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Working Capital Loans: Compare Your Best Options

Last updated on November 17, 2023
Edited byChristine Aebischer
✅Fact checked and reviewed

⏰ Estimated read time: 7 minutes

Working capital loans can be used to finance short-term business expenses. Compare options from online and SBA lenders.

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A working capital loan finances everyday business operations and short-term expenses, like rent, payroll and inventory. These small-business loans can help keep your business afloat when you face cash flow gaps, but they aren’t meant to finance long-term expenses, like real estate.
Both banks and online lenders offer working capital loans for small businesses. Government-backed SBA 7(a) loans, term loans and business lines of credit can all be used for working capital. The right business capital loan for you will depend on your qualifications and how fast you need access to funding.

How much do you need?

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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 7 working capital loans

LenderNerdWallet Rating▼Max loan amount▼Min. credit score▼Next steps

SBA 7(a) loan

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Best for SBA working capital loans

$5,000,000650

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Funding Circle - Online term loan

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4.5/5

Best for Working capital loans for established businesses

$500,000660

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OnDeck - Online term loan

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5.0/5

Best for Fast working capital loans

$250,000625

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Accion Opportunity Fund - Small Business Working Capital Loan

Read Review
4.0/5

Best for Working capital loans for startups

$250,000570
Read Review

Fora Financial - Online term loan

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4.5/5

Best for Working capital loans for bad credit

$1,500,000500

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Fundbox - Line of credit

Read Review
5.0/5

Best for Unsecured working capital loans

$150,000600
Read Review

PayPal Business Loan

Best for PayPal Premier or Business account holders

$250,000580

Here are 7 working capital loans

Best for SBA working capital loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Working capital loans for established businesses

Funding Circle

Max Amount

$500,000

Min. Credit Score

660

Best for Fast working capital loans

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Working capital loans for startups

Accion

Max Amount

$250,000

Min. Credit Score

570

Read Review

Best for Working capital loans for bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

500

Best for Unsecured working capital loans

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Read Review

Best for PayPal Premier or Business account holders

PayPal

Max Amount

$250,000

Min. Credit Score

580

I'M INTERESTED IN:

Our pick for

SBA working capital loans

The SBA 7(a) loan program includes term loans as well as line of credit options that you can use for working capital, seasonal expenses or costs to cover supplies and labor while completing a contracted project.

SBA 7(a) loan

Read Review

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

11.50-15.00%

7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Read Review

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Our pick for

Working capital loans for established businesses

Funding Circle’s loans can fund within a matter of days, but you’ll need at least two years in business to qualify.

Funding Circle - Online term loan

4.5
NerdWallet rating 
Read Review

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Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
4.5
NerdWallet rating 

Max loan

$500,000

Min. Credit score

660

Apr range

15.22-45.00%

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
Read Review

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Our pick for

Fast working capital loans

OnDeck’s same-day business loans are available to business owners with credit scores of 625 or more.

OnDeck - Online term loan

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
35.40-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
5.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

625

Apr range

35.40-99.90%

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

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Our pick for

Working capital loans for startups

You may be able to qualify for a working capital loan from Accion with three months or more in business.

Accion Opportunity Fund - Small Business Working Capital Loan

4.0
NerdWallet rating 
Read Review
Max Loan Amount
$250,000
Min. credit score
570
Est. APR
7.49-29.67%
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
4.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

570

Apr range

7.49-29.67%

Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Read Review

Our pick for

Working capital loans for bad credit

Fora Financial offers working capital loans to borrowers who have a personal credit score of 500 or higher.

Fora Financial - Online term loan

4.5
NerdWallet rating 
Read Review

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Max Loan Amount
$1,500,000
Min. credit score
500
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
4.5
NerdWallet rating 

Max loan

$1,500,000

Min. Credit score

500

Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Read Review

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Our pick for

Unsecured working capital loans

Fundbox offers working capital lines of credit up to $150,000. You do not need to put up physical collateral, but the lender does require a UCC lien, and in some cases, a personal guarantee.

Fundbox - Line of credit

5.0
NerdWallet rating 
Read Review
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
May fund quickly
5.0
NerdWallet rating 

Max loan

$150,000

Min. Credit score

600

Apr range

36.00-99.00%

Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
Read Review

Our pick for

PayPal Premier or Business account holders

PayPal Working Capital loans are available to holders of PayPal Premier or Business accounts. Loan amounts range from $1,000 to $250,000 and are available if you’ve been an account holder for at least 90 days and have processed at least $15,000 ($20,000 for Premier) within the last 12 months. You will not be approved if you have a current outstanding PayPal Working Capital loan.

PayPal Business Loan

Max Loan Amount
$250,000
Min. credit score
580
PayPal Working Capital and Business Loans can help low-revenue business owners access financing.

Max loan

$250,000

Min. Credit score

580

PayPal Working Capital and Business Loans can help low-revenue business owners access financing.

How Much Do You Need?

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What is working capital?

Working capital is the amount of money that you have available at any given time to meet your short-term, or day-to-day, business needs. Your net working capital is calculated by subtracting your current liabilities from your current assets. Current, or short-term, liabilities and assets are generally more liquid things like accounts payable, salaries, cash on hand or accounts receivable.
Seasonality, growth stage and industry can all influence the ideal amount of working capital for your business.

What is a working capital loan?

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. These loans can come in several forms, including term loans, lines of credit and SBA loans, and are offered by banks and online lenders. Working capital loans are best for short-term needs like cash flow gaps, and are not used for investments like real estate or large equipment. They are available to a wide variety of businesses and can often be funded quickly, but they also come with frequent payments and can be expensive.

Types of business working capital loans

Several types of business loans can provide you with working capital. Repayment terms, funding amounts and interest rates vary based on loan type and lender, as well as your business’s qualifications.

Business lines of credit

A business line of credit provides a lot of flexibility, 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. But terms tend to be fairly short — potentially less than a year. Working capital lines of credit are best for companies that need to get through a short-lived slowdown. You’ll need strong revenue in time to pay back your lender before the loan term ends.

SBA loans

SBA loans are partially guaranteed by the U.S. Small Business Administration and issued through participating banks, credit unions and online lenders. SBA 7(a) term loans and lines of credit provide up to $5 million for working capital, expansion or equipment purchases.
SBA 7(a) term loans are best for companies that need a lump sum of working capital while undertaking a pivot or expansion. The CAPLines program, a subset of SBA 7(a) loans, offers SBA lines of credit to businesses that want to tap a revolving line of credit as needed while their business ebbs and flows.
The long terms and low interest rates of SBA loans make them one of the most affordable types of financing, though they can be slow to fund.

Term loans

While term loans are commonly used for financing an expansion, they can also be used as short-term working capital funding. Term loans provide a sum of cash upfront that is repaid over a set period of time with fixed, equal payments.
Term loans can be useful as business debt consolidation loans, helping reduce your debt load so you can use working capital more efficiently. In general, though, they can be a good choice for businesses that want flexible financing and have sufficient cash flow to make fixed payments.

Invoice factoring

Invoice factoring lets you turn unpaid 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.
Invoice factoring is best for business-to-business companies that are struggling to qualify for other types of financing. Since this isn’t technically a business loan — you’re selling an asset, not borrowing money — factoring companies don’t give as much weight to your credit score or business history as banks and online lenders do.

Merchant cash advances

While invoice factoring is an option if you bill other businesses, merchant cash advances may be available if you work directly with consumers. MCAs are financing that you repay with a percentage of your future debit and credit card sales. Because lenders can make these withdrawals automatically, they usually give less weight to other qualification factors like your credit score.
Merchant cash advances tend to have very high fees, making them a funding option of last resort. But if you need working capital to overcome an acute financial crunch — and especially if you can’t qualify for other types of financing — they may be helpful.

Pros and cons of working capital loans

Pros

  • Suitable for cash flow gaps and seasonal slows. Working capital loans can easily provide your business with the funds needed to address slower periods, whether your business operates seasonally or is experiencing a one-off sales dip.
  • Flexible funds. You can use a business working capital loan for a variety of purposes, such as purchasing inventory or supplies, making payroll and covering utilities. 
  • Accessible to a wide variety of businesses. Although some working capital loans require that you meet strong eligibility criteria, others — like online business loans or loans from other alternative lenders — can be more flexible.
  • Can fund quickly. Some online lenders can provide same-day financing, whereas others may take a few business days. More traditional lenders, however, will have a longer funding timeline.

Cons

  • Frequent payments. Working capital loans typically have short repayment terms — and some lenders may require daily or weekly payments.
  • May be expensive. Some types of business working capital loans can carry high annual percentage rates (APRs) and other fees. 
  • Different ways of charging interest. Certain lenders may charge interest as a factor rate — which can make it difficult to understand the cost of your financing — as well as compare it to other lenders. You should always try to translate the interest a lender charges into an APR to get a better sense of loan costs.
» MORE: Estimate interest and payments with our business loan calculator

How to get a working capital loan

You can get a working capital loan from a variety of sources, including online lenders, banks and credit unions. Before you apply for a business loan, however, you’ll need to figure out what kind of lender you want to work with.
Banks and credit unions are good options for established businesses with collateral and strong credit, and tend to offer the lowest interest rates. Online lenders may make more sense if you have a spotty credit history, though they will typically charge higher APRs than banks and credit unions.
You’ll then need to provide financial statements and details about your business and its owners so lenders can see if you meet their business loan requirements. Online lenders can review applications in as little as a few hours, while banks tend to take longer. SBA loans can have the longest application timelines.
If you’re approved for financing from an online lender, you could have access to your working capital within a few days. Again, bank and SBA lenders will likely take longer.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on November 17, 2023

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

Learn more

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