Normally, a short-term loan would be selected for businesses with a less than perfect credit profile, as these products are easier to qualify for and can still be obtained at a reasonable price to term ratio.
A short-term loan is, by comparison, also useful for those businesses which are seasonal in nature or a business that is making a purchase where the usefulness of the thing or the service that the funds were used for is greater than (or not significantly less than) the term of the loan.
This type of loan is also utilized by those businesses looking to meet its short-term working capital requirements, as a short-term loan will be in repayment for less than 12 months. The rate of interest or factor rate and overall payment is generally higher due to the short-term nature of the repayment. It is common to find these loans being repaid daily or weekly, but not monthly.
Finally, a bridge loan is a type of a term loan that is useful for businesses that have run out of cash or are nearly out of cash, and are expecting to receive a longer-term loan soon. Lenders grant these types of loans only to those borrowers who are the most credit worthy. Sometimes the lender might want to use a business asset like a building or machinery as collateral, while the bridge loan is in repayment. However, there are many cases where a bridge loan can be acquired without any collateral.
