Short-term loans are best used to fill short-term capital needs. That is, they’re not well-suited for high-cost, long-term projects that could take years before you see a return on your investment. You might consider taking out a short-term loan during times of fluctuating cash flow, growth periods or to act on immediate business opportunities.
For example, using a short-term loan to purchase inventory and hire staff for the upcoming busy season is a responsible use for this type of financing. In short, if your business will benefit from an immediate infusion of capital, and you’re confident you can repay the debt in full and on time, a short-term loan might make sense for your business.