- Monthly. Interest is paid each month, like a standard loan. Suits businesses with steady cash flow.
Unsecured loans usually bundle interest and principal into fixed, frequent repayments. Run the numbers on our caveat loan calculator to see how prepaid and capitalised approaches compare.
Compare total cost, not headline price
Short-term loans should be compared on the total dollars you’ll pay, including:
- establishment and application fees
- legal and valuation costs
- interest over the realistic term, not the maximum
- any minimum interest period
- discharge or exit fees
- extension fees if the exit is late
Ask every lender for a total cost in dollars for your scenario. It’s the only fair way to compare offers.
Plan the exit, then a backup
A short-term loan is only as good as the plan to repay it. Write down your exit, the date you expect it, and what you’d do if it’s late. Common backups include a second property that could be sold, a bank refinance or an equity partner. Our exit plan checker walks through the key questions.
A worked example
A Brisbane event hire company had a $380,000 receivable from a festival organiser, payable 60 days after the event. It needed $250,000 now for staff and transport. A private lender took a caveat over the owner’s investment property for a three-month term with prepaid interest. The receivable arrived on day 58, and the loan was repaid in full with a month to spare.
When short-term isn’t the answer
If the business needs money every month to cover costs, a short-term loan only delays the problem. In that case, a longer facility, a business restructure or advice from your accountant will serve you better. We’ll say so if we think that’s the situation.
Questions to ask before you sign
- What is the total repayable in dollars if I repay on the expected date?
- What is it if I repay a month early, or two months late?
- Is there a minimum interest period, and how long is it?
- What does an extension cost, and who decides whether it’s granted?
- When do default charges start, and how are they calculated?
- Can part of the loan be repaid early to reduce interest?
Find the right term
Tell us what you need, when it will be repaid and what you can offer as security. We’ll suggest a term and structure that fits. There’s no credit check when you first enquire, and your details aren’t passed around.
Clear dates and amounts in the form help us shape the right offer. Start your enquiry, or read about fast business loans and then check your eligibility.
Frequently asked questions
What's the shortest term available?
Some secured private loans run for as little as one to three months, often with a minimum interest period. Unsecured loans commonly start at three months.
Can I repay early?
Usually, yes, but check the minimum interest period and any early repayment fee. These affect the real cost if the exit comes sooner than expected.
What if I need longer than planned?
Ask about extensions before you sign. Many lenders will extend for a fee if the exit is still on track, but it isn't guaranteed.
Are short-term loans more expensive?
The price per month is usually higher than a long bank loan, but because the term is short, the total cost can be modest relative to what the money achieves.