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Short-term loan
Also called short term business loan, STL.
A fixed-amount business loan repaid over roughly three to eighteen months by daily or weekly ACH debits, usually quoted as a total payback figure rather than an annual rate.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Structurally it is a loan: a stated principal, a fixed obligation to repay, a maturity date, and payments that are due whether or not sales arrive. That last point is the whole distinction from a merchant cash advance, which is written as a purchase of receivables with repayment contingent on receipts.
Cost is generally expressed either as a factor applied to the principal or as a total repayment figure, and often on a pre-computed basis — the full cost is baked in at origination rather than accruing on a declining balance. Where the interest is pre-computed, paying early does not proportionally reduce what is owed unless the contract offers a specific discount for it.
Underwriting looks like advance underwriting: recent bank statements, deposit volume, average daily balance, negative days, time in business, existing debits visible on the statements, and a personal guarantee. A UCC-1 is normal. Funding is fast relative to bank credit.
Where this one catches people
The daily debit makes a short-term loan feel like an advance, so owners assume the same flexibility applies — that a slow month can be reconciled downward. It cannot. There is no percentage of receipts, no reconciliation right, and a missed debit is a missed loan payment with default consequences. The similarity is cosmetic; the obligation is not.
Worked through
Illustrative only. $100,000 principal at a 1.30 factor equals $130,000 total repayment. Over a 12-month term paid across roughly 252 business days, the daily debit is about $516. Pay it off in month six and, on a pre-computed basis with no prepayment discount, the remaining $65,000 is still owed in full.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Short-term loan — common questions
What does short-term loan mean?
A fixed-amount business loan repaid over roughly three to eighteen months by daily or weekly ACH debits, usually quoted as a total payback figure rather than an annual rate.
Where does short-term loan catch people out?
The daily debit makes a short-term loan feel like an advance, so owners assume the same flexibility applies — that a slow month can be reconciled downward. It cannot. There is no percentage of receipts, no reconciliation right, and a missed debit is a missed loan payment with default consequences. The similarity is cosmetic; the obligation is not.
Is short-term loan the same as an interest rate?
Short-term loan is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does short-term loan apply to?
Working Capital, Term Loan.
Is there a worked example of short-term loan?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside short-term loan?
Add-on interest, Cash advance, Daily debit, Early payoff discount, Factor rate.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.