What is a short-term business loan?

A short-term business loan is finance repaid quickly, usually within 3 to 18 months. It covers revolving credit lines, fast fixed-term loans and merchant cash advances. The trade-off for speed and easy access is a higher cost than a standard multi-year loan, and a personal guarantee is usually required.

How much do short-term business loans cost?

Expect an effective 20% to over 90% APR, far above the 7% to 12% of a high-street loan. Factor-rate products such as merchant cash advances fix the cost upfront (a factor of 1.1 to 1.5), so repaying early does not reduce it. Always convert an offer to a total repayment figure before you sign.

What is a merchant cash advance and how does it work?

A merchant cash advance gives you a lump sum against your future card takings. The lender then takes a fixed share of each day's card sales until an agreed total is repaid, so payments rise on busy days and shrink on slow ones. It's priced on a factor rate, not an APR, and suits card-revenue retail and hospitality businesses.

Can you get a short-term business loan with bad credit?

Yes. Capify and the merchant cash advance providers consider adverse credit and CCJs, because they assess your live card takings and cash flow through Open Banking rather than relying on a credit score. You'll pay a higher factor rate to reflect the risk, and a personal guarantee is required.

How fast can you get a short-term business loan?

Very fast. Using Open Banking, iwoca, Capify and 365 Finance often decide the same day and fund within 24 hours, and Fleximize within 48 hours. That speed is the main reason short-term finance costs more than a slower high-street loan.

Do short-term business loans need a personal guarantee?

Almost always. iwoca, Capify, Fleximize and most merchant cash advance providers require a personal guarantee from a director, so you are personally liable if the business defaults. 365 Finance is an exception that markets no security or business plan, though it still advances against your card takings.

Best Short-Term Business Loans UK: Rates and Lenders Compared

Provider	Best For	Loan Amount	Indicative Cost	Action
Tide Funding Options Compare All	Businesses wanting to compare multiple funding types in one place	From £1,000	Varies by product	View Deal →
iwoca Most Flexible	SMEs needing fast, flexible credit without fixed monthly repayments	£1,000 to £1,000,000	49% APR (representative)	View Deal →
365 Finance	Card-revenue businesses wanting funding that flexes with daily sales	£10,000 to £500,000	Factor rate (no fixed APR)	View Deal →
Capify Bad Credit OK	Businesses with adverse credit or CCJs needing fast funding	£5,000 to £1,000,000	Factor rate (high effective APR)	View Deal →
Fleximize	Established businesses wanting flexible short-term funding with penalty-free early repayment	£10,000 to £1,000,000	0.9% to 2.9% per month	View Deal →
Funding Circle	Established limited companies wanting the lowest unsecured rate and larger amounts	£10,000 to £750,000	From 6.9% APR	View Deal →

Best for: Businesses wanting to compare multiple funding types in one place

Watch out: Rates and terms vary by lender; always check the final offer directly with the matched provider

Not ideal if: Businesses with a strong existing bank relationship who have already secured competitive terms

Representative APR49% APR

Best for: SMEs needing fast, flexible credit without fixed monthly repayments

Watch out: The 49% representative APR is expensive; judge it on total cost for short borrowing, not the headline

Not ideal if: Sole traders, who are not eligible, or anyone wanting the lowest possible rate

Best for: Card-revenue businesses wanting funding that flexes with daily sales

Watch out: Priced on a factor rate (around 1.1 to 1.5), not an APR, so the annualised cost can be high; you need steady card takings

Not ideal if: Businesses without significant card or e-commerce revenue, or anyone wanting the cheapest annual rate

Best for: Businesses with adverse credit or CCJs needing fast funding

Watch out: A processing fee (£249 to £649) and monthly service fee stack on top of the factor rate, so the total cost is high

Not ideal if: Businesses that qualify for a bank or Funding Circle rate, where borrowing is far cheaper

Eligibility: 12 or more months trading, at least £10,000 monthly turnover (MCA needs £20,000 monthly card sales), UK limited company, sole trader or partnership; adverse credit considered

Not ideal if: Businesses that qualify for a bank or Funding Circle rate, where borrowing is far cheaper

Watch out: A processing fee (£249 to £649) and monthly service fee stack on top of the factor rate, so the total cost is high

Best for: Established businesses wanting flexible short-term funding with penalty-free early repayment

Watch out: Unsecured rates run 1.5% to 2.9% a month, and as B2B lending it sits outside formal FCA regulation

Not ideal if: Businesses under six months old, or anyone needing funds the same day

Representative APRFrom 6.9% APR

Best for: Established limited companies wanting the lowest unsecured rate and larger amounts

Watch out: A completion fee of 1% to 3% is added to the loan at drawdown, so factor it into the true cost

Not ideal if: Sole traders, ordinary partnerships, or any business under two years old, none of which qualify

How Short-Term Business Loans Work

Loan Amounts, Terms and Short-Term Options

Short-term finance covers 3 to 18 months, and you pick from three shapes: a revolving credit line, a fixed-term loan, or a merchant cash advance against your card takings.

Amounts run from £1,000 on an iwoca line up to £500,000 or more, with the facility sized to your recent turnover and cash flow.

Short and fast is the appeal. That’s what you pay a premium for.

How Short-Term Lenders Charge You

Watch how you’re charged: iwoca and Fleximize quote a monthly rate, while Capify and 365 Finance use a factor rate, a fixed multiplier on the amount you borrow.

A factor rate of 1.25 means you repay £1.25 for every £1, whatever the timeframe, so clearing it early won’t cut the cost.

Factor rates hide the real cost from you. That’s the trap to watch.

How Short-Term Funds Reach You

Speed is the point: with Open Banking, the lenders we rate fastest, iwoca, Capify and 365 Finance, can read your account and fund within 24 hours, where a bank takes weeks.

Picture your accountant connecting Open Banking and exporting last quarter’s takings on a Friday while you wait, and the offer lands the same day.

Short-Term Business Loan Costs and Fees

Interest Rates, Factor Rates and Representative APR

You’ll pay far more than on a long-term loan: short-term and MCA products run an effective 20% to 90%+ APR, against 7% to 12% at a high-street bank.

The Bank of England base rate is 3.75%, but these lenders price on risk and speed, not the base rate, so the cost barely tracks it.

We rate iwoca’s 49% representative APR fair for flexible short bursts, while the factor-rate products can cost far more.

The faster the money, the more it costs you. That’s the trade.

Fees on Top of the Headline Cost

Your headline cost isn’t the end of it. Capify adds a processing fee of £249 to £649, a 4% origination fee and a monthly service charge on top.

iwoca and Fleximize charge no early repayment fee, and 365 Finance rolls everything into one agreed total, so check what’s actually included.

Why Short-Term Costs So Much Annualised

If you annualise it, short-term finance looks dear because the fee is fixed upfront and daily repayments drain your cash flow before the money has worked.

Cheap it isn’t. That’s why short-term only pays when the return beats the cost.

Eligibility for Short-Term Business Loans

Trading History and Turnover

Your recent turnover matters more than your history: most short-term lenders want six months trading, though Capify and Funding Circle ask for twelve.

MCA providers like 365 Finance need steady card takings, from £10,000 a month, because that’s what the advance is repaid from.

Picture your accountant emailing three months of card statements to the underwriter while you wait on a same-day decision.

Credit Score and Open Banking

Your credit file counts for less here, because Open Banking lets a lender read your live cash flow instead of relying on a score.

We rate the Open Banking lenders fastest, but a weak recent cash flow will still cost you a higher rate.

Personal Guarantees on Short-Term Loans

Almost every short-term lender wants a personal guarantee, so your own assets back the debt even though no specific asset is secured.

365 Finance is the outlier, marketing no security or business plan, though most MCA providers do take a guarantee.

How to Compare Short-Term Business Loan Lenders

Comparing Short-Term Lenders by Cost

If cost drives your choice, convert every offer to a total repayment figure including fees, because a factor rate and an APR can’t be compared head to head.

We rate iwoca and Fleximize easier to price than the factor-rate MCAs, where the true annual cost is hidden.

Comparing Short-Term Lenders by Flexibility

If your income is lumpy, a revolving line or an MCA flexes with you, where a fixed-term loan locks you into the same payment each month.

iwoca lets you draw and repay as your cash flow allows, while 365 Finance shrinks repayments on slow days.

Comparing Short-Term Lenders by Speed and Credit

If you need money today or your credit is thin, Capify and the MCA providers will still say yes, pricing the risk into the cost.

The right lender fits your cash flow, not the biggest brand. That’s the call that saves you money.

Who Short-Term Business Loans Are Best For

Best Short-Term Loan for Bridging a Cash-Flow Gap

If you’re waiting on a big invoice or covering a seasonal dip, short-term finance bridges the gap so your cash flow doesn’t stall.

We rate a revolving iwoca line best here, because you only pay for the days you actually draw the money.

Best Short-Term Loan for Card-Revenue Retail

If you take card payments, an MCA from 365 Finance or Capify suits you, because repayments rise and fall with your daily takings.

Repayments that flex with sales protect you on slow days. That’s the real draw of an MCA.

When a Different Loan Beats Short-Term

If you’re funding kit, premises or a multi-year project, a longer secured or term loan is far cheaper than draining your cash flow on short-term repayments.

Short-term only wins when the return lands fast. For slow-burn growth, it’s the wrong, expensive tool.

Frequently Asked Questions

What is a short-term business loan?
A short-term business loan is finance repaid quickly, usually within 3 to 18 months. It covers revolving credit lines, fast fixed-term loans and merchant cash advances. The trade-off for speed and easy access is a higher cost than a standard multi-year loan, and a personal guarantee is usually required.
How much do short-term business loans cost?
Expect an effective 20% to over 90% APR, far above the 7% to 12% of a high-street loan. Factor-rate products such as merchant cash advances fix the cost upfront (a factor of 1.1 to 1.5), so repaying early does not reduce it. Always convert an offer to a total repayment figure before you sign.
What is a merchant cash advance and how does it work?
A merchant cash advance gives you a lump sum against your future card takings. The lender then takes a fixed share of each day’s card sales until an agreed total is repaid, so payments rise on busy days and shrink on slow ones. It’s priced on a factor rate, not an APR, and suits card-revenue retail and hospitality businesses.
Can you get a short-term business loan with bad credit?
Yes. Capify and the merchant cash advance providers consider adverse credit and CCJs, because they assess your live card takings and cash flow through Open Banking rather than relying on a credit score. You’ll pay a higher factor rate to reflect the risk, and a personal guarantee is required.
How fast can you get a short-term business loan?
Very fast. Using Open Banking, iwoca, Capify and 365 Finance often decide the same day and fund within 24 hours, and Fleximize within 48 hours. That speed is the main reason short-term finance costs more than a slower high-street loan.
Do short-term business loans need a personal guarantee?
Almost always. iwoca, Capify, Fleximize and most merchant cash advance providers require a personal guarantee from a director, so you are personally liable if the business defaults. 365 Finance is an exception that markets no security or business plan, though it still advances against your card takings.

How We Reviewed Short-Term Business Loan Lenders

Ranking criteria. We ranked lenders on the true cost, speed, flexibility and how easily a business can qualify. Cost and transparency carry the most weight, because short-term pricing is where borrowers are most often caught out.

Data sources. Rates, limits and eligibility were checked directly in June 2026: iwoca, 365 Finance, Capify, Fleximize and Funding Circle. No comparison sites and no press releases.

Update cadence. We re-verify every lender on this page at least monthly, and whenever a lender changes pricing, eligibility or terms. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.

Regulatory note. This is editorial content, not regulated financial advice. Most short-term business lending and merchant cash advances are unregulated B2B agreements. Credit is subject to status and approval; compare offers directly before you apply.