Short-term loans are designed to give financial relief to a qualified borrower, with repayment expected in about a year. Small businesses have a myriad of reasons to seek these types of loans, but it usually centers around the need to get money quickly. Certain situations fit with temporary loans better than others.

When equipment necessary for business operations needs to be repaired or replaced, it can spell financial disaster for small businesses if they are not able to get quick access to cash. Temporary loans can help provide the money quickly so that repairs or replacements can be made and business operations can resume as quickly as possible. 

Businesses whose operations are seasonal may experience cash flow problems during the off-season. This can result in the need to supplement or bridging the gap between seasons. These are known as bridge loans. A limiting factor for bridge loans is that there needs to be enough cash flow to make regular payments. 

It is not uncommon for businesses to occasionally make purchases when items they sell regularly are offered at a reduced price. The catch is usually that a larger purchase is made and that the business owner decides quickly if they want the offer or if they will decline. This is another situation where provisional loan types could fit will the business need because funds can be made available in as little as one or two days. 

Starting a new project can also be a good fit for provisional loans. There are almost always up start-up costs associated with a new project that is in excess of the cash the business has on hand. However, obtaining access to the needed money rapidly may not be the only objective. Paying the loan back in two or three months could cost less in the end, and a new project may increase earnings allowing quick repayment.

Short-term loans can be essential for businesses with less than stellar credit or for those looking to obtain capital rapidly. These loans tend to have higher interest rates which means they can cost more, in the end, than longer-term loans making planning for potential cash flow problems advantageous. If it is possible to wait for several weeks, some businesses could qualify for small business loans, which are known to have excellent rates. Knowing some of the common reasons businesses seek these types of loans can be helpful with planning future cash needs.