A working capital loan is a form of financing used to fund everyday business operations. These loans can provide the working capital you need to pay for short-term business expenses such as rent, payroll or restocking inventory.
Working capital loans are not used to finance long-term investments, like real estate or equipment purchases. Consider other small-business loans, like term loans, for such expenses.
Both banks and online lenders offer working capital loans — the right lender for your business will depend on your qualifications and how fast you need access to capital.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 5 options for you
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Kabbage - Line of credit on Kabbage's website | Best for Working capital line of credit | $250,000 | 640 | on Kabbage's website |
OnDeck - Online term loan with Fundera by NerdWallet | Best for Fast working capital loans | $250,000 | 600 | with Fundera by NerdWallet |
SBA 7(a) loan with Fundera by NerdWallet | Best for Working capital loans for well-established businesses | $5,000,000 | 650 | with Fundera by NerdWallet |
Credibility Capital - Online term loan with Fundera by NerdWallet | Best for Working capital loans for large purchases | $500,000 | 650 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Working capital loans for startups | $150,000 | 600 | with Fundera by NerdWallet |
Our pick for
Working capital line of credit
Kabbage - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
640
Est. APR
9.00-36.00%
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.
Our pick for
Fast working capital loans
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. Credit Score
600
Est. APR
9.00-99.00%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Our pick for
Working capital loans for well-established businesses
SBA 7(a) loan
Max Loan Amount
$5,000,000
Min. Credit Score
650
Est. APR
5.50-8.00%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate
Our pick for
Working capital loans for large purchases
Credibility Capital - Online term loan
Max Loan Amount
$500,000
Min. Credit Score
650
Est. APR
6.99-24.99%
Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.
Our pick for
Working capital loans for startups
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. Credit Score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
How Much Do You Need?
A working capital loan is a type of short-term financing used to cover day-to-day business expenses, such as rent, payroll, utilities or inventory purchases. Working capital loans are designed to help businesses stabilize cash flow and manage operational costs, but are not suited for long-term expenditures.
Business working capital loans can come in several forms, including term loans, lines of credit, SBA loans and invoice factoring.
Working capital loans are available from a variety of sources, including online lenders, banks and credit unions. Banks and credit unions are options for established businesses with collateral and strong credit, while online lenders may provide options for borrowers with spotty credit histories.
Online or alternative lenders will typically charge higher APRs than banks and credit unions.
Working capital financing may be a smart move when your business needs cash to cover day-to-day operational expenses. The loans can provide a lifeline for seasonal businesses that experience a dip in sales, like landscapers, ski resorts and retailers.
This is a short-term loan to solve a temporary slowdown, so it isn't the best solution for business expansion or financing a long-term investment. If you need to borrow for those reasons, consider a long-term business loan instead.
Term loans: While term loans are commonly used for financing an expansion, they can also be used for short-term working capital. Term loans provide a sum of cash upfront that is repaid over a set period of time with fixed, equal payments.
Business lines of credit: A line of credit provides more flexibility than term loans, as you get access to funds up to a credit limit and only pay interest on what you’ve borrowed. You can draw and repay funds as often as you’d like, as long as you make payments and don’t exceed your limit.
SBA loans: These loans are guaranteed by the U.S. Small Business Administration and issued through participating banks, credit unions and online lenders. SBA loans provide up to $5 million for working capital, expansion or equipment purchases.
Invoice factoring: If you have customers with unpaid invoices, this type of financing lets you turn the invoices into fast working capital. The factoring company buys your invoices for an upfront payment (minus a fee), and it gets paid when it collects from your customer.
When looking for a business working capital loan, it’s important to compare all of your choices based on APR, which represents the true cost of the loan, including all fees.
For more options, check out NerdWallet’s list of small-business loans that are best for business owners. Our recommendations are based on factors including market scope, customer experience and lender trustworthiness.
Last updated on November 1, 2021
To recap our selections...
Best Working Capital Loans of May 2022
- Kabbage - Line of credit: Best for Working capital line of credit
- OnDeck - Online term loan: Best for Fast working capital loans
- SBA 7(a) loan: Best for Working capital loans for well-established businesses
- Credibility Capital - Online term loan: Best for Working capital loans for large purchases
- Fundbox - Line of credit: Best for Working capital loans for startups