Top 5 Short-term Business Loans in the UK

Short-term business loans in the UK provide £1,000 to £1 million over 3–18 months, at higher costs than standard business loans in exchange for faster approval and lighter eligibility checks. The five lenders below – iwoca, Fleximize, Funding Circle, 365 Business Finance and Capify – all fund within hours to a few days. Here is how they compare in 2026.

What Is a Short-Term Business Loan?

A short-term business loan is any business borrowing with a repayment term under 18 months – and often as short as 3 months. It costs more than long-term bank lending but approves in hours or days rather than weeks, making it suited to urgent working capital needs where speed matters more than minimising interest cost.

Short-term business finance covers several distinct products with similar functions but different structures. The most common types in the UK are:

The Top 5 Short-Term Business Lenders Compared

All five lenders below were verified against their own published terms in July 2026. Watch the pricing basis: iwoca prices per 30 days, Fleximize per month, Funding Circle quotes an annual interest rate, and 365 Business Finance and Capify charge a fixed fee rather than interest.

iwoca’s Flexi-Loan is a pre-approved facility of £1,000 to £1 million: you draw what you need, pay interest only on the drawn balance, and repay any time without fees. Pricing starts at 1.5% per 30 days, and iwoca’s own representative example works out at 49% APR – so treat it as expensive money used briefly, not a long-term facility.

Approval takes up to 24 hours, funds typically arrive within hours, and applying does not affect your credit score. The catch: iwoca lends to limited companies and LLPs only – sole traders are excluded.

Fleximize’s Flexiloan Lite is built for exactly this use case: £10,000 to £1 million over 3–12 months at a fixed 1.9%–3.9% per month, for businesses trading just 6 months or more. Its standard Flexiloan (12–60 months, 0.9%–2.9% per month) covers longer needs.

There are no application or arrangement fees when applying directly, and the Penalty-Free Promise means no early repayment charges. Top-ups and repayment holidays unlock after three successful repayments. A personal guarantee from at least one director is required on every product.

Funding Circle’s dedicated short-term loan covers £10,000 to £750,000 over 6 or 12 months, with rates from 6.9% per year. That figure is an interest rate, not an APR – but on this product there is no upfront fee when you apply directly, no fee to overpay, and interest accrues only on the remaining balance.

Decisions are instant for loans up to £250,000 and funds typically arrive within 48 hours. Its FlexiPay line (up to £250,000) adds pay-in-instalments for individual transactions at a flat fee from 1.99% per use – useful for spreading supplier bills. See our business loan costs guide for how the completion-fee model works on Funding Circle’s longer-term loans.

365 Business Finance advances £10,000 to £500,000 through its Rev&U product, repaid automatically as a fixed 5–15% slice of your card takings until the advance clears. Quiet week, smaller repayment – there is no fixed monthly bill and no fixed term.

Eligibility is one of the lightest here: 6 months trading and monthly card sales above £10,000. The trade-off is cost transparency – pricing is a single fixed fee agreed per advance, and no factor rate is published. “No APRs” in the marketing does not mean cheap; ask for the total repayable before signing.

Capify offers both an unsecured Small Business Loan (£10,000 to £3 million, 3–12 months, repaid in small regular instalments) and a merchant cash advance (£5,000 to £1 million) under one roof. Unlike iwoca, it accepts sole traders and partnerships as well as limited companies – the broadest structure coverage of the five.

Eligibility is 12 months trading and £10,000 monthly turnover, with a 60-second eligibility check that does not touch your credit score and funding in as little as 24 hours. Costs use a factor rate set by risk, and Capify publishes no rate figures – read our full Capify review for disclosed worked examples before committing. A personal guarantee is required on every product.

Short-Term Business Loan Rates in 2026

Short-term lenders price on four different bases: per-30-day interest (iwoca, from 1.5%), fixed monthly interest (Fleximize, 0.9-3.9%), annual interest (Funding Circle, from 6.9% per year), and fixed fees or factor rates with no interest at all (365 Business Finance, Capify). Always compare the total amount repayable, not the headline number.

The basis matters more than the figure. A “low” 1.9% monthly rate is roughly 23% over a year before compounding, and a fixed-fee advance can cost more than either if repaid quickly. The good news with genuinely short terms: money borrowed for three months at a high annualised rate still costs relatively little in absolute pounds – a 3-month loan at 2% per month costs around £600 in interest per £10,000 borrowed.

When a Short-Term Loan Makes Sense

A short-term loan makes financial sense when the return on the borrowed capital exceeds the interest cost. Winning a £50,000 contract that requires £10,000 upfront investment – funded at 30% APR over 3 months – costs around £750 in interest. That is a sound trade-off if the contract is secured and the margins support it. The calculation breaks down when borrowing to cover operating losses rather than invest in growth.

The most common and financially justified use cases for short-term business finance include:

Bridging a payment gap. You have received an order, completed the work, and raised an invoice – but your customer pays on 60-day terms. A short-term loan or invoice finance bridges the 60 days while you continue operating. The cost is the price of the working capital gap, not a long-term liability.

Seasonal stock purchase. A retailer buying Christmas stock in September, or a hospitality business stocking up for summer, needs capital before revenue materialises. A 3–6 month loan timed to the revenue cycle can be repaid from seasonal income.

Urgent equipment or repair. If a key piece of equipment fails and needs replacing immediately to fulfil existing orders, a fast short-term loan – even at a high rate – may be cheaper than losing the revenue from the downtime.

Taking advantage of a supplier discount. If a supplier offers a 5% early payment discount on a £50,000 order, a 30-day bridge at even 40% APR costs roughly £1,650 – well below the £2,500 saving on the discount. Short-term finance is frequently used this way in supply chain management.

How to Qualify for a Short-Term Business Loan

Across our five verified lenders: minimum trading history runs from 6 months (Fleximize Lite, 365 Business Finance) to 12 months (Capify), most want a UK business bank account and 3 months of statements, and every one of them can require a personal guarantee from at least one director.

Eligibility requirements vary significantly between high-street banks (which typically require 2+ years of accounts and strong credit) and alternative online lenders (which may approve on 6 months of bank statements alone). Key criteria to have ready before applying:

• Trading history: 6–12 months for the alternative lenders above; 2 years for bank lending
• Monthly turnover: Capify requires £10,000+; 365 Business Finance wants £10,000+ in card sales specifically
• Bank statements: 3–6 months of business bank statements are the standard supporting document – most fast lenders read them via open banking
• Business structure: iwoca and Funding Circle centre on limited companies; Capify and Fleximize accept sole traders and partnerships
• Personal guarantee: required by most lenders, including those that advertise “unsecured” products

Short-Term vs Long-Term Business Loans: Which Is Right?

Use a short-term loan when the funding need is time-limited (a seasonal gap, bridging finance, urgent opportunity) and you can repay from identifiable incoming cash flow. Use a long-term loan when funding a capital asset with a multi-year useful life, or where repayments need to be spread to remain within cash flow capacity. Never use short-term borrowing to fund long-term losses.

Emergency Business Loans: Getting Funded Quickly

Same-day business funding is realistic in 2026: iwoca typically pays out within hours of approval, Fleximize deposits the same day a loan is agreed, Capify and 365 Business Finance both cite funding or approval inside 24 hours, and Funding Circle’s FlexiPay draws down same-day before 2pm. Bank-route funding takes 5-15 working days.

If you need funding urgently – within 24–48 hours – the realistic options are alternative online lenders rather than banks. Key requirements for fast approval are: an existing business bank account the lender can review, 3 months of bank statements, and a personal guarantor available to sign. Most fast-approval lenders use open banking to access your bank statements instantly, removing the need to upload documents manually.

Related Business Loan Guides

Compare specific lenders and products, or explore alternative working capital options before committing to a short-term loan.

• Business Loan Costs UK 2026 – APR comparison table: banks vs alternative lenders
• Capify Review 2026 – fast-approval lender with disclosed worked examples
• Liberis Review 2026 – revenue-based finance, payments flex with sales
• Best Invoice Factoring Companies – unlock cash from unpaid invoices instead of borrowing
• Business Overdrafts UK – revolving credit for recurring cash flow gaps

Clara Wenslow

Finance & Business Services Editor

Clara analyses SME finance and procurement markets, covering business loans, invoice finance, payroll, and related B2B services. She ensures each comparison and guide is transparent and data-driven.

Reviewed by

Sarah Mitchell

B2B Commerce & Finance Reviewer