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Best Working Capital Loans for Small Businesses 2020

Jackie ZimmermannApril 27, 2020

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Online lenders offer working capital loans to finance everyday needs, large purchases and unpaid customer invoices.

Working capital loans can help you pay for operational costs, such as rent, payroll and debt payments. They carry short repayment terms and are not typically used for long-term investments, such as real estate.

The term working capital can encompass virtually every facet of your finances, but ultimately you need it to, well, keep your company working. That could include coping with seasonal dips in revenue, covering maintenance costs, keeping your payroll up to date, or managing your inventory.

Banks offer the lowest annual percentage rates on these loans, so if you own an established business with strong cash flow, you may want to start there. But if the bank says no or if you need cash fast, you can turn to online lenders for small-business financing.

LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?

CARES Act: Coronavirus relief and SBA loans for small businesses.

Does your small business need COVID-19 relief? Learn about the SBA Paycheck Protection Program and apply on Lendio.

Does your small business need COVID-19 relief? Learn about the SBA Paycheck Protection Program and apply on Lendio.

Our picks for

Working capital for everyday needs

Kabbage and OnDeck offer working capital loans and lines of credit up to $250,000.

Kabbage - Line of credit

Kabbage - Line of credit

Est. APR

24.00 - 99.00%

Min. Credit Score

560

Kabbage provides fast loans for business owners with bad personal credit, but rates can be high.

Pros

  • Financing up to $250,000 available within a few days.
  • Accepts low credit scores.

Cons

  • Rates are high compared to other online lenders.
  • Must have online checking or PayPal account to verify cash flow.
  • Fixed-fee structure means early repayment does not save interest.
Read full review

Qualifications

  • Minimum credit score: 560.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $50,000.
OnDeck - Online term loan

OnDeck - Online term loan

Est. APR

9.00 - 99.00%

Min. Credit Score

600

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

Pros

  • Cash can be available within the same business day.
  • Requires low minimum credit score.
  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.
  • Requires frequent (daily or weekly) repayments.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 3 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 2 years.

Our picks for

Working capital for large purchases

If you need a large sum to cover an equipment purchase or minor expansion project, focus your search on lenders that offer the lowest APRs and longer repayment terms.

SmartBiz - SBA loan

SmartBiz - SBA loan

Est. APR

6.73 - 10.29%

Min. Credit Score

650

SmartBiz’s low-cost SBA loans work best for established businesses that want to finance an expansion or refinance debt.

Pros

  • Competitive rates among online lenders.
  • Faster than getting an SBA loan from a bank.

Cons

  • Must have strong financials, supported by personal and business tax returns for the past 3 years.
  • Stringent rules on use of proceeds.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $50,000.
  • No bankruptcies or foreclosures in the past 3 years.
Currency - Equipment financing

Currency - Equipment financing

Est. APR

6.00 - 24.00%

Min. Credit Score

585

Currency is an option for business owners looking to finance the purchase of new equipment.

Pros

  • Competitive rates among online lenders.

Cons

  • Prepayment penalty in some cases.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 585.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $75,000.
  • Must have a net loss no greater than 10% over the past 12 months.
Credibility Capital - Online term loan

Credibility Capital - Online term loan

Est. APR

19.99 - 24.99%

Min. Credit Score

680

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.
  • Extra monthly payments can save interest cost.

Cons

  • Short repayment term results in higher payment amounts.
  • Requires high minimum credit score and revenue.
  • Requires business lien and may require personal guarantee.
  • Not available in Nevada, North Dakota, South Dakota, or Vermont.
Read full review

Qualifications

  • Minimum credit score: 680.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 5 years.

Our pick for

Working capital for unpaid customer invoices

Companies that work in the business-to-business sector will face gaps in cash flow. To help keep your business running while the check’s in the mail, consider invoice factoring or invoice financing.

BlueVine - Invoice factoring

BlueVine - Invoice factoring

Est. APR

15.00 - 68.00%

Min. Credit Score

530

BlueVine’s invoice factoring works best for financing larger invoices, but only if your customers reliably pay on time.

Pros

  • Finances larger invoices.
  • Cash can be available within the same day.
  • Accepts low minimum credit score and short time in business.

Cons

  • Not for businesses that do not invoice on net terms.
  • Loan amount is tied to the value of your invoices.
  • Dependency on customers to pay their bills on time.
Read full review

Qualifications

  • Minimum credit score: 530.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $100,000.

Does your small business need COVID-19 relief? Learn about the SBA Paycheck Protection Program and apply on Lendio.

Does your small business need COVID-19 relief? Learn about the SBA Paycheck Protection Program and apply on Lendio.

Summary of Best Working Capital Loans for Small Businesses 2020

LenderBest ForEst. APRMin. Credit Score
Kabbage - Line of credit

Kabbage - Line of credit

Best for: Working capital for everyday needs

24.00 - 99.00%

560

OnDeck - Online term loan

OnDeck - Online term loan

Best for: Working capital for everyday needs

9.00 - 99.00%

600

SmartBiz - SBA loan

SmartBiz - SBA loan

Best for: Working capital for large purchases

6.73 - 10.29%

650

Currency - Equipment financing

Currency - Equipment financing

Best for: Working capital for large purchases

6.00 - 24.00%

585

Credibility Capital - Online term loan

Credibility Capital - Online term loan

Best for: Working capital for large purchases

19.99 - 24.99%

680

BlueVine - Invoice factoring

BlueVine - Invoice factoring

Best for: Working capital for unpaid customer invoices

15.00 - 68.00%

530

Compare small-business loans

When looking for a working capital loan, it’s important to compare all of your options based on APR, which represents the true cost of the loan, including all fees. To evaluate other loans, you can go to NerdWallet’s small-business loan tool. NerdWallet’s list of lenders is based on factors including market scope, customer experience and lender trustworthiness.

Last updated on April 27, 2020

To recap our selections...

NerdWallet's Best Working Capital Loans for Small Businesses 2020

Frequently asked questions

A working capital loan helps your business continue its daily operations. It makes sense when your business needs help covering regular operating costs like payroll, rent and inventory.

Working capital loans are available from a variety of sources, including online lenders, banks and credit unions. Banks and credit unions are an option for established businesses with collateral and strong credit, while online lenders may provide options for borrowers with a spotty credit history.