Normally, when you think about growing your business, you probably imagine big goalposts. Things like buying your business property, investing in high-quality equipment, or opening a second business location may come to mind. These long-term goals are great for turning your company into an industry powerhouse, but it’s good to set smaller goals, too. Short-term loans can be a huge help in protecting your company’s financial health and keeping you focused on the future.

What Are Short-Term Loans?

Many business loans are designed as long-term loans. Mortgages and commercial real estate financing, for example, usually provide terms of 25 years. Small business loans usually carry comfortable terms of 15 years for business acquisitions.

Things are different with short-term financing. These loans may only offer terms of a few years. Some options give you up to five years for repayment. Lines of credit work a little differently — more like a credit card — but the way they’re structured means you should try to pay off balances sooner rather than later, so you save money on interest fees.

What Short-Term Loan Options Are There?

A common type of short-term loan is called a bridge loan. Also known as asset-based lending, these loans provide money that helps you bridge funding gaps quickly. Other loans include merchant cash advances, invoice financing, and working capital loans.

All these options are designed to provide fast, simple, and flexible financing. Unlike conventional loans, these financing options may only require a few days or a few weeks to get approved. That’s much faster than the two or three months you’re looking at with normal loans.

What Are the Pros and Cons?

You’re free to spend a short-term however you need if it helps you grow your business. You can put the money towards advertising, website development, inventory purchases, equipment repairs, purchases of software/technology, lease payments, payroll, and tons of other things.

The downside is that all this freedom and flexibility costs more. A short-term loan is usually more expensive in terms of interest rates than SBA loans, closer to credit card interest rates.

Why Choose Short-Term?

On the upside, asset-based lending gives you amazing flexibility. These loans are essentially pure working capital, which is huge for reaching business goals. Short-term loans can supplement your cash flow, protecting business operations while you wait for invoices to clear. You can cope better with seasonal ordering surges, too.