Everything You Need To Know About Short-term Lending


From furnishing your dream house to financing a business you want to establish for yourself, you probably have a long list of things you want to accomplish. It can even be about funding a bucket list vacation with family or friends or getting seed money for future investments. With enough capital, you can do so many things to satisfy your pursuits and business plans. However, we all know that there are times when getting enough cash to start-up your projects can be a little challenging. 

Thankfully, there are ways to safely secure money from trusted moneylenders without the fear of sky-high interest or inequitable deals. In this ultimate guide to short-term lending, you’ll learn all the basics you need to know about such arrangements and how you can avail of them in the Philippines. 

What is a short-term loan?

A short-term loan is a type of loan designed to be repaid within a year or less, combining the amount borrowed and the interest earned over time. Usually, the amount borrowed under short-term loans is lower compared to that of long-term loans. Short term loans are ideal when you need money for a sudden expense, or when you need cash to tide you over until your next payday. 

Short-term loans are often unsecured, meaning that you aren’t putting up collateral or borrowing a certain amount against your property to avail of the loan. However, in turn, short-term loans often have slightly higher interest rates compared to secured loans because of the risk of non-payment. 

What are the types of short-term loans?

Depending on what you need, there are various types of short-term loans that you can avail of from trusted lending partners. Here are some of the most common types of loans that you should know if you’re interested in getting one:


Lines of Credit

A line of credit is a type of short-term loan that’s similar to business credit cards. There’s a specific credit limit allocated to a person, and you can tap into that line of credit if you need to pull out the money from the lender. 

In a line of credit, you make monthly installment payments against the amount of money you have borrowed. It will vary depending on the amount of line of credit you have accessed so far. What’s good about availing a line of credit is that it has a lower annual percentage rate compared to business credit cards. If you want to control the amount of money you pull out of your account and you aren’t in immediate need of the lump sum, a line of credit might be a good option for you. 


Merchant Cash Advances

A merchant cash advance is a type of short-term loan that works like a cash advance but technically operates as a loan. The lenders typically loan a specific amount to the borrower. The borrower, in turn, makes loan payments by giving the lender access to the borrower’s credit facility. Every time a customer purchases through the borrower’s facility, a certain percentage of the sale is directed to the lender. 


Payday Loans

If you need money immediately, one of the types of loans that you can get is a payday loan. A payday loan is a type of loan that lenders give as a lump sum to the borrower. Compared to other types of short-term loans, this is relatively easy to obtain. 

While the quick approval and release of this loan are beneficial, there’s a drawback that comes with payday loans. That is, in this type of loan, you must pay it back in one lump sum as soon as your payday arrives. Usually, lenders take out the money directly from the borrower’s bank account using the continuous payment authority.


Online or Installment Loans

Another type of loan that you can get is the online / installment loan. Like a payday loan, this type of loan is relatively easy to obtain. Even from your home, you can get this loan and do the application process to approval as long as you meet the requirements of your chosen moneylender. As soon as your online or installment loan gets approved, your borrowed amount will immediately be wired to your bank account courtesy of your lender. 


Invoice Financing

As a business, one of the short-term loans you'd probably be interested in is the invoice financing loan. This type of loan utilizes businesses' unpaid accounts receivable invoices. The lender will loan the money and charge the interest depending on the number of weeks the invoices remain unpaid. As soon as the invoice gets paid, the lender will review the invoice payment and take the interest charged on the loan before they return the amount due to the business. 

Apart from these, there are other types of loans that you can check out. Some of these include doorstep loans, bridge loans, and overdraft loans. If you're interested in such loans, it would be advisable to approach trusted moneylenders, who can help determine which one would be the most beneficial to you.

Differences between short-term loans and other types of loans

With the numerous types of loans available today, it would be useful to know how to differentiate them accurately. That’s to make sure that you get the loan that best fits your purpose for taking that loan. Here are some of the main discerning points of short-term loans compared to other loans:


Short-term Loan versus Personal Loan

As mentioned, a short-term loan is a type of loan you can take if you’re facing unexpected financial shortfalls that need immediate solutions. A personal loan works the same way, so it is no surprise that many people get confused when differentiating the two. 

The main factor that separates short-term loans and personal loans is the time you’ll need to pay back your loans. Whereas you typically need to pay back short-term loans within one year or less, personal loans often have longer repayment terms. 

Short-term loans will be perfect if you want to avoid having a long financial commitment to a lender. Since you need to pay them within a year, you won’t have to pay your moneylender for an extended period. It's ideal if you want a quick solution, and you can pay back the money you owe in a short amount of time. 

For example, you need to send your motorcycle for repair, but you don't have your salary yet. By taking a short-term loan, you'll be able to get money ahead of time for repairs. You can then immediately pay it back once you receive your salary. 

In contrast, a personal loan is a type of unsecured loan that allows individuals to borrow money from lenders and repay them at an extended length of time. Since the nature of unsecured loans doesn't require borrowers to pledge assets as collaterals, they usually come with higher interest rates compared to other forms of personal loans.


Short-term Loan versus Online Lending

Both short-term loans and online lending allow individuals to borrow a certain amount of money to lenders in case they encounter unexpected financial issues. While both of these may enable people to borrow money immediately, be aware of their distinct differences.

First, online loans are typically easier to get compared to short-term loans. You can find many lenders online, and you’ll usually receive a faster response from them. However, while the delivery of service and approval rate is excellent, you’ll come to know that there are plenty of predatory lenders online. These people don't check your credit score to see if you can pay them back on time. They count on you not being able to meet the repayment deadlines to earn more interest. 

Of course, that doesn’t mean that all online lenders have wicked intentions. There are still legitimate and trust-worthy lenders online that offer fair interest rates and terms to borrowers. You just have to make sure that you research enough about them before committing to a deal. 

The second difference between short-term loans and online lending is the application process. Most short-term loans are available offline. However, you can still look for legitimate lending partners online to see if they extend their service on the internet.

Conversely, online lending is only available on the world wide web. You won’t find physical outlets or shops. Hence, it can be challenging to verify the legitimacy of these lenders unless there’s enough feedback online to verify their authenticity. 

If you want a quick and expedient borrowing process that could quite literally take minutes before you get feedback, you can try the online route. However, if you want to make sure that you borrow money from trusted lending partners, it's recommended that you only approach trusted and experienced moneylenders. 


Short-term Loan versus Peer-to-Peer Lending

In peer-to-peer lending (P2P), people obtain loans directly from other individuals instead of getting them from licensed moneylenders or other financial institutions. This mode of lending has grown exponentially, and more peer-to-peer websites are showing up in response to the growing demand. 

Also called crowdlending or social lending, peer-to-peer lending, the primary mode of transaction in P2P, is through online websites. Private individual investors fund these, and they also come with interest and fees. 

What makes peer-to-peer lending different from short-term loans is the fact that they usually have lower interest rates because of the lack of overhead costs. Additionally, getting them is quick and easy, as the application process is quite straightforward. Of course, the actual funding might come in a few days after or even longer, but they’re generally easier to get compared to short-term loans.

However, P2P comes with origination fees. You have to pay 1%-5% to fund your loan, which is a lot higher compared to short-term loans and personal loans. In peer-to-peer lending, your credit score gets reviewed for you to get a calibrated loan term. Even people with non-attractive credit scores can still avail loans from P2P, but beware that these loans will cost more than most short-term loans. 

Short-term loans are some of the best loans you can get if you need money immediately. But you have alternative options if you want to borrow money under different terms. To know which type of borrowing suits your interests the most, you should research more on how short-term loans differ from other types of lending.

Advantages of short-term-lending

There’s no denying the fact that a short-term loan is one of the most convenient ways to receive fast money when in case there's a sudden need for it. However, just like other types of lending, it has its advantages and disadvantages. Here are some of the pros and cons of a short-term loan to help you decide if you want to avail this for yourself:


Short-term financing allows you to get funded immediately.

Unlike other types of big loans, short-term loan applications get processed easier and faster. You can find ways to borrow money in the short-term in certain physical outlets. Still, there are various ways to get funded digitally. That means that feedback will be more immediate, and emailing your application and processing documents will take a shorter time as well. 

Apart from the speed of approval and feedback, the money you borrowed also gets delivered to your account faster compared to bank loans. Sometimes, bank loans get processed for weeks, and the actual rollout of money takes even longer. With short-term loans, you’ll only need to wait a few days for the processing and deployment of funds combined. 

Short-term loans are less strict compared to bank loans. As such, you won’t have to submit mountains of documents and present a business plan before receiving the borrowed money. Short-term loans only need a handful of documents like your credit score and cash flow, among others. If you have no other options, and you need immediate money, getting short-term financing is not a bad idea. 


You can get financed even without a strong credit score.

One of the main hindrances that people have when getting long-term loans is the absence of a strong credit score. More often than not, most banks expect their borrowers to have an outstanding rating. But the problem is, excellent credit scores usually take time to build. 

It isn’t usually the case for ordinary individuals or smaller businesses. The reason why they're borrowing money in the first place is that they don't have enough to tide them over the next big purchase. That's where short-term loans will come in.

Since short-term loans don't need impressive credit scores, even people with not-so-impressive credit ratings can avail this type of loan. Of course, the terms and interest rates will adjust depending on your credit rating. However, you’ll get to have the immediate capital when you need it with the help of short-term loans.  


Even small businesses can get short-term loans. 

Even small businesses need enough capital to get their operations running. Unfortunately, many start-ups with incredible ideas and products find the lack of capital a hindrance to making their dream business come to be. Thankfully, getting a loan from a trusted moneylender is now an option that they could take.

Small businesses may find it challenging to take out significant and long-term loans, but getting short-term loans shouldn’t be an issue. With the help of the loan, not only will the business start earning money, but it'll also have the chance to build its credit score positively. Eventually, they can get a bigger loan in the future to expand.  


There’ll be no need to put up collateral in a short-term loan. 

When you get bigger loans, you’ll more often than not be required to put up an asset as collateral in case you don't meet the repayment terms of your moneylender. That is a risky commitment to make, especially if you are not sure if you can pay back the money you owe on time. There’s a chance that you'll be stripped of your prized properties, such as your vehicle, equipment, or even land titles—putting you at a bigger financial hole.

Since short-term loans are typically unsecured, there'll be no need for you to offer up your properties as collateral. Instead, there’s a specific interest rate that'll be allocated to you, which you can choose to opt into or try to renegotiate. Short-term loans will help you get money without sacrificing an investment you’ve worked hard to possess. However, you still have to try to meet your repayment terms on time. Interest rates will continue to take effect, and your loan can balloon if you don't pay the money you owe. 

Disadvantages of a short-term loan

Short-term loans have relatively higher interests and factor rates. 

The approval process of short-term loans may be faster and easier, but that doesn’t mean that it’s immediately the best option for you. Since short-term loans are usually unsecured, the interest rates of these loans are higher than long-term loans. Some short-term loans use a factor rate instead of interest rates, and short-term factor rates are often higher than average long-term loans too.  


Payments are more frequent

In long-term financing options, most borrowers tend to pay monthly. There are even cases when borrowers pay quarterly, or after a set number of months. However, short-term loans often require payments weekly or daily. It can be challenging for many people, as a simple fluctuation in your cash flow can cause a ripple effect in your repayment schedule. 

If you continuously fail to pay your dues on time, you'll have to shoulder the cost of penalties. In extreme cases, you can even default on your loan because of this. If you or your business is vulnerable to payment lags, you should make sure that your repayment terms will give you a reasonable payment schedule. That way, your repayment won’t be botched by last-minute issues, and you’ll continue to have good credit ratings even after your loan.  


You can be at risk for a borrowing cycle

Since short-term loans are relatively easy to get, you can be encouraged to get loan after loan until you’ve lost track of all the things you need to pay for. Before you know it, you get trapped in a cycle of loans with a high risk of getting penalties. 

If you use this method to run your business, you'll definitely fall into a debt trap that'll make your whole business operations inefficient and unsustainable. While getting short-term loans can be beneficial, being in a cycle of debt won't get you anywhere good.   


The amount of money you can borrow is minimal 

Short-term loans are easier to get because the lender isn’t required to provide a massive amount of money with a little-to-no guarantee of immediate return. Instead, short-term loans come in smaller amounts (which can reach as much as 20,000 PHP on the average). 

While this can help you if you need short-term financial assistance, it wouldn’t be enough for big businesses or a substantial sudden expense. If you want to receive more money, whether in a lump sum or as a line of credit, obtaining a long-term loan would be a better option for you.  Not only would you need to repay a lower interest rate with long-term loans, but you’ll also get more time to pay back the money you owe. 

Getting a short-term loan isn’t black and white. While it’s not wrong to get a short-term loan, it also isn’t advisable to keep taking loans to pay off another. You must understand the pros and cons of short-term loans to gauge just how intently you need to take the road to fast cash. As a responsible borrower, you must balance the way you take our short-term loans to protect your credit rating and take care of your hard-earned assets without issue.

Where can I get a short-term loan?

As a person living in the Philippines, you’ll come to know that apart from banks, other lending facilities could cater to your request for short-term loans. If you want to know some of your available money lending options, here are some of the most trusted loan facilities that you can approach:


Global Dominion Financing Incorporated

Global Dominion Financing Incorporated is a financial institution that seeks to help Filipinos receive affordable loan products and services. Whether it be for medical expenses, emergencies, or any sudden expenses, Global Dominion is ready to provide you assistance with manageable interest rates and easy payment options. 

As an experienced and legitimate moneylender, Global Dominion can finance various loans for their clients. Some of their loan products include Doctors’ Loan, OFW Personal Loan, Car Loan, Business Loan, Medical Equipment Financing, Truck Financing Loan, and Seaman Personal Loan, among a host of other options. To apply, you may contact them at (0945) 132-8800 or send an email to [email protected] 


Radiowealth Finance Corporation

Radiowealth Finance is a company that offers accessible credit to Filipinos from all walks of life. It seeks to deliver loan products and services to its clients and has been a steady financing partner of Filipinos for over 50 years. From Educational Loans to Home Repair Loans, get started on your short-term loans now with Radiowealth Finance Corporation. You may contact Radiowealth Finance by calling +63998 998-8080  or sending an email to [email protected] 


TALA Finance

TALA is a licensed and registered moneylender that focuses on providing fast and personalized loans to Filipinos digitally. Anyone with a smartphone can apply to TALA. With enough supporting documents, you will be able to take out the loan that you need in due time. Most loans get decided on in minutes, and the cash-out process happens within two days at most. To know more about TALA, you can visit their website or app and request for real-time assistance from their staff.


Home Credit

In its bid to promote financial inclusion, Home Credit has continuously expanded through the years. Now, it's one of the fastest-rising giants in the field of the Philippine financing industry. Even without upfront cash or collateral, Home Credit clients can take home the products they need to purchase under special terms. What’s great about Home Credit is that it's available in many stores and outlets. You can even avail of their services using an app.

Some of the products and promos promoted by Home Credit are cash loans, insurance loans, 0% interest purchases, and more. To know more about Home Credit, you may visit their mobile application, contact them at (02) 7753 5711, or send an email to [email protected] 



Cashwagon is a financial technology company based in that Philippines that focuses on online consumer financing. This type of loaning agent doesn't require any form of collateral, nor does it have complicated application processes. All you need to do is download the app, fill out the forms, and you’ll get to receive the money as soon as it gets confirmed internally. You may contact Cashwagon at [email protected]



pera247 is a mobile app that provides credit products for honest & hardworking Filipinos. Customers can borrow to fund their purchase or get money up to ₱30,000! pera247 has 3 product offerings: InstaLoan, a short-term loan for first-time borrowers. AffordaLoan, a cash installment loan for established borrowers. And, eShopaLoan an online sale finance loan with longer-term and better rates.  

Download the pera247 app today and check their loan offerings via Gobear


When should I get a short-term loan

When you are in immediate need of money, you can use loans wisely to invest in your future. You might need it for a sudden expense, or your business needs financing to remain sustainable. Fortunately, you have a wide variety of options when it comes to the available loan products out there. You just need to find the best one that suits your needs and capabilities as a borrower. 

Of course, you being able to access short-term loans is not a sign that you should continuously seek to get loans from trusted moneylenders. While loans can be helpful when you need it, paying a loan back after another has the chance to bring you to financial ruin. You must make sure that you only take out loans when necessary.

Am I eligible for a short-term loan?

Depending on the moneylending company you approach, there are various requirements when applying for a short-term loan. However, there are some standard requirements that almost all lenders will ask for. You should try to prepare these ahead of time to apply for short term loans more efficiently:

  • Valid government-issued IDs with photo and signature
  • Proof of Billing
  • Payslips (if possible, include at least three months’ worth)
  • Bank Statements

The requirements may vary depending on the financial partner you approach. Before you apply for a loan, make sure that you gather all the necessary documents to avoid rejection or delays. 

Can I get a short-term loan with bad credit?

Many people think that only individuals and businesses with good credit are allowed to take out loans. However, that's not the case. Moneylenders understand that most financial institutions like banks typically don't approve the borrowing request of people with poor credit ratings. For this reason, moneylenders specifically target individuals with less than the average credit rating—to give them the chance to uplift themselves financially and rebuild their credit rating. 

Of course, there’s a caveat to borrowing money with a bad credit rating. Since you’re a high-risk borrower, the interest or factor rate for your borrowed amount will be higher than the average rates. You have to learn how to earn money sustainably to finance yourself and avoid being trapped in a debt cycle.

What fees should I look for when getting a short-term loan?

Before you commit to a short-term loan, you should understand all the fees that come with it. Moneylenders are not entirely benevolent. They also need to make sure that they don't lose money at the end, which is why they put up interest rates and fees to sustain the operation of their business. If you are looking at a short-term loan, here are some of the fees that you should be aware of:


Interest Rates

All short-term loans come with interest rates. As short-term loans are often unsecured loans, interest rates in this loan category will be higher compared to standard interest rates. On average, interest rates for short-term loans range from 10%-20%. Your exact interest rate will depend on your present credit rating. The better your credit score is, the lower your interest rate will be. 


Late Charges

You need to pay your dues on time. Otherwise, you might be required to pay late charges to your lender. It might not seem like a big deal. Still, if you combine late charges with your monthly interest rate and other additional fees, you’ll find out just how big you're paying back in addition to the initial amount you borrowed.


Processing Fee

If you go through a moneylender, they might charge a processing fee for your request. They'll usually deduct it from your loan amount. Typically, banks have less than PHP2,500.00 worth of processing fees. 

You should make it a habit to check the terms of your repayment on the fine print before you affix your signature to the contract. That's to ensure that you understand the financial deal you're going to commit to before you’re approved in it for real. 

How do I apply for a short-term loan

Now that you have an idea about short-term loans and their nature, you must be interested in applying for one. Thankfully, there are numerous short-term loan lenders to be found online, whether in the form of microfinance companies like TALA or fast moneylenders like Cashwagon. 

Depending on the loan vendor, the application process for short-term loans may differ. Here are some of the basic steps that you’ll go through when applying for a short-term loan in the Philippines.


Look for trusted moneylenders online.

The good thing about the industry going digital is that you can get faster feedback not only from the company itself but also from people who have experienced dealing with the moneylending company. Because of this, you can weed out companies that seem questionable, and approach financing partners that look experienced and professional.  


Prepare the necessary documents needed.

Short-term loans are not as strict as long-term loans in terms of documents and requirements. That, however, doesn't mean that you can simply forgo the usual requirements of short-term loan lenders just because you weren’t able to process it beforehand. These documents authenticate your identity and prove that you're capable of paying back the loan you requested. Make sure that your application doesn’t get rejected and delayed just because the documents you need are not available.


Fill out the application form and choose the terms options you want to request from the lender.

Filling out the personal details in the application should be a non-issue. However, the amount of money needed and the terms and repayment schedule you want may be requested (subject to lender’s approval). Make sure that you fill out the form accurately and select a repayment schedule that works best for the type of loan you're planning to get.


Wait for feedback from the lender.

Once you submit your application, wait for the feedback of the lender. They will reply within a few hours or a few days, depending on the volume of applications. They’ll set their terms and conditions and ask you to read them thoroughly. 

Read their terms carefully. Make sure that you're aware of all added fees, the repayment schedule, and interest rates before you agree to the short-term loan. Once you read the fine print, you may go ahead and choose to accept the terms or renegotiate for a better one.

•    Anticipate the amount deposited to your account.

The loaned money usually gets deposited to the borrower’s account in a span of 1 day to 2 weeks. Check your account regularly to see if the money has come in. Once you receive it, you may start using it for your intended purpose. 

Apply for a short-term loan now!

Now that you know just how easy it is to take out a short-term loan, you should consider getting one on the occasion that you encounter sudden financial shortfalls. Of course, this shouldn’t mean that you have to apply for loans every time you need money. You should evaluate whether you actually need the loan for urgent needs, or if you’re only going to use it for pleasure and be caught in a bind financially. 

As much as possible, you shouldn’t get trapped in the cycle of debt. See if you really need to borrow money and start the ordering process from there. Short-term loans can help a great deal, and it can even kickstart the business you’ve always wanted to build.

With the numerous licensed moneylenders in the Philippines, you wouldn’t run out of options when in need of immediate cash flow. Research on the company and ask for feedback from people who have borrowed money from them previously. That way, when the time comes, and you feel like you need urgent money, you already know who to call and what to ask for. 

Get started with your application with our bear-y reliable comparison tool at gobear.com

Last update on Feb 27, 2020