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In our short-term business loans guide:















What is a short-term business loan?

A short-term business loan is a type of secured or unsecured business finance with a term of between one month and three years. They are usually used by businesses to cover sudden expenses or to capitalise on a limited-time growth opportunity. They are also popular with seasonal businesses in Australia.

A short-term business loan provides access to funds from a lender for any genuine commercial purpose. Lenders will assess the revenue of a business to determine whether it can comfortably repay the loan amount. The business will agree to repay the loan amount plus interest over an agreed term.

What can you get with a short-term business loan?

  • Loans from $5,000 up to $2 million
  • Terms between 1 month and 3 years
  • Secured and unsecured options
  • Available from banks, credit unions and specialist online lenders
  • Fastest approval from specialist online lenders
  • Finance for a wide range of business purposes
  • Generally higher interest rates and fees than long-term finance

How short-term business loans work

Short-term business loans are used in Australia by businesses that require fast access to finance and can demonstrate an ability to comfortably repay the loan amount over a short period of time.

There are two types of short-term business loans: Secured and unsecured.

secured short term business loans

Secured short-term business loans

A secured short-term business loan uses an asset (also known as ‘collateral’), such as residential property, as a guarantee on the loan.

Secured finance usually means you get a lower interest rate and can borrow a higher amount. However, the application process may take longer.

Unsecured short-term business loans

Unsecured short-term business loans

An unsecured short-term business loan does not require any security. With unsecured business finance it's usually possible to get the loan approved faster, but higher interest rates and fees may apply. It may be difficult for newly-established businesses to be approved for unsecured short-term finance.

Reasons to use a short-term business loan

Whether secured or unsecured, short-term finance is generally used to cover immediate operating costs. Invoice finance is another potential source of short-term finance for business with outstanding invoices.

For ongoing access to working capital, a business line of credit or business overdraft are popular options.

For longer-term investment, like purchasing equipment, asset finance – for example, a chattel mortgage – will generally be more suitable.

is short term or long term business finance better

Is short-term finance better than long-term finance?

Deciding between short and long-term business finance comes down to what you need the funds for.

But there are some significant differences to factor into the decision too.

If you're not sure whether a short-term loan or a long-term loan is best for your business, below we explain some of the main features of each.

Short-term business loansLong-term business loans


1 month - 3 years

3 - 5 years

Interest rates

Usually higher and often represented as a factor rate, particularly if the loan term is less than 12 months

Usually lower than short-term loans but costs add up significantly over time


Up-front (often a percentage of the loan amount)

Up-front and ongoing fees, fees for early repayment

Loan purposes

Unexpected one-off costs, cash flow during quiet operating periods, buying extra stock, one-off growth opportunities, paying a tax bill

Purchasing assets, vehicles and machinery, acquiring another business

Short-term business loan example

Type of Business: Retail

Loan Amount: $50,000

A retail business has been working hard for a number of years to operate in the same area as a competitor. Through hard work, persistence, and providing excellent levels of service, they are able to compete at a higher level than their rival retail store.

The competitor announces they are entering liquidation, and will be selling their remaining inventory at a heavily discounted price — but only for a few days. To maximise on the opportunity and secure the discounted inventory, the owner of the retail business takes out a short-term business loan to access immediate funding and close the sale on the remaining stock.

As the inventory is heavily discounted, the retail business greatly increases its profit margin on each sale, and the loan is able to be repaid in full before the end of the loan term.

qualify for short term business loan

How to qualify for a short-term business loan

Qualifying for a short-term business loan can be relatively simple. If your business bank statements illustrate an ability to comfortably repay your desired loan amount within the agreed loan term, you will qualify for approval, assuming you meet the basic eligibility requirements:

  • Have been trading for at least 6-12 months;
  • Have an ABN and are registered for GST (including sole traders and self-employed individuals)
  • Have a clean credit history (you can check your credit score for free before you apply)

How to apply for a short-term business loan

There are two main types of applications, which will depend on the amount you wish to borrow. Either way lenders will assess an application based on the monthly revenue of the business, its intended use for the loan, how the loan will benefit future business revenue, and more.

Borrowing less than $100,000

If you are borrowing less than $100,000 the approval process will be fairly simple and you may even be approved on the same day.

You can generally apply online with a number of different specialist business loan lenders, including those who provide short-term business loans designed specifically for SMEs.

You'll need to provide:

  • Proof of identity
  • An ABN and GST registration
  • Business bank statements
  • Trust Deed if the business is held in a trust
  • Australian Taxation Office (ATO) Portal access.

Borrowing more than $100,000:

If you wish to borrow more than $100,000, your lender will require additional documentation to assess your application.

  • All the documentation provided if borrowing less than $100,000
  • Financial records (provided by your accountant)
  • Profit and loss statements
  • Balance Sheet

If you are making an application for more than $100,000, you can speak to your bank or a lender directly to discuss your financial circumstances and need for finance.

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why are short term business loans declined

Reasons short-term business loan applications are declined

The number one reason short-term business loan applications are declined is because your business financials do not illustrate an ability to service the loan amount.

You can strengthen your application by providing a lender with a business plan — a detailed plan showing how you plan to use the funds and meet your repayments.

Other common issues with applications include:

  • A bad credit rating — i.e. a business owner or director has a bad credit score
  • Limited customer base — i.e. your revenue is too dependent on a small number of customers
  • Poor projected growth — i.e. the outlook for your market sector is poor and your business may struggle to meet repayments over the term
  • A new business — i.e. your business hasn’t been operating for long enough and a lender cannot accurately assess your revenue

If your business is likely to be impacted by these issues, you could consider seeing if you qualify for a low-doc business loan (if you are running a new business) or a bad credit business loan (if you have existing defaults on your credit file).

Short-term business loans FAQ

If you operate a business in Australia, have an ABN and are registered for GST, you can likely qualify for a short-term business loan if you are able to provide bank statements and meet minimum operating criteria set by each lender.

If you are borrowing less than $100,000, you can generally apply with a lender online and get approved on the same day by only submitting your business bank statements and identification.

Technically, you can use short-term finance for any legitimate business purpose. However, there are a number of different business loans in Australia and each of them has its own benefits and best-use scenarios. Consider comparing all your options before applying.

You can generally borrow between $5,000 and $500,000 with a short-term business loan. However, this amount will vary between lenders and will depend on the strength of your application and business turnover.

Business Loan guides and resources

Learn more about your business finance options and how to get the funding you need to grow your business.

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Written by

Shaun McGowan founder

Loans Expert

Shaun McGowan

Reviewed by

Sean Callery Editor


Sean Callery